United States vs. Diaz Conde

An act that was legal at the time it was committed cannot be made criminal by subsequent legislation. Applying a new penal law retroactively to punish prior conduct constitutes a prohibited ex post facto law.

This case arose during the early American colonial period in the Philippines, a time when the legislature was enacting new regulatory statutes, including the first comprehensive Usury Law (Act No. 2655). The central legal tension was between this new regulatory power and constitutional protections against retroactive penal laws and laws impairing contracts, as guaranteed under the organic law (the Jones Law).

• Filed in the Court of First Instance (CFI) of Manila.
• The CFI found the defendants guilty and sentenced them to a fine.
• The defendants appealed directly to the Supreme Court.

• On December 30, 1915, Bartolome Oliveros and Engracia Lianco borrowed P300 from the defendants, Vicente Diaz Conde and Apolinaria R. de Conde.
• The loan contract (Exhibit B) stipulated an interest rate of 5% per month, payable within the first ten days of each month, with the first payment due on January 10, 1916.
• At the time of the contract's execution, there was no usury law in force in the Philippine Islands.
• The Usury Law (Act No. 2655) took effect on May 1, 1916.
• The defendants collected the stipulated interest after Act No. 2655 had become effective.
• A criminal complaint was filed against the defendants on May 6, 1921, for violating the Usury Law.

• The contract was executed on December 30, 1915, before Act No. 2655 (effective May 1, 1916) existed.
• No usury law was in force when the contract was made.
• Applying Act No. 2655 to this pre-existing contract would give it an impermissible retroactive effect.
• Such retroactive application would unconstitutionally impair the obligation of their contract.

• The lower court's reasoning was that while the contract's execution was legal, the collection of usurious interest occurred after the law took effect, thus violating the new statute.

• Procedural Issues: N/A
• Substantive Issues:
  • Whether the defendants could be criminally prosecuted under Act No. 2655 for collecting interest on a contract executed before the law's enactment.

• Procedural: N/A
• Substantive: The SC ruled in favor of the defendants. The collection of interest was an integral part of the contractual obligation created in 1915. Since the contract and its obligations were legal when made, subjecting the defendants to criminal liability under a later-enacted law would be to give that law an ex post facto operation, which is prohibited. The obligation to pay interest is part of the contract itself, and a subsequent law changing that obligation impairs the contract in violation of the constitution.

• Ex Post Facto Law — A law that retroactively criminalizes an act that was innocent when done, or that imposes a punishment for an act that was not punishable at the time it was committed, is prohibited. The SC held that applying Act No. 2655 to the defendants' pre-enactment conduct would make an innocent act criminal, thus constituting a forbidden ex post facto law.
• Non-Impairment of Obligation of Contracts — The obligation of a contract is the law binding the parties to perform their agreement. Any subsequent law that enlarges, abridges, or changes the intention of the parties impairs the contract itself. The SC ruled that the interest stipulation was part of the contractual obligation, and a later law altering its legality would unconstitutionally impair that obligation.

• "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."
• "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. v. Constantino Tan Quingco Chua, 39 Phil. 552 — Cited for the principle that laws must be construed prospectively and that a contract legal at its inception cannot be rendered illegal by subsequent legislation.
• Aguilar v. Rubiato and Gonzales Vila, 40 Phil. 570 — Cited in support of the rule against the retroactive application of laws that would impair contractual obligations.

• Jones Law (Organic Act for the Philippine Islands) — The constitutional prohibition against the enactment of laws impairing the obligation of contracts.
• Articles 21 and 22 of the Penal Code — The prohibition against giving penal laws a retroactive effect unless favorable to the accused.
• Act No. 2655 (Usury Law) — The substantive law the prosecution sought to apply retroactively.