US v Diaz-Conde GR No. L-18208

PANDAN, Philip Angelo S. TITLE: US v Diaz-Conde, GR no. L-18208, February 4, 1922 The United States, plaintiff and appellee, vs. Vicente Diaz Conde and Apolinaria R. de Conde, defendants and appellants. Ponente: Justice Johnson Charges: Violation of Usury Law Topics: Ex Post Facto Law Doctrines and Provisions: Art. 3, Sec. 22 of the 1987 Constitution Act No. 2655: Usury Law It is an elementary rule of contracts that the laws in force at the time it was made must govern its interpretation and application. Facts:   

December 30, 1915, complainants Bartolome Oliveros and Engracia Lianco entered into a contract with the defendants concerning a debt of P300. Oliveros and co. were obligated to pay five percent interest per month within the first ten days of every month. February 24,1916, Act No. 2655: AN ACT FIXING RATES OF INTEREST UPON LOANS AND DECLARING THE EFFECT OF RECEIVING OR TAKING USURIOUS RATES AND FOR OTHER PURPOSES was enacted. On May 6, 1921, Vicente Diaz Conde and Apolinaria R. De Conde were charged with violating the Usury Law in the Court of First Instance of the city of Manila. They were found guilty, sentenced to pay a fine of P120 and in case of insolvency, to suffer subsidiary imprisonment in accordance with the provisions of law. The court 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, they were guilty of a violation of that law and should be punished in accordance with its provisions.

Issues and Holdings: 1. Whether or not the defendants commit a crime under Act No. 2655: Usury Law? The defendants did not commit a crime under Usury Law. The law is well established that when a contract contains an obligation to pay interest, the interest thereby becomes part of the principal and is included within the promise to pay. The obligation to pay interest on money due under a contract 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." 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, its construction or discharge. Any law which enlarges, abridges or in any manner changes the intention of the parties, necessarily impairs the contract itself. It is an elementary rule of contracts that the laws in force at the time it was made must govern its interpretation and application. Ruling: 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 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. So ordered.