United States vs. Conde

G.R. No.
L-18208 February 14, 1922

THE UNITED STATES, plaintiff-appellee,
vs.
VICENTE DIAZ CONDE and APOLINARIA R. DE CONDE, defendants-appellants.
Facts:
On May 6, 1921, a complaint was presented in the Court of First Instance of Manila, charging
Vicente Diaz Conde (Conde) and Apolinaria De Conde (De Conde) with a violation of the Usury
Law (Act No. 2655). They were arrested, arraigned, and pleaded not guilty. The cause was
brought on for trial on September 1, 1921. At the trial, and after a consideration of the evidence
presented, the judge, Honorable M.V. del Rosario, found that the defendants were guilty of the
crime charged in the complaint and sentenced each of them to pay a fine of P120, and, in case of
insolvency, to suffer imprisonment in accordance with the provisions of the law. From that, the
defendants appealed to the court.
Issues:
1. Whether or not the contract upon which the alleged usurious interest was collected was
executed before Act No. 2655 was adopted.
2. Whether or not at the time said contract was made (December 30, 1915), there was no usury
law in force in the Philippine Islands.
3. Whether or not the said Act No. 2655 did not become effective until May 1, 1916, or four
months and a half after the contract in question was executed.
4. Whether or not that said law could have no retroactive effect or operation, and that said law
impairs the obligation of a contract, and that for all of said reasons the judgment imposed by the
lower court should be revoked; that the complaint should be dismissed, and that they should each
be discharged from the custody of the law.
Ruling:
1. The essential facts constituting the basis of the criminal action are not in dispute, and may be
stated as follows:(1) That on the 30th day of December, 1915, the alleged offended persons
Bartolome Oliveros (Oliveros) and Engracia Lianco (Lianco) executed and delivered to the
defendants a contract (Exhibit B) evidencing the fact that the former had borrowed from the
latter the sum of P300, and (2) that, by virtue of the terms of said contract, the said Oliveros and
Lianco obligated themselves to pay to the defendants interest at the rate of five per cent (5%) per
month, payable within the first ten days of each and every month, the first payment to be made
on the 10th day of January, 1916.
The lower court, in the course of its opinion, stated that at the time of the execution and delivery
of said contract, there was no law in force in the Philippine Islands punishing usury; but,
inasmuch as the defendants had collected a usurious rate of interest after the adoption of the
Usury Law in the Philippine Islands (Act No. 2655), they were guilty of a violation of that law
and should be punished in accordance with its provisions.
2. The law is well established that when a contract contains an obligation to pay interest upon the
principal, the interest thereby becomes part of the principal and is included within the promise to
pay. In other words, the obligation to pay interest on money due under a contract, be it express or
implied, is a part of the obligation of the contract. Laws adopted after the execution of a contract,
changing or altering the rate of interest, cannot be made to apply to such contract without
violating the provisions of the constitution which prohibit the adoption of a law "impairing the
obligation of contract." (8 Cyc., 996; 12 Corpus Juris, 1058-1059.)
The obligation of the contract is the law which binds the parties to perform their agreement if it
is not contrary to the law of the land, morals or public order. That law must govern and control
the contract in every aspect in which it is intended to bear upon it, whether it affect its validity,
construction, or discharge. Any law which enlarges, abridges, or in any manner changes the
intention of the parties, necessarily impairs the contract itself. If a law impairs the obligation of a
contract, it is prohibited by the Jones Law, and is null and void. The laws in force in the
Philippine Islands prior to any legislation by the American sovereignty, prohibited the
Legislature from giving to any penal law a retroactive effect unless such law was favorable to the
person accused. (Articles 21 and 22, Penal Code.)
3. A law imposing a new penalty, or a new liability or disability, or giving a new right of action,
must not be construed as having a retroactive effect. It is an elementary rule of contract that the
laws in force at the time the contract was made must govern its interpretation and application.
Laws must be construed prospectively and not retrospectively. If a contract is legal at its
inception, it cannot be rendered illegal by any subsequent legislation. If that were permitted then
the obligations of a contract might be impaired, which is prohibited by the organic law of the
Philippine Islands. (U.S. vs. Constantino Tan Quingco Chua, 39 Phil., 552; Aguilar vs. Rubiato
and Gonzales Vila, 40 Phil., 570.)
4. Ex post facto laws, unless they are favorable to the defendant, are prohibited in this
jurisdiction. Every law that makes an action, done before the passage of the law, and which was
innocent when done, criminal, and punishes such action, is an ex post facto law. In the present
case Act No. 2655 made an act which had been done before the law was adopted, a criminal act,
and to make said Act applicable to the act complained of would be to give it an ex post facto
operation. A law may be given a retroactive effect in civil action, providing it is curative in
character, but ex post facto laws are absolutely prohibited unless its retroactive effect is
favorable to the defendant.
For the reason, therefore, that the acts complained of in the present case were legal at the time of
their occurrence, they cannot be made criminal by any subsequent or ex post facto legislation.
What the courts may say, considering the provisions of Article 1255 of the Civil Code, when a
civil action is brought upon said contract, cannot now be determined. A contract may be annulled
by the courts when it is shown that it is against morals or public order.
Decision:
WHEREFORE, the acts complained of by the defendants did not constitute a crime at the time
they were committed, and therefore the sentence of the lower court should be, and is hereby,
revoked; and it is hereby ordered and decreed that the complaint be dismissed, and that the
defendants be discharged from the custody of the law, with costs de oficio.

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G.R. No.

L-18208 February 14, 1922

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