Caltex v.

Palomar

6.

Gr No. L-19650
Author: Patrick V. Arcellana
Petition: For Declaratory Relief
Petitioner/appellee: Caltex (Philippines) Inc.
Respondent/Appellant: Enrico Palomar (The Postmaster General)
Potente: Castro, J.
Doctrine: Statutory Construction
FACTS:
1. 1960- Caltex Philippines created a promotional scheme (Caltex
Hooded Pump Contest) in which contestants estimate the actual
number of liters a hooded gas pump of a Caltex Station will
dispense during a specified period.
2.

Participation is for all motor vehicle owners and/or licensed

drivers and requires no fee or consideration and no purchase of
Caltex Products to be made. Entry forms are to be made available
upon request at each Caltex Station in which accomplished entry
stubs will be deposited in a sealed can.

ISSUES:
1. WON the petition states a sufficient cause of action for declaratory
relief.
2. WON the Caltex Hooded Pump Contest violates the Postal Law.
PROVISIONS:

With the use of mails as a media of publicizing of the contest and

transmission of communications relative hereto, representations
were made by Caltex with the postal authorities for the contest to
be cleared in advance for mailing, having in view sections
1954(a), 1982 and 1983 of the Revised Administrative Code.

4.

Caltex sent a letter with the contest rules to the Postmaster

General to justify its position of the non-violation of the contest in
the provisions of the Postal law.

5.

Palomar opined that the scheme falls within the jurisdiction of the
provisions and declined the request. Caltex sought reconsideration
because there was no consideration in the part of any contestant
and therefore the contest was not a lottery but Palomar contested
that it is also considered a gift enterprise and also under the
provisions of the Postal Law.

The Postal Law, chapter 52 of the Revised Administrative Code, using

almost identical terminology in sections 1954(a), 1982 and 1983
thereof, supra, condemns as absolutely non-mailable, and empowers
the Postmaster General to issue fraud orders against, or otherwise
deny the use of the facilities of the postal service to, any information
concerning "any lottery, gift enterprise, or scheme for the distribution of
money, or of any real or personal property by lot, chance, or drawing of
any kind"

RULING + RATIO:
1.

3.

Caltex sought a declaratory relief against Palomar praying that the

contest not be violative of the Postal Law and allow Caltex to use
mail for publicity of the contest.

YES. There is sufficient cause for declaratory Relief.

-Declaratory Relief is available to any person whose right are
affected by a statute to determine any question of construction
under a statute and for a declaration of his right thereunder.
There are 4 conditions for declaratory relief to be granted.
a. There must be a justiciable controversy
i. In this case, there is a justiciable controversy
because Caltexs assertion of its claim to use
mail for its contest and the consequent denial of
Palomar to grant the privilege demanded caused
the controversy.
b. Controversy must be between persons whose
interests are adverse
i. Freedom to enhance business of Caltex v.
Palomars enforcement of an unavoidable duty.
ii. Active antagonistic assertion of a legal right on
one side (Caltex) and a denial thereof on the
other (Postmaster General).

c.

The party seeking declaratory relief must have a

legal interest in the controversy
i. Caltex has a legal interest for if it is denied
declaratory relief it would be forced undesirable
alternatives.
1. Launch the contest- will be at risk or
threatened by a certain imposition of a
fraud order
2. Abandon the contest- becomes a selfappointed censor and allows Palomar to
implement a virtual fiat of previous
censorship that is constitutionally
unwarranted.
d. The issue involved must be ripe for judicial
determination.
i. The disagreement is no longer nebulous or
contingent. It has taken a fixed and final shape,

presenting clearly defined legal issues susceptible of

immediate resolution. The immediate resolution of
the case cannot be avoided anymore.
2.

NO. There is no violation of the Postal law.

A Lottery has three essential elements and these are:

Consideration, Prize and Chance. The contest presents the

element of Prize and Chance. The court also states that the law

does not condemn the gratuitous distribution of property by chance, if

no consideration is derived directly or indirectly from the party receiving
the chance, but does condemn as criminal schemes in which a valuable
consideration of some kind is paid directly or indirectly for the chance to
draw a prize.

There is nowhere in the rules wherein any fee must be paid or any
merchandise must be bought in order to participate. Therefore the
contest fails to exhibit any consideration to label it as a lottery. It
is actually a gratuitous distribution of property by chance.
It is also not a gift enterprise because like a lottery, a gift

enterprise comes within the prohibitive statutes only if it exhibits the

tripartite elements of prize, chance and consideration. A gift enterprise
is defined as goods that are sold for their market value but by way of
inducement each purchaser is given a chance to win a prize. Since
there is no consideration, it cannot also be considered a gift
enterprise.
DISPOSITION: Petition granted.