G.R. No.

L-19650 September 29, 1966

CALTEX (PHILIPPINES), INC., petitioner-appellee,

vs.
ENRICO PALOMAR, in his capacity as THE POSTMASTER GENERAL, respondent-appellant.

Office of the Solicitor General for respondent and appellant.

Ross, Selph and Carrascoso for petitioner and appellee.

CASTRO, J.:

In the year 1960 the Caltex (Philippines) Inc. (hereinafter referred to as Caltex) conceived and laid
the groundwork for a promotional scheme calculated to drum up patronage for its oil products.
Denominated "Caltex Hooded Pump Contest", it calls for participants therein to estimate the actual
number of liters a hooded gas pump at each Caltex station will dispense during a specified period.
Employees of the Caltex (Philippines) Inc., its dealers and its advertising agency, and their
immediate families excepted, participation is to be open indiscriminately to all "motor vehicle owners
and/or licensed drivers". For the privilege to participate, no fee or consideration is required to be
paid, no purchase of Caltex products required to be made. Entry forms are to be made available
upon request at each Caltex station where a sealed can will be provided for the deposit of
accomplished entry stubs.

A three-staged winner selection system is envisioned. At the station level, called "Dealer Contest",
the contestant whose estimate is closest to the actual number of liters dispensed by the hooded
pump thereat is to be awarded the first prize; the next closest, the second; and the next, the third.
Prizes at this level consist of a 3-burner kerosene stove for first; a thermos bottle and a Ray-O-Vac
hunter lantern for second; and an Everready Magnet-lite flashlight with batteries and a screwdriver
set for third. The first-prize winner in each station will then be qualified to join in the "Regional
Contest" in seven different regions. The winning stubs of the qualified contestants in each region will
be deposited in a sealed can from which the first-prize, second-prize and third-prize winners of that
region will be drawn. The regional first-prize winners will be entitled to make a three-day all-
expenses-paid round trip to Manila, accompanied by their respective Caltex dealers, in order to take
part in the "National Contest". The regional second-prize and third-prize winners will receive cash
prizes of P500 and P300, respectively. At the national level, the stubs of the seven regional first-
prize winners will be placed inside a sealed can from which the drawing for the final first-prize,
second-prize and third-prize winners will be made. Cash prizes in store for winners at this final stage
are: P3,000 for first; P2,000 for second; Pl,500 for third; and P650 as consolation prize for each of
the remaining four participants.

Foreseeing the extensive use of the mails not only as amongst the media for 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, having in view
sections 1954(a), 1982 and 1983 of the Revised Administrative Code, the pertinent provisions of
which read as follows:

SECTION 1954. Absolutely non-mailable matter. — No matter belonging to any of the

following classes, whether sealed as first-class matter or not, shall be imported into the
Philippines through the mails, or to be deposited in or carried by the mails of the Philippines,
or be delivered to its addressee by any officer or employee of the Bureau of Posts:
 Written or printed matter in any form advertising, describing, or in any manner pertaining to,
or conveying or purporting to convey any information concerning any lottery, gift enterprise,
or similar scheme depending in whole or in part upon lot or chance, or any scheme, device,
or enterprise for obtaining any money or property of any kind by means of false or fraudulent
pretenses, representations, or promises.

"SECTION 1982. Fraud orders.—Upon satisfactory evidence that any person or company is
engaged in conducting 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, or that any person or
company is conducting any scheme, device, or enterprise for obtaining money or property of
any kind through the mails by means of false or fraudulent pretenses, representations, or
promises, the Director of Posts may instruct any postmaster or other officer or employee of
the Bureau to return to the person, depositing the same in the mails, with the word
"fraudulent" plainly written or stamped upon the outside cover thereof, any mail matter of
whatever class mailed by or addressed to such person or company or the representative or
agent of such person or company.

SECTION 1983. Deprivation of use of money order system and telegraphic transfer
service.—The Director of Posts may, upon evidence satisfactory to him that any person or
company is engaged in conducting 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, or that
any person or company is conducting any scheme, device, or enterprise for obtaining money
or property of any kind through the mails by means of false or fraudulent pretenses,
representations, or promise, forbid the issue or payment by any postmaster of any postal
money order or telegraphic transfer to said person or company or to the agent of any such
person or company, whether such agent is acting as an individual or as a firm, bank,
corporation, or association of any kind, and may provide by regulation for the return to the
remitters of the sums named in money orders or telegraphic transfers drawn in favor of such
person or company or its agent.

The overtures were later formalized in a letter to the Postmaster General, dated October 31, 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 opined that the scheme falls within the purview of the provisions
aforesaid and declined to grant the requested clearance. In its counsel's letter of December 7, 1960,
Caltex sought a reconsideration of the foregoing stand, stressing that there being involved no
consideration in the part of any contestant, the contest was not, under controlling authorities,
condemnable as a lottery. Relying, however, on an opinion rendered by the Secretary of Justice on
an unrelated case seven years before (Opinion 217, Series of 1953), the Postmaster General
maintained his view that the contest involves consideration, or that, if it does not, it is nevertheless a
"gift enterprise" which is equally banned by the Postal Law, and in his letter of December 10, 1960
not only denied the use of the mails for purposes of the proposed contest but as well threatened that
if the contest was conducted, "a fraud order will have to be issued against it (Caltex) and all its
representatives".

