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Caltex (Philippines) Inc. vs.

Palomar
FACTS:
In the year 1960, Caltex Philippines conceived and laid the ground work for a
promotional scheme calculated to drum up patronage for its oil products. The
contest was entitled Caltex Hooded Pump Contest, which calls for participants to
estimate the actual number of liters as hooded gas pump at each Caltex station will
dispense during a specific period.
Foreseeing the extensive use of the mails not only as amongst the media for
publicizing the contest but also for the transmission of communications,
representations were made by Caltex with the postal authorities for the contest to
be cleared in advance for mailing. This was formalized in a letter sent by Caltex to
the Post master General, dated October 31, 1960, in which Caltex, thru its counsel,
enclosed a copy of the contest rules and endeavored to justify its position that the
contest does not violate the The Anti-Lottery Provisions of the Postal Law.
Unfortunately, the Palomar, the acting Postmaster General denied Caltexs
request stating that the contest scheme falls within the purview of the Anti-lottery
Provision and ultimately, declined Clatexs request for clearance.
Caltex sought reconsideration, stressing that there being no consideration
involved in part of the contestant, the contest was not commendable as a lottery.
However, the Postmaster General maintained his view that the contest involves
consideration, or even it does not involve any consideration it still falls as Gift
Enterprise, which was equally banned by the Postal Law.
ISSUE:
Whether the petition states a sufficient cause of action for declaratory relief?
Whether or not the scheme proposed by Caltex the appellee is within the coverage
of the prohibitive provisions of the Postal Law?
HELD:
I.
By express mandate of Section 1 of Rule 66 of the old Rules of Court which deals
with the applicability to invoke declaratory relief which states: Declaratory relief is
available to person whose rights are affected by a statute, to determine any
question of construction or validity arising under the statute and for a declaration of
rights thereunder.
In amplification, conformably established jurisprudence on the matter, laid down
certain conditions:

There must be a justiciable controversy.


The controversy must be between persons whose interests are adverse.
The party seeking declaratory relief must have a legal interest in the controversy.
The issue involved must be ripe for judicial determination.
With the appellees bent to hold the contest and the appellants threat to issue a
fraud order if carried out, the contenders are confronted by an ominous shadow of
imminent and inevitable litigation unless their differences are settled and stabilized
by a declaration. And, contrary to the insinuation of the appellant, the time is long
past when it can rightly be said that merely the appellees desires are thwarted by
its own doubts, or by the fears of others which admittedly does not confer a
cause of action. Doubt, if any there was, has ripened into a justiciable controversy
when, as in the case at bar, it was translated into a positive claim of right which is
actually contested.
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.
It is not amiss to point out at this juncture that the conclusion we have herein just
reached is not without precedent. In Liberty Calendar Co. vs. Cohen, 19 N.J., 399,
117 A. 2d., 487, where a corporation engaged in promotional advertising was
advised by the county prosecutor that its proposed sales promotion plan had the
characteristics of a lottery, and that if such sales promotion were conducted, the
corporation would be subject to criminal prosecution, it was held that the
corporation was entitled to maintain a declaratory relief action against the county
prosecutor to determine the legality of its sales promotion plan.
II.
Is the Contest Scheme a Lottery?
Lottery

Extends to all schemes for the distribution of prizes by chance

e.g. policy playing, gift exhibitions, prize concerts, raffles and fairs as well as various
forms of gambling.
Three Essential Elements:
Consideration

Prize

3. Chance
No, according to the Supreme Court, the contest scheme is not a lottery but
it appears to be more of a gratuitous distribution since nowhere in the rules is any
requirements that any fee be paid, any merchandise be bought, any services be
rendered, or any value whatsoever be given for the privilege to participate. Since, a
prospective contestant has to do is go to a Caltex Station, request for the entry form
which is available on demand and accomplish and submit the same for the drawing
of the winner. Because of this, the contest fails to exhibit any discernible
consideration which would brand it as a lottery.
Moreover, 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 it does condemn as criminal scheme in which a valuable
consideration of some kind is paid directly or indirectly for the chance to draw a
prize.
Is the scheme, as sales promotion which would benefit the sponsor in the way of
increased patronage be considered as a consideration and thus violates the Postal
Law?
No, the required element of consideration does not consist of the benefit
derived by the sponsors of the contest. The true test lies on whether or not the
participant pays a valuable consideration for the chance of winning and not whether
or not those conducting the enterprise receiver something of value for the
distribution of the prize.
Is the Contest Scheme a Gift Enterprise?
Even if the term Gift Enterprise is not yet defined explicitly, there appears to
be a consensus among lexicographers and standard authorities that the term is
common applied to a sporting artifice of under which goods are sold for their market
value but by way of inducement to purchase the product, the purchaser is given a
chance to win a prize.
And thus, the term of gift enterprise cannot be established in the case at bar
since there is not sale of anything to which the chance offered is attached as an
inducement to the purchaser. The contest is open to all qualified contestant
irrespective of whether or not they buy the appellees products.
The lesson that we derive from this state of the pertinent jurisprudence is that every
case must be resolved upon the particular phraseology of the applicable statutory
provision. It is only logical that the term under a construction should be accorded no

other meaning than that which is consistent with the nature of the word associated
therewith.
In the end, the Supreme Court ruled out that under the prohibitive provision of the
Postal Law, gift enterprise and similar schemes therein contemplated are
condemnable only if, like lotteries, they involve the element of consideration.
Finding non in the contest, it was ruled out that the appellee may not be denied the
use of the mails for the purpose thereof.
Or

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.
Issue(s):
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 wellknown 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.

PCFI v. NTC
G.R. No. L-63318 November 25, 1983
FACTS:
Private respondent PLDT filed an application with the NTC for the approval of a
revised schedule for its Subscriber Investment Plan (SIP). The NTC issued an exparte order provisionally approving the revised schedule which, however, was set
aside by this Court on August 31, 1982. The Court therein ruled that "there was
necessity of a hearing by the Commission before it should have acted on the
application of the PLDT. On November 22, 1982, the NTC rendered the questioned
decision permanently approving PLDT's new and increased SIP rates. It is the
submission of petitioner that the SIP schedule presented by the PLDT is pre-mature
and, therefore, illegal and baseless, because the NTC has not yet promulgated the
required rules and regulations implementing Section 2 of Presidential Decree No.
217.
ISSUE:
Whether or not respondent acted with grave abuse of discretion when it approved
the Revised Subscriber Investment Plan (SIP) of respondent PLDT in the absence of
specific rules and regulations implementing Presidential Decree No. 217.
HELD:
There is merit in the contention of petitioner that it is the duty of respondent NTC to
promulgate rules and regulations. In the separate opinion of Justice Abad Santos, it
is said that the case involves a simple problem of statutory construction - that of
Section 2 of Presidential Decree No. 217. The decision sustained the petitioner's
contention that it is the duty of NTC to first promulgate rules and regulations. The
resolution does not subscribe to the view that the NTC should or must promulgate
rules and regulations because the decree must be given its ordinary meaning; the
word used is the permissive "may" and not the mandatory "shall." The nonunanimous resolution thus relies on the canons index animi sermo est (speech is
the indication of intent) and a verba legis non est recedendum (from the words of

the statute there should be no departure). Any lawyer of modest sophistication


knows that canons of statutory construction march in pairs of opposite. Thus with
the canons above mentioned we have the following opposite: verba intentioni, non
e contra, debent inservire (words ought to be more subservient to the intent and
not the intent to the words). It is an elementary rule in statutory construction that
the word "may" in a statute is permissive while the word "shall" is mandatory. The
rule, however, is not absolute. The literal interpretation of the words of an act
should not prevail if it creates a result contrary to the apparent intention of the
legislature and if the words are sufficiently flexible to admit of a construction which
will effectuate the legislative intention. In the case at bar compelling reasons dictate
that the provision of the decree should be construed as mandatory rather than
merely directory. There is no justification for the rate increase of the revised
schedule of PLDT's SIP. It is untimely, considering the present economic condition
obtaining in the country. The approved rate defeats the purpose of the decree which
is to spread ownership among the wide base of investors. Accordingly, the decision
of NTC is annulled and set aside.

