1 Caltex V Palomar

Caltex v.
Palomar
GR L-19650, 29 September 1966 (18 SCRA 247)
Facts:
In 1960, Caltex (Phils) Inc. conceived a promotional scheme “Caltex Hooded Pump Contest” calculated to
drum up patronage for its products, calling for participants therein to estimate the actual number of liters a hooded gas
pump at each Caltex station will dispense during a specified period. For the privilege to participate, no fee or
consideration is required to be paid. Neither a purchase of Caltex products is required. Entry forms were available upon
request at each Caltex station where a sealed can was provided for the deposit of accomplished entry stubs.
Foreseeing the extensive use of the mails, not only as amongst the mediator publicizing the contest but also for the
transmission of communications relative thereto, representations were made by Caltex with the postal authorities for
the contest to be cleared in advance for mailing, in view of sections 1954(a), 1982 and 1983 of the Revised
Administrative Code. Such overtures were formalized in a letter to the Postmaster General, dated 31 October 1960, in
which the Caltex, thru counsel, enclosed a copy of the contest rules and endeavored to justify its position that the
contest does not violate the anti-lottery provisions of the Postal Law. Unimpressed, the then Acting Postmaster General
Enrico Palomar opined that the scheme falls within the purview of the provisions aforesaid and declined to grant the
requested clearance.
Caltex thereupon invoked judicial intervention by filing a petition for declaratory relief against the Postmaster General,
praying that judgment be rendered declaring its Caltex Hooded Pump Contest not to be violative of the Postal Law, and
ordering respondent to allow petitioner the use of the mails to bring the contest to the attention of the public. The trial
court ruled that the contest does not violate the Postal Code and that the Postmaster General has no right to bar the
public distribution of the contest rules by the mails. The Postmaster General appealed to the Supreme Court.
Issues:
*Whether construction should be employed in the case.
* Whether the contest is a lottery or a gift enterprise that violates the provisions of the Postal Law.
Held:
Construction is the art or process of discovering and expounding the meaning and intention of the
authors of the law with respect to its application to a given case, where that intention is rendered doubtful,
amongst others, by reason of the fact that the given case is not explicitly provided for in the law. In the present
case, the prohibitive provisions of the Postal Law inescapably require an inquiry into the intended meaning of the words
used therein. This is as much a question of construction or interpretation as any other. The Court is tasked to look
beyond the fair exterior, to the substance, in order to unmask the real element and pernicious tendencies that the law is
seeking to prevent.
“Lottery” extends to all schemes for the distribution of prizes by chance, such as policy playing, gift exhibitions,
prize concerts, raffles at fairs, etc., and various forms of gambling. The three essential elements of a lottery are: (1)
consideration, (2) prize, and (3) chance. “Gift enterprise,” on the other hand, is commonly applied to a sporting artifice
under which goods are sold for their market value but by way of inducement each purchaser is given a chance to win a
prize. Further, consonant to the well-known principle of legal hermeneutics noscitur a sociis, the term under
construction should be accorded no other meaning than that which is consistent with the nature of the word associated
therewith. Hence, if lottery is prohibited only if it involves a consideration, so also must the term “gift enterprise” be so
construed. Significantly, there is not in the law the slightest indicium of any intent to eliminate that element of
consideration from the “gift enterprise” therein included. Gratuitous distribution of property by lot or chance does not
constitute ‘lottery’, if it is not resorted to as a device to evade the law and no consideration is derived, directly or
indirectly, from the party receiving the chance, gambling spirit not being cultivated or stimulated thereby. Thus, gift
enterprises and similar schemes therein contemplated are condemnable only if, like lotteries, they involve the element
of consideration. In the present case, there is no requirement in the rules that any fee be paid, any merchandise be
bought, any service be rendered, or any value whatsoever be given for the privilege to participate; for the scheme to be
deemed a lottery. Neither is there is a sale of anything to which the chance offered is attached as an inducement to the
purchaser for the scheme to be deemed a gift enterprise. The scheme is merely a gratuitous distribution of property by
chance.
The Supreme Court affirmed the appealed judgment, without costs.
No. Caltex may be granted declaratory relief, even if Enrico Palomar simply applied the clear provisions of the law to a
given set of facts as embodied in the rules of the contest. For, construction is the art or process of discovering and
expounding the meaning and intention of the authors of the law with respect to its application to a given case is not
explicitly provided for in the law.
In this case, the prohibitive provisions of the Postal Law inescapably required an inquiry into the intended meaning of
the words used therein. Also, the Court is tasked to look beyond the fair exterior, to the substance, in order to unmask
the real element that the law is seeking to prevent or prohibit.

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