Civil Code supplements commercial 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. (Article 18 of the Civil Code of the Philippines) The Civil Code of the Philippines, a part of civil law, contains provisions on contracts, obligations and damages. These are matters not foreign to commercial law. For example, an insurance policy is a contract between the insurer and the insured; therefore, the general civil law principles on contracts should apply.

In case of conflict with the Code of Commerce or special laws, the Civil Code shall only be suppletory, except if otherwise provided for under the Civil Code. In general, therefore, in case of conflict, the special law prevails over the Civil Code, which is general in nature. (Paras, citing Leyte A. and M. Oil Co. v. Block, 52 Phil. 429) "Act No. 190 or the Law of Civil Procedure is general in character, while the Insolvency Law, Act No. 1956 is a special law and the rule is that on a specific matter the special law shall prevail over the general law, which shall be resorted to only to supply deficiencies in the former. (Art. 16, [Old] Civil Code.)" (G.R. No. 29755, December 14, 1928)

In Domingo Ang v. American Steamship Agencies, Inc., L- 22491, Jan. 27, 1967, the Supreme Court held that the Carriage of Goods by Sea Act speaks of "loss or damage." The issue was whether or not there was loss of the goods subject matter of the complaint. Nowhere is "loss" defined in the Carriage of Goods by Sea Act. Therefore, recourse must be had from the Civil Code which provides in Article 18 thereof that, "In matters which are governed by the Code of Commerce and special laws, their deficiency shall be supplied by the provisions of this Code." Article 1189 of the Civil Code answers the question.

To summarize, in commercial law, the pertinent mercantile law should apply. For example, insurance contracts and issues about premium, policies, etc. are covered by the Insurance Code. If there is silence or insufficiency on the part of the Insurance Code, relevant provisions of the Civil Code will have to take over.

According to Paras, there are instances when the Civil Code expressly declares itself superior to special laws, to wit:

  1. Regarding common carriers, the Code of Commerce supplies the deficiency. "In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws" (Art. 1766, Civil Code); and
  2. As to insolvency, the special laws supply the deficiency. "Insolvency shall be governed by special laws insofar as they are not inconsistent with this Code." (Art. 2237, Civil Code).
The general rule is that the special law governs in case of conflict with a general law. Generalia specialibus non derogant; the provisions of a general statute must yield to those of a special one. It is also known as the rule of implied exception. Thus, in the case of Ramos v. De la Rama, 15 Phil. 544, large cattle was sold in a public instrument. It was contended that under the Civil Code, the sale should be valid. It was held by our Supreme Court that the sale is void because, under the Cattle Registration Act, no sale or transfer of large cattle is valid unless it is registered and a certificate of the transfer is obtained under said special law. The Civil Code cannot apply because there is no deficiency in the matter in this special law.

In commercial law, the Corporation Code is a general law applying to all types of corporations, while the New Central Bank Act regulates specifically banks and other financial institutions, including the dissolution and liquidation thereof. As between a general and special law, the latter shall prevail – generalia specialibus non derogant. (G.R. No. 169053, 19 June 2009)

In another case, it was held: "Without doubt, the Corporation Code is the general law providing for the formation, organization and regulation of private corporations. On the other hand, RA 6657 is the special law on agrarian reform. As between a general and special law, the latter shall prevail—generalia specialibus non derogant." (G.R. No. 171101, 5 July 2011)

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