People v. Conde
REITERATIONFacts
The Antecedents: Bartolome Oliveros and Engracia Lianco executed a contract on December 30, 1915, borrowing P300 from Vicente Diaz Conde and Apolinaria R. de Conde. The contract stipulated an interest rate of five percent (5%) per month, payable within the first ten days of each month, with the first payment due on January 10, 1916. Procedural History: A complaint was filed on May 6, 1921, charging the defendants with a violation of the Usury Law (Act No. 2655). The Court of First Instance of Manila found the defendants guilty and sentenced each to pay a fine of P120, with subsidiary imprisonment in case of insolvency. The defendants appealed. The Petition: The appellants contended that the contract was executed before Act No. 2655 was adopted, that no usury law was in force at the time of the contract's execution, that Act No. 2655 had no retroactive effect, and that applying it would impair the obligation of contract.
Issue(s)
Whether Act No. 2655, the Usury Law, can be applied to a contract executed before its effectivity. Whether applying Act No. 2655 to a contract executed prior to its enactment constitutes an impairment of the obligation of contract. Whether applying Act No. 2655 to acts committed before its effectivity constitutes an ex post facto law.
Ruling
The Supreme Court revoked the judgment of the lower court, ordered the dismissal of the complaint, and decreed the discharge of the defendants from custody, with costs de oficio.
Ratio Decidendi
On whether Act No. 2655 can be applied to a contract executed before its effectivity: The Court held that 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 constitutional prohibition against laws impairing the obligation of contract. The obligation of a contract is governed by the laws in force at the time it was made. Therefore, since the contract was executed on December 30, 1915, and Act No. 2655 became effective on May 1, 1916, the law could not be applied retroactively to the said contract. The Court emphasized that laws must be construed prospectively and not retrospectively. On whether applying Act No. 2655 constitutes an impairment of the obligation of contract: The Court affirmed that any law which enlargens, abridges, or in any manner changes the intention of the parties to a contract necessarily impairs the contract itself. Such a law is prohibited by the Jones Law and is null and void. In this case, applying Act No. 2655 to a contract validly entered into before its enactment would alter the terms and obligations agreed upon by the parties, thus impairing the obligation of contract. The principle that the laws in force at the time of the contract's making must govern its interpretation and application was reiterated. On whether applying Act No. 2655 constitutes an ex post facto law: The Court stated that ex post facto laws, unless favorable to the defendant, are prohibited in the jurisdiction. Every law that makes an action, innocent when done, criminal and punishes such action is an ex post facto law. Since the acts complained of (entering into the contract with the stipulated interest rate) were legal at the time of their occurrence, making Act No. 2655 applicable would give it an ex post facto operation, which is prohibited. The Legislature is prohibited from adopting a law that makes an act done before its adoption a crime.
Main Doctrine
A law imposing a new penalty or liability cannot be given retroactive effect if it makes an act, innocent when done, criminal. Such application would constitute an ex post facto law, which is prohibited unless favorable to the accused. Therefore, acts committed before the effectivity of the Usury Law (Act No. 2655) cannot be punished thereunder, even if interest was collected after its effectivity, as this would impair the obligation of contract.