Caltex thereupon invoked judicial intervention by filing the present petition for declaratory relief
against Postmaster General Enrico Palomar, 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". After issues
were joined and upon the respective memoranda of the parties, the trial court rendered judgment as
follows:
 In view of the foregoing considerations, the Court holds that the proposed 'Caltex Hooded
Pump Contest' announced to be conducted by the petitioner under the rules marked as
Annex B of the petitioner does not violate the Postal Law and the respondent has no right to
bar the public distribution of said rules by the mails.

The respondent appealed.

The parties are now before us, arrayed against each other upon two basic issues: first, whether the
petition states a sufficient cause of action for declaratory relief; and second, whether the proposed
"Caltex Hooded Pump Contest" violates the Postal Law. We shall take these up in seriatim.

1. By express mandate of section 1 of Rule 66 of the old Rules of Court, which was the applicable
legal basis for the remedy at the time it was invoked, declaratory relief is available to any 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 his rights thereunder" (now section 1, Rule 64,
Revised Rules of Court). In amplification, this Court, conformably to established jurisprudence on the
matter, laid down certain conditions sine qua non therefor, to wit: (1) there must be a justiciable
controversy; (2) the controversy must be between persons whose interests are adverse; (3) the party
seeking declaratory relief must have a legal interest in the controversy; and (4) the issue involved
must be ripe for judicial determination (Tolentino vs. The Board of Accountancy, et al., G.R. No. L-
3062, September 28, 1951; Delumen, et al. vs. Republic of the Philippines, 50 O.G., No. 2, pp. 576,
578-579; Edades vs. Edades, et al., G.R. No. L-8964, July 31, 1956). The gravamen of the
appellant's stand being that the petition herein states no sufficient cause of action for declaratory
relief, our duty is to assay the factual bases thereof upon the foregoing crucible.

As we look in retrospect at the incidents that generated the present controversy, a number of
significant points stand out in bold relief. The appellee (Caltex), as a business enterprise of some
consequence, concededly has the unquestioned right to exploit every legitimate means, and to avail
of all appropriate media to advertise and stimulate increased patronage for its products. In contrast,
the appellant, as the authority charged with the enforcement of the Postal Law, admittedly has the
power and the duty to suppress transgressions thereof — particularly thru the issuance of fraud
orders, under Sections 1982 and 1983 of the Revised Administrative Code, against legally non-
mailable schemes. Obviously pursuing its right aforesaid, the appellee laid out plans for the sales
promotion scheme hereinbefore detailed. To forestall possible difficulties in the dissemination of
information thereon thru the mails, amongst other media, it was found expedient to request the
appellant for an advance clearance therefor. However, likewise by virtue of his jurisdiction in the
premises and construing the pertinent provisions of the Postal Law, the appellant saw a violation
thereof in the proposed scheme and accordingly declined the request. A point of difference as to the
correct construction to be given to the applicable statute was thus reached. Communications in
which the parties expounded on their respective theories were exchanged. The confidence with
which the appellee insisted upon its position was matched only by the obstinacy with which the
appellant stood his ground. And this impasse was climaxed by the appellant's open warning to the
appellee that if the proposed contest was "conducted, a fraud order will have to be issued against it
and all its representatives."

Against this backdrop, the stage was indeed set for the remedy prayed for. The appellee's insistent
assertion of its claim to the use of the mails for its proposed contest, and the challenge thereto and
consequent denial by the appellant of the privilege demanded, undoubtedly spawned a live
controversy. The justiciability of the dispute cannot be gainsaid. There is an active antagonistic
assertion of a legal right on one side and a denial thereof on the other, concerning a real — not a
mere theoretical — question or issue. The contenders are as real as their interests are substantial.
To the appellee, the uncertainty occasioned by the divergence of views on the issue of construction
hampers or disturbs its freedom to enhance its business. To the appellant, the suppression of the
appellee's proposed contest believed to transgress a law he has sworn to uphold and enforce is an
unavoidable duty. With the appellee's bent to hold the contest and the appellant's threat to issue a
fraud order therefor if carried out, the contenders are confronted by the ominous shadow of an
imminent and inevitable litigation unless their differences are settled and stabilized by a tranquilizing
declaration (Pablo y Sen, et al. vs. Republic of the Philippines, G.R. No. L-6868, April 30, 1955).
And, contrary to the insinuation of the appellant, the time is long past when it can rightly be said that
merely the appellee's "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 (III Moran, Comments on the Rules of Court, 1963 ed., pp. 132-133, citing:
Woodward vs. Fox West Coast Theaters, 36 Ariz., 251, 284 Pac. 350).