National Federation of Labor (NFL) v. Eisma


GR L-61236, 31 January 1984 (127 SCRA 419)
En Banc, Fernando (p): 9 concur, 1 concur with comments, 1 took no part, 1 on leave
Facts: On 5 March 1982, the National Federation of Labor filed with the Ministry of Labor and Employment (Labor
Relations Division, Zamboanga City), a petition for direct certification as the sole exclusive collective bargaining
representative of the monthly paid employees at the Lumbayao manufacturing plant of the Zamboanga Wood
Products, Inc. (Zambowood). On 17 April 1982, such employees charged the firm before the same office for
underpayment of monthly living allowances. On 3 May 1982, the union issued a notice of strike against the firm,
alleging illegal termination of Dionisio Estioca, president of the said local union; unfair labor practice; nonpayment
of living allowances; and employment of oppressive alien management personnel without proper permit. The
strike began on 23 May 1982.
On 9 July 1982, Zambowood filed a complaint with the trial court against the officers and members of the union,
for damages for obstruction of private property with prayer for preliminary injunction and/or restraining order.
The union filed a motion for the dismissal and for the dissolution of the restraining order, and opposition to the
issuance of the writ of preliminary injunction, contending that the incidents of picketing are within the exclusive
jurisdiction of the Labor Arbiter pursuant to Batas Pambansa 227 (Labor Code, Article 217) and not to the Court of
First Instance. The motion was denied. Hence, the petition for certiorari.
Issue: Whether construction of the law is required to determine jurisdiction.
Held: The first and fundamental duty of courts is to apply the law. Construction and interpretation come only after
it has been demonstrated that application is impossible or inadequate without them.
Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority which organizes
the court; and it is given only by law. Jurisdiction is never presumed; it must be conferred by law in words that do

not admit of doubt. Since the jurisdiction of courts and judicial tribunals is derived exclusively from the statutes of
the forum, the issue should be resolved on the basis of the law or statute in force. Therefore, since (1) the original
wording of Article 217 vested the labor arbiters with jurisdiction; since (2) Presidential Decree 1691 reverted the
jurisdiction with respect to money claims of workers or claims for damages arising from employer-employee
relations to the labor arbiters after Presidential Decree 1367 transferred such jurisdiction to the ordinary courts,
and since (3) Batas Pambansa 130 made no change with respect to the original and exclusive jurisdiction of Labor
Arbiters with respect to money claims of workers or claims for damages arising from employer-employee relations;
Article 217 is to be applied the way it is worded. The exclusive original jurisdiction of a labor arbiter is therein
provided for explicitly. It means, it can only mean, that a court of first instance judge then, a regional trial court
judge now, certainly acts beyond the scope of the authority conferred on him by law when he entertained the suit
for damages, arising from picketing that accompanied a strike.
The Supreme Court, thus, granted the writ of certiorari, and nullified and set aside the 20 July 1982 order issued
by the court a quo. It granted the writ of prohibition, and enjoined the Judge of said court, or whoever acts in his
behalf in the RTC to which this case is assigned, from taking any further action on the civil case (Civil Case 716
[2751]), except for the purpose of dismissing it. It also made permanent the restraining order issued on 5 August
1982.

Daoang vs. Municipal Judge of San Nicolas


Daoang v. Municipal Judge of San Nicolas
GR L-34568, 28 March 1988 (159 SCRA 369)
Facts:
On 23 March 1971, spouses Antero and Amanda Agonoy filed a petition with the
Municipal Court of San Nicolas, Ilocos Norte seeking the adoption of minors Quirino
Bonilla and Wilson Marcos. However, minors Roderick and Rommel Daoang, assisted
by their father and guardian ad litem, the petitioners herein filed an opposition to
the said adoption. They contended that the spouses Antero and Amanda Agonoy
had a legitimate daughter named Estrella Agonoy, oppositors mother, who died on 1
March 1971, and therefore said spouses were disqualified to adopt under Article 335
of the Civil Code, which provides that those who have legitimate, legitimated,
acknowledged natural children or children by legal fiction cannot adopt.
Issue: Whether the spouses Antero Agonoy and Amanda Ramos are disqualified to
adopt under paragraph 1 of Article 335 of the Civil Code.
Held:
The words used in paragraph (1) of Article 335 of the Civil Code, in enumerating the
persons who cannot adopt, are clear and unambiguous. When the New Civil Code
was adopted, it changed the word descendant, found in the Spanish Civil Code to
which the New Civil Code was patterned, to children. The children thus mentioned

have a clearly defined meaning in law and do not include grandchildren. Well known
is the rule of statutory construction to the effect that a statute clear and
unambiguous on its face need not be interpreted. The rule is that only statutes with
an ambiguous or doubtful meaning may be the subjects of statutory construction. In
the present case, Roderick and Rommel Daoang, the grandchildren of Antero
Agonoy and Amanda Ramos-Agonoy, cannot assail the adoption of Quirino Bonilla
and Wilson Marcos by the Agonoys.
The Supreme Court denied the petition, and affirmed the judgment of the Municipal
Court of San Nicolas, Ilocos Norte (Special Proceedings 37), wthout pronouncement
as to costs.
Or