ARTICLE 18 (CIVIL CODE OF THE PHILIPPINES)

CIVIL CODE OF THE PHILIPPINES

(Republic Act No. 386)

Chapter 1. EFFECT AND APPLICATION OF LAWS

Article 18. In matters which are governed by the Code of Commerce and special laws, their deficiency shall be supplied by the provisions of this Code. (16a)

ü  The Civil Code shall only be suppletory in case of conflict with the Code of Commerce or special laws, except if otherwise provided by the Civil Code.

ü  It is general in nature that in case of conflict, the special law prevails over the Civil Code.

CASE DIGEST:

RAFAEL ENRIQUEZ, as administrator of the estate of the late Joaquin Ma. Herrer, vs. SUN LIFE ASSURANCE COMPANY OF CANADA.

 FACTS:

Ø  On September 24, 1917, Joaquin Herrer made application to the Sun Life Assurance Company of Canada through its office in Manila for a life annuity. Two days later he paid the sum of P6,000 to the manager of the company's Manila office and was given a receipt.

Ø  The application was immediately forwarded to the head office of the company at Montreal, Canada.

Ø  On November 26, 1917, the head office gave notice of acceptance by cable to Manila.

Ø  On December 4, 1917, the policy was issued at Montreal.

Ø  On December 18, 1917, attorney Aurelio A. Torres wrote to the Manila office of the company stating that Herrer desired to withdraw his application.

Ø  The following day the local office replied to Mr. Torres, stating that the policy had been issued, and called attention to the notification of November 26, 1917.

Ø  This letter was received by Mr. Torres on the morning of December 21, 1917.

Ø  Mr. Herrer died on December 20, 1917.

ISSUE # 1: Whether or not the Civil Code may be applied in identifying if the contract was ever perfected despite the fact that the subject matter of the contract is governed by Insurance Act.

HELD: The Supreme Court ruled in the affirmative. The Civil Code will prevail in the event that the special law is deficient.

Based on the provisions of the Civil Code, the court rules that the there is no contract unless the following requisites concur:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established.

            In the Civil Code is found article 1262 providing that "Consent is shown by the concurrence of offer and acceptance with respect to the thing and the consideration, which are to constitute the contract. An acceptance made by letter shall not bind the person making the offer except from the time it came to his knowledge. 

The Civil Code rule, that an acceptance made by letter shall bind the person making the offer only from the date it came to his knowledge, may not be the best expression of modern commercial usage. Still it must be admitted that its enforcement avoids uncertainty and tends to security.

According to the provisional receipt, three things had to be accomplished by the insurance company before there was a contract:

(1) There had to be a medical examination of the applicant;

(2) There had to be approval of the application by the head office of the company;

(3) This approval had in some way to be communicated by the company to the applicant.

The Supreme Court ruled that the contract for a life annuity in the case at bar was not perfected because it has not been proved satisfactorily that the acceptance of the application ever came to the knowledge of the applicant.

The Supreme Court explained that:

While, as just noticed, the Insurance Act deals with life insurance, it is silent as to the methods to be followed in order that there may be a contract of insurance.

On the other hand, the Civil Code, in article 1802, not only describes a contract of life annuity markedly similar to the one we are considering, but in two other articles, gives strong clues as to the proper disposition of the case. For instance, article 16 of the Civil Code provides that "In matters which are governed by special laws, any deficiency of the latter shall be supplied by the provisions of this Code [Civil Code]."

On the supposition, therefore, which is incontestable, that the special law on the subject of insurance is deficient in enunciating the principles governing acceptance, the subject-matter of the Civil code, if there be any, would be controlling.

References:

* Judge Albano, Ed Vincent S. (2017). Family Code of the Philippines

*G.R. No. L-15895 Retrieved from: https://www.lawphil.net/judjuris/juri1920/nov1920/gr_l-15895_1920.html?fbclid=IwAR2RNUKUcrlSrYCN86SOCyfIEgC61K5vSvEgYR-bQ0zcd_is7SXbB9c2-N4

*Retrieved from: http://www.chanrobles.com/civilcodeofthephilippinesbook4.htm