We cannot hospitably entertain the appellant's pretense that there is here no question of
construction because the said appellant "simply applied the clear provisions of the law to a given set
of facts as embodied in the rules of the contest", hence, there is no room for declaratory relief. The
infirmity of this pose lies in the fact that it proceeds from the assumption that, if the circumstances
here presented, the construction of the legal provisions can be divorced from the matter of their
application to the appellee's contest. This is not feasible. Construction, verily, 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 (Black, Interpretation of Laws, p.
1). This is precisely the case here. Whether or not the scheme proposed by the appellee is within the
coverage of the prohibitive provisions of the Postal Law inescapably requires an inquiry into the
intended meaning of the words used therein. To our mind, this is as much a question of construction
or interpretation as any other.

Nor is it accurate to say, as the appellant intimates, that a pronouncement on the matter at hand can
amount to nothing more than an advisory opinion the handing down of which is anathema to a
declaratory relief action. Of course, no breach of the Postal Law has as yet been committed. Yet, the
disagreement over the construction thereof is no longer nebulous or contingent. It has taken a fixed
and final shape, presenting clearly defined legal issues susceptible of immediate resolution. With the
battle lines drawn, in a manner of speaking, the propriety — nay, the necessity — of setting the
dispute at rest before it accumulates the asperity distemper, animosity, passion and violence of a
full-blown battle which looms ahead (III Moran, Comments on the Rules of Court, 1963 ed., p. 132
and cases cited), cannot but be conceded. Paraphrasing the language in Zeitlin vs. Arnebergh 59
Cal., 2d., 901, 31 Cal. Rptr., 800, 383 P. 2d., 152, cited in 22 Am. Jur., 2d., p. 869, to deny
declaratory relief to the appellee in the situation into which it has been cast, would be to force it to
choose between undesirable alternatives. If it cannot obtain a final and definitive pronouncement as
to whether the anti-lottery provisions of the Postal Law apply to its proposed contest, it would be
faced with these choices: If it launches the contest and uses the mails for purposes thereof, it not
only incurs the risk, but is also actually threatened with the certain imposition, of a fraud order with
its concomitant stigma which may attach even if the appellee will eventually be vindicated; if it
abandons the contest, it becomes a self-appointed censor, or permits the appellant to put into effect
a virtual fiat of previous censorship which is constitutionally unwarranted. As we weigh these
considerations in one equation and in the spirit of liberality with which the Rules of Court are to be
interpreted in order to promote their object (section 1, Rule 1, Revised Rules of Court) — which, in
the instant case, is to settle, and afford relief from uncertainty and insecurity with respect to, rights
and duties under a law — we can see in the present case any imposition upon our jurisdiction or any
futility or prematurity in our intervention.

The appellant, we apprehend, underrates the force and binding effect of the ruling we hand down in
this case if he believes that it will not have the final and pacifying function that a declaratory
judgment is calculated to subserve. At the very least, the appellant will be bound. But more than this,
he obviously overlooks that in this jurisdiction, "Judicial decisions applying or interpreting the law
shall form a part of the legal system" (Article 8, Civil Code of the Philippines). In effect, judicial
decisions assume the same authority as the statute itself and, until authoritatively abandoned,
necessarily become, to the extent that they are applicable, the criteria which must control the
actuations not only of those called upon to abide thereby but also of those in duty bound to enforce
obedience thereto. Accordingly, we entertain no misgivings that our resolution of this case will
terminate the controversy at hand.

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. In pari materia, see also: Bunis vs. Conway, 17
App. Div. 2d., 207, 234 N.Y.S. 2d., 435; Zeitlin vs. Arnebergh, supra; Thrillo, Inc. vs. Scott, 15 N.J.
Super. 124, 82 A. 2d., 903.

In fine, we hold that the appellee has made out a case for declaratory relief.

2. 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". Upon these words hinges the resolution of the second issue posed
in this appeal.

Happily, this is not an altogether untrodden judicial path. As early as in 1922, in "El Debate", Inc. vs.
Topacio, 44 Phil., 278, 283-284, which significantly dwelt on the power of the postal authorities
under the abovementioned provisions of the Postal Law, this Court declared that —

While countless definitions of lottery have been attempted, the authoritative one for this
jurisdiction is that of the United States Supreme Court, in analogous cases having to do with
the power of the United States Postmaster General, viz.: The term "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: First, consideration; second, prize; and third, chance. (Horner vs. States [1892],
147 U.S. 449; Public Clearing House vs. Coyne [1903], 194 U.S., 497; U.S. vs. Filart and
Singson [1915], 30 Phil., 80; U.S. vs. Olsen and Marker [1917], 36 Phil., 395; U.S. vs. Baguio
[1919], 39 Phil., 962; Valhalla Hotel Construction Company vs. Carmona, p. 233, ante.)

Unanimity there is in all quarters, and we agree, that the elements of prize and chance are too
obvious in the disputed scheme to be the subject of contention. Consequently as the appellant
himself concedes, the field of inquiry is narrowed down to the existence of the element of
consideration therein. Respecting this matter, our task is considerably lightened inasmuch as in the
same case just cited, this Court has laid down a definitive yard-stick in the following terms —

In respect to the last element of consideration, 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.

Reverting to the rules of the proposed contest, we are struck by the clarity of the language in which
the invitation to participate therein is couched. Thus —

No puzzles, no rhymes? You don't need wrappers, labels or boxtops? You don't have to buy
anything? Simply estimate the actual number of liter the Caltex gas pump with the hood at
your favorite Caltex dealer will dispense from — to —, and win valuable prizes . . . ." .

Nowhere in the said rules is any requirement that any fee be paid, any merchandise be bought, any
service be rendered, or any value whatsoever be given for the privilege to participate. A prospective
contestant has but to 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. Viewed from all angles or turned
inside out, the contest fails to exhibit any discernible consideration which would brand it as a lottery.
Indeed, even as we head the stern injunction, "look beyond the fair exterior, to the substance, in
order to unmask the real element and pernicious tendencies which the law is seeking to prevent" ("El
Debate", Inc. vs. Topacio, supra, p. 291), we find none. In our appraisal, the scheme does not only
appear to be, but actually is, a gratuitous distribution of property by chance.

There is no point to the appellant's insistence that non-Caltex customers who may buy Caltex
products simply to win a prize would actually be indirectly paying a consideration for the privilege to
join the contest. Perhaps this would be tenable if the purchase of any Caltex product or the use of
any Caltex service were a pre-requisite to participation. But it is not. A contestant, it hardly needs
reiterating, does not have to buy anything or to give anything of value. 1awphîl.nèt

Off-tangent, too, is the suggestion that the scheme, being admittedly for sales promotion, would
naturally benefit the sponsor in the way of increased patronage by those who will be encouraged to
prefer Caltex products "if only to get the chance to draw a prize by securing entry blanks". The
required element of consideration does not consist of the benefit derived by the proponent of the
contest. The true test, as laid down in People vs. Cardas, 28 P. 2d., 99, 137 Cal. App. (Supp.) 788,
is whether the participant pays a valuable consideration for the chance, and not whether those
conducting the enterprise receive something of value in return for the distribution of the prize.
Perspective properly oriented, the standpoint of the contestant is all that matters, not that of the
sponsor. The following, culled from Corpus Juris Secundum, should set the matter at rest:

The fact that the holder of the drawing expects thereby to receive, or in fact does receive,
some benefit in the way of patronage or otherwise, as a result of the drawing; does not
supply the element of consideration. Griffith Amusement Co. vs. Morgan, Tex. Civ. App., 98
S.W., 2d., 844" (54 C.J.S., p. 849).

Thus enlightened, we join the trial court in declaring that the "Caltex Hooded Pump Contest"
proposed by the appellee is not a lottery that may be administratively and adversely dealt with under
the Postal Law.

But it may be asked: Is it not at least a "gift enterprise, or scheme for the distribution of money, or of
any real or personal property by lot, chance, or drawing of any kind", which is equally prescribed?
Incidentally, while the appellant's brief appears to have concentrated on the issue of consideration,
this aspect of the case cannot be avoided if the remedy here invoked is to achieve its tranquilizing
effect as an instrument of both curative and preventive justice. Recalling that the appellant's action
was predicated, amongst other bases, upon Opinion 217, Series 1953, of the Secretary of Justice,
which opined in effect that a scheme, though not a lottery for want of consideration, may
nevertheless be a gift enterprise in which that element is not essential, the determination of whether
or not the proposed contest — wanting in consideration as we have found it to be — is a prohibited
gift enterprise, cannot be passed over sub silencio.

While an all-embracing concept of the term "gift enterprise" is yet to be spelled out in explicit words,
there appears to be a consensus among lexicographers and standard authorities that the term is
commonly applied to a sporting artifice of under which goods are sold for their market value but by
way of inducement each purchaser is given a chance to win a prize (54 C.J.S., 850; 34 Am. Jur.,
654; Black, Law Dictionary, 4th ed., p. 817; Ballantine, Law Dictionary with Pronunciations, 2nd ed.,
p. 55; Retail Section of Chamber of Commerce of Plattsmouth vs. Kieck, 257 N.W., 493, 128 Neb.
13; Barker vs. State, 193 S.E., 605, 56 Ga. App., 705; Bell vs. State, 37 Tenn. 507, 509, 5 Sneed,
507, 509). As thus conceived, the term clearly cannot embrace the scheme at bar. As already noted,
there is no sale of anything to which the chance offered is attached as an inducement to the
purchaser. The contest is open to all qualified contestants irrespective of whether or not they buy the
appellee's products.

Going a step farther, however, and assuming that the appellee's contest can be encompassed within
the broadest sweep that the term "gift enterprise" is capable of being extended, we think that the
appellant's pose will gain no added comfort. As stated in the opinion relied upon, rulings there are
indeed holding that a gift enterprise involving an award by chance, even in default of the element of
consideration necessary to constitute a lottery, is prohibited (E.g.: Crimes vs. States, 235 Ala 192,
178 So. 73; Russell vs. Equitable Loan & Sec. Co., 129 Ga. 154, 58 S.E., 88; State ex rel. Stafford
vs. Fox-Great Falls Theater Corporation, 132 P. 2d., 689, 694, 698, 114 Mont. 52). But this is only
one side of the coin. Equally impressive authorities declare that, like a lottery, a gift enterprise comes
within the prohibitive statutes only if it exhibits the tripartite elements of prize, chance and
consideration (E.g.: Bills vs. People, 157 P. 2d., 139, 142, 113 Colo., 326; D'Orio vs. Jacobs, 275 P.
563, 565, 151 Wash., 297; People vs. Psallis, 12 N.Y.S., 2d., 796; City and County of Denver vs.
Frueauff, 88 P., 389, 394, 39 Colo., 20, 7 L.R.A., N.S., 1131, 12 Ann. Cas., 521; 54 C.J.S., 851,
citing: Barker vs. State, 193 S.E., 605, 607, 56 Ga. App., 705; 18 Words and Phrases, perm. ed., pp.
590-594). The apparent conflict of opinions is explained by the fact that the specific statutory
provisions relied upon are not identical. In some cases, as pointed out in 54 C.J.S., 851, the terms
"lottery" and "gift enterprise" are used interchangeably (Bills vs. People, supra); in others, the
necessity for the element of consideration or chance has been specifically eliminated by statute. (54
C.J.S., 351-352, citing Barker vs. State, supra; State ex rel. Stafford vs. Fox-Great Falls Theater
Corporation, supra). The lesson that we derive from this state of the pertinent jurisprudence is,
therefore, that every case must be resolved upon the particular phraseology of the applicable
statutory provision.

Taking this cue, we note that in the Postal Law, the term in question is used in association with the
word "lottery". With the meaning of lottery settled, and consonant to the well-known principle of legal
hermeneutics noscitur a sociis — which Opinion 217 aforesaid also relied upon although only insofar
as the element of chance is concerned — 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. 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.

This conclusion firms up in the light of the mischief sought to be remedied by the law, resort to the
determination thereof being an accepted extrinsic aid in statutory construction. Mail fraud orders, it is
axiomatic, are designed to prevent the use of the mails as a medium for disseminating printed
matters which on grounds of public policy are declared non-mailable. As applied to lotteries, gift
enterprises and similar schemes, justification lies in the recognized necessity to suppress their
tendency to inflame the gambling spirit and to corrupt public morals (Com. vs. Lund, 15 A. 2d., 839,
143 Pa. Super. 208). Since in gambling it is inherent that something of value be hazarded for a
chance to gain a larger amount, it follows ineluctably that where no consideration is paid by the
contestant to participate, the reason behind the law can hardly be said to obtain. If, as it has been
held —

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. City of Roswell vs. Jones, 67 P. 2d., 286, 41 N.M., 258." (25 Words and
Phrases, perm. ed., p. 695, emphasis supplied).

we find no obstacle in saying the same respecting a gift enterprise. In the end, we are persuaded to
hold that, under the prohibitive provisions of the Postal Law which we have heretofore examined, gift
enterprises and similar schemes therein contemplated are condemnable only if, like lotteries, they
involve the element of consideration. Finding none in the contest here in question, we rule that the
appellee may not be denied the use of the mails for purposes thereof.

Recapitulating, we hold that the petition herein states a sufficient cause of action for declaratory
relief, and that the "Caltex Hooded Pump Contest" as described in the rules submitted by the
appellee does not transgress the provisions of the Postal Law.

ACCORDINGLY, the judgment appealed from is affirmed. No costs.

Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar and
Sanchez, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-29906 January 30, 1976

RODOLFO GENERAL and CARMEN GONTANG, petitioners,

vs.
LEONCIO BARRAMEDA, respondent.

Augusto A. Pardalis for petitioners.

E.V. Guevarra for respondent.

ESGUERRA, J.:

Petition for certiorari to review the decision of the Court of Appeals (Second Division) in CA-G.R. No.
38363-R, entitled "Leoncio Barrameda, plaintiff-appellant, vs. Development Bank of the Philippines
(Naga Branch, Naga City), Rodolfo General and Carmen Gontang, defendants-appellees," which
reversed the decision of the Court of First Instance of Camarines Sur in its Civil Case No. 5697,
"dismissing the complaint with costs against plaintiff".

Appellate Court's decision has the following dispositive portion:

We therefore find that the appealed judgment should be reversed and set aside and
another one entered declaring (1) null and void the sale executed on September 3,
1963, by defendant Development Bank of the Philippines in favor of its defendants
Rodolfo General and Carmen Gontang, (2) T.C.T. No. 5003 cancelled and (3) the
mortgaged property redeemed; and ordering the Clerk of the lower court to deliver
the amount of P7,271.22 deposited to defendants Rodolfo General and Carmen
Gontang and the Register of Deeds to issue a new Transfer Certificate of Title in the
name of plaintiff in lieu of T.C.T. No. 5003 upon payment by him of corresponding
fees; with costs against the defendants in both instances.

Undisputed facts are:

Plaintiff seeks to redeem the land formerly embraced in Transfer Certificate of Title
No. 1418, containing an area of 59.4687 hectares, situated in barrio Taban,
Minalabac Camarines Sur; to annul any and all contracts affecting said property
between the Development Bank of the Philippines (DBP) and Rodolfo General and
Carmen Gontang and to recover damages, attorney's fees and costs.

The land in dispute was mortgaged by plaintiff to the DBP to secure a loan of
P22,000.00. For failure of the mortgagor to pay in full the installments as they fall
due, the mortgagee foreclosed extrajudicially pursuant to the provisions of Act 3135.
On April 23, 1962, the provincial sheriff conducted an auction sale in which the
mortgagee, as the highest bidder, bought the mortgaged property for P7,271.22. On
 May 13, 1963, the sheriff executed a final deed of sale in favor of the DBP (Exhibit 2)
and the DBP executed an affidavit of consolidation of ownership (Exhibit 3). Upon
registration of the sale and affidavit on September 2, 1963 (Exhibit 1), TCT No. 1418
in the name of plaintiff was cancelled and TCT No. 5003 issued to the DBP (Exhibit-
5) in its stead. On September 3, 1963, defendants Rodolfo General and Carmen
Gontang purchased the land from their codefendant. The sale in their favor was
annotated on TCT No. 5003 on November 26, 1963 only.

Prior to the date last mentioned, or on November 20, 1963, plaintiff offered to redeem
the land. In view of the refusal of the DBP to allow the redemption, plaintiff
commenced this suit. The original complaint was filed in court on November 23,
1963. On August 12, 1964, plaintiff deposited with the clerk of court the sum of
P7,271.22, representing the repurchase price of the land.

The trial court held that the one-year period of redemption began to run on April 23,
1962, when the sale at public auction was held, and ended on April 24, 1963; that the
plaintiff's offer to redeem on November 20, 1963 and the deposit of the redemption
price on August 12, 1964 were made beyond the redemption period; and that
defendants Rodolfo General and Carmen Gontang 'are legitimate purchasers for
value.

Two principal issues raised are:

(1) In the interpretation and application of Section 31, Commonwealth Act 459 (Law
that created the Agricultural and Industrial Bank, now Development Bank of the
Philippines) which provides:

The Mortgagor or debtor to the Agricultural and Industrial Bank

whose real property was sold at public auction, judicially or extra-
judicially, for the full or partial payment of an obligation to said bank
shall, within one year from the date of' the auction sale, have the right
to redeem the real property ... (Emphasis supplied),

shall the period of redemption start from the date of auction sale or the date of the
registration of the sale in the register of deeds as the respondent Appellate Court
held?

(2) Were petitioners under obligation to look beyond what appeared in the certificate
of title of their vendor the Development Bank of the Philippines and investigate the
validity of its title before they could be classified as purchasers in good faith?

Petitioners' principal contentions are: that Section 31 of Commonwealth Act No. 459 which created
the Agricultural and Industrial Bank, predecessor of the Rehabilitation Finance Corporation and the
Development Bank of the Philippines, clearly provides that the right to redeem the real property sold
at public auction judicially or extra-judicially may only be exercised "within one year from the date of
the auction sale"; that there is no provision in Commonwealth Act No. 459 expressly stating that the
redemption period of one year shall start from the registration of the certificate of sale in the register
of deeds; that Sec. 31 of C. A. 459 is a specific provision of law which governs redemption of real
property foreclosed by the Agricultural and Industrial Bank (now the Development Bank of the
Philippines), and prescribes the redemption period for both judicial and extra-judicial foreclosures of
mortgage; that insofar as foreclosures of mortgage by banking and financial institutions are
concerned, the period of redemption applicable must be the one prescribed in their respective
charters as, in the case at bar, Section 31, C.A. No. 459; that the ruling in the case of Agbulos vs.
Alberto, G.R. No. L-17483, July 31, 1962, cited by respondent Appellate Court as a basis for its
decision, is not applicable to the case at bar because this Court based its Agbulos ruling on Section
26 (now Sec. 90) of Rule 39 of the Rules of Court, wherein it is not clear when the period of
redemption should start (date when execution sale was conducted, or when the certificate of sale
was executed by sheriff, or when the certificate of sale was registered in the registry of deeds), and
this Court ruled that as the land involved in that case is registered under the Torrens system, the
date of redemption should begin to run from the date of registration, unlike in the case at bar where
Section 31 of Commonwealth Act 459 specifically and clearly provides that the running of the
redemption period shall start from the date of the auction sale; and that the ruling of this Court
in Gonzales vs. P.N.B., 48 Phil. 824, also invoked by respondent Appellate Court as a basis for its
decision, is likewise not applicable to the case at bar because the provisions on the matter of the
P.N.B. Charter, Act No. 2938, are different from that of Commonwealth Act 459. Section 32 of Act
2938, which is now Section 20 of R.A. No. 1300 (PNB Charter) provides that the mortgagor shall
have the right to redeem within one year the sale of the real estate. This is Identical to the provision
appearing in Sec. 26, now Sec. 30, Rule 39, Rules of Court, while under Sec. 31 of Commonwealth
Act 459, the period of redemption should star, on the date of the auction sale, and the latter
provision is applicable specifically and expressly to the case at bar.

It is also petitioners' principal argument that the ruling in Metropolitan Insurance Company,
substituted by spouses Loreto Z. Marcaida and Miguel de Marcaida vs. Pigtain 101 Phil. 1111, 1115-
1116, wherein this Court, in construing Sec. 6 of Act No. 3135, categorically stated that the one year
redemption period shall start from the date of sale and not from the report of the sale or the
registration of the sale certificate in the office of the Register of Deeds, is more applicable to the
present case. The pertinent portion of the decision in the Marcaida case follows:

But again the appellants claim that in this particular case, the statutory redemption
period of one year should begin from December 17, 1954, when the auction sale was
actually recorded in the office of the Register of Deeds of Manila and not from
December 15, 1953, when the sale at public auction of the properties in question
took place. We find its contention to be also untenable in view of the clear provision
of the aforesaid Section 6 of Act No. 3135 to the effect that the right of redemption
should be exercised within one year from the date of the sale. It should not be
overlooked that the extrajudicial sale in question was for foreclosure of a mortgage
and was not by virtue of an ordinary writ of execution in a civil case. ... And since the
appeallants had failed to redeem the land in question within the time allowed by
Section 6 of Act 3135, the appellee has perfect right to require the cancellation of the
attachment lien in question. (Emphasis supplied)

Notwithstanding the impressive arguments presented by petitioners, the crucial issue to determine is
the choice of what rule to apply in determining the start of the one year redemption period, whether
from the date of the auction sale or from that of the registration of the sale with the registry of deeds.
In other words it is whether a literal interpretation of the provision of Section 31 of Commonwealth
Act 459 — that the period of redemption shall start from the date of the auction sale — shall govern,
or whether the words, "auction sale" shall be considered in their ordinary meaning or in the same
sense that site is used in the texts of Section 26, now 30, of Rule 39 of the Rules of Court, and
Section 26 of Act 2938, now Section 20, R.A. 1300 (Charter of PNB). Stated differently, should the
word "sale" used in the above indicated provisions of the Rules of Court and the PNB Charter, under
whichWe ruled that the redemption period shall start from the registration of the sale in the registry of
deeds be applied to foreclosure sales for the DBP and give to the words auction sale" in its charter
the same meaning of "sale" as used in connection with registered land?
We are of the view that a correct solution to the foregoing issue must entail not merely trying to
determine the meaning of the words auction sale" and "sale" in different legislative enactments, but,
more importantly, a determination of the legislative intent which is quite a task to achieve as it
depends more on a determination of the purpose and objective of the law in giving mortgagors a
period of redemptiom of their foreclosed properties. Mortgagors whose properties are foreclosed and
are purchased by the mortgagee as highest bidder at the auction sale are decidedly at a great
disadvatage because almost invariably mortgagors forfeit their properties at a great loss as they are
purchased at nominal costs by the mortgagee himself who ordinarily bids in no more than his credit
or the balance threof at the auction sale. That is the reason why the law gives them a chance to
redeem their properties within a fixed period. It cannot be denied that in all foreclosures of
mortgages and sale of property pursuan to execution, whether judicial or extrajudicial in nature,
under different legislative enactments, a public auction sale is a indispensable pre-requisite to the
valid disposal of properties used as collateral for the obligation. So that whether the legislators in
different laws used as collateral for the obligation. So that whether the legislators in different laws
used the term "sale" or "auction sale" is of no moment, since the presumption is that when they used
those words "sale" and "auction sale" interchangeable in different laws they really referred to only
one act — the sale at public auction indispensably necessary in the disposition of mortgaged
properties and those levied upon to pay civil obligations of their owners.

In the case of Ernesto Salazar, et al. vs. Flor De Lis Meneses, et al.,G.R. No.
L-15378, promulgated July 31, 1963, this Court stated:

The issue decisive of this appeal is the one raised by appellants in their third
assignment of error, which is to this effect: that the lower court erred in not holding
that the period of redemption in this case, as far as appellants are concerned, started
only on May 26, 1956, registered. Should We rule to this effect, it is clear that hen
appellants attempted to exercise their right to redeem, as judgment creditors of the
deceased mortgagor by judgment subsequent to the extrajudicial foreclosure sale,
and when they initiated the present action on October 1, 1956, the period of
redemption had not yer expired.

We find appellants' contention to be meritorious. In the case of Agbulos vs.

Alberto, G.R. No. L-17483, promulgated on July 31, 1962, We held:

The property involved in the present case is registered land. It is the

law in this jurisdiction that when property brought under the operation
of the Land Registration Act sold, the operative act is the registration
of the deed of conveyance. The deed of sale does not take effect this
a conveyance or bind the land it is registered. (Section 50, Act 496;
Tuason vs. Raymundo, 28 Phil. 635; Sikatuna vs. Guevara, 43 Phil.
371; Worcester vs. Ocampo, 34 Phil. 646) (Emphasis supplied)

We find no compelling reason to deviate from the aforequoted ruling and not apply the same to the
present case. To Us petitioners' main contention that there is a great deal of difference in legislative
intent in the use of the words 94 auction sale" in Sec. 31 of Commonwealth Act 459 and the word
"sale" in See. 32 of Act 2938, and See. 30 of Rule 39 of the Rules of Court, pales into insignificance
in the light of Our stand that those words used interchangeably refer to one thing, and that is the
public auction sale required by law in the disposition of properties foreclosed or levied upon. Our
stand in the Salazar case and in those mentioned therein (Garcia vs. Ocampo, G.R. No. L-13029,
June 30, 1959; Gonzales et al. vs. Philippine National Bank et al. 48 Phil. 824) is firmly planted on
the premise that registration of the deed of conveyance for properties brought under the Torrens
System is the operative act to transfer title to the property and registration is also the notice to the
whole world that a transaction involving the same had taken place.

To affirm the previous stand this Court has taken on the question of when the one year period of
redemption should start (from the time of registration of the sale) would better serve the ends of
justice and equity especially in this case, since to rule otherwise would result in preventing the
respondent-mortgagor from redeeming his 59.4687 hectares of land which was acquired by the
Development Bank of the Philippines as the highest bidder at the auction sale for the low price of
only P7,271.22 which was simply the unpaid balance of the mortgage debt of P22,000.00 after the
respondent-mortgagor had paid the sum of P14,728.78. As it is, affirmance of the Appellate Court's
decision would not result in any loss to petitioners since the amount of P7,271.22 they paid to the
Bank will be returned to 'them. What further strengthen's Our stand is the fact found by the
respondent Appellate Court that respondent Barrameda has always been in possession of the
disputed land.

IN THE LIGHT OF THE FOREGOING, We find it no longer necessary to determine whether the
petitioners are purchasers in good faith of the land involved, since the respondent Barrameda
redeemed the mortgaged property within the legal period of redemption and, consequently the sale
of the property executed on September 3, 1963, by the Development Bank of the Philippine in favor
of the petitioners is null and void.

WHEREFORE, the decision of the respondent Appellate Court is affirmed, with costs against
petitioners.

Teehankee (Chairman), Makasiar, Muñoz Palma and Martin, JJ., affirmed.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-11988 April 4, 1918

JACINTO MOLINA, plaintiff-appellee,

vs.
JAMES J. RAFFERTY, Collector of Internal Revenue, defendant-appellant.

Acting Attorney-General Paredes for appellant.

Araneta & Zaragoza for appellee.

FISHER, J.:

After the publication of the decision announced under the date of February 1st., 1918, 1 counsel for
appellee presented a petition for a rehearing. This petition was granted and oral argument of the
motion was permitted. Two of the members of the court, as constituted at the time of the argument
on the motion for a rehearing, were not present when the case was first submitted and did not
participate in the original decision.

Upon the facts, as correctly stated in the original majority decision, a majority of the members of the
court as now constituted is in favor of setting aside the original decision and affirming the judgment
of the trial court.

Plaintiff contends that the fish produced by him are to be regarded as an "agricultural product" within
the meaning of that term as used in paragraph (c) of section 41 of Act No. 2339 (now section 1460
of the Administrative Code of 1917), in forced when the disputed tax was levied, and that he is
therefore exempt from the percentage tax on merchants' sales established by section 40 of Act No.
2339, as amended.

The provision upon which the plaintiff relies reads as follows:

In computing the tax above imposed transactions in the following commodities shall be
excluded: . . . (c) Agricultural products when sold by the producer or owner of the land where
grown, whether in their original state or not. (Act No. 2339, sec. 41.)

The same exemption, with a slight change in wording, is now embodied in section 1460 of the
Administrative Code, of 1917.

The question of law presented by this appeal, as we view, is not whether fish in general constitute an
agricultural products, but whether fish produced as were those upon which the tax in question was
levied are an agricultural product.

As stated by judged Cooley in his great work on taxation:

The underlying principle of all construction is that the intent of the legislature should be
sought in the words employed to express it, and that when found it should be made to
govern, . . . . If the words of the law seem to be of doubtful import, it may then perhaps
 become necessary to look beyond them in order to ascertain what was in the legislative mind
at the time the law was enacted; what the circumstances were, under which the action was
taken; what evil, if any, was meant to be redressed; . . . . And where the law has
contemporaneously been put into operation, and in doing so a construction has necessarily
been put upon it, this construction, especially if followed for some considerable period, is
entitled to great respect, as being very probably a true expression of the legislative purpose,
and is not lightly to be overruled, although it is not conclusive. (Cooley on Taxation [Vol. 1]
3d. Ed., p. 450.)

The first inquiry, therefore, must relate to the purpose of the Legislative had in mind in establishing
the exemption contained in the clause now under consideration. It seems reasonable to assume that
it was due to the belief on the part of the law making body that by exempting agricultural products
from this tax the farming industry would be favored and the development of the resources of the
country encouraged. It is a fact, of which we take judicial cognizance, that there are immense tracts
of public land in this country, at present wholly unproductive, which might be made fruitful by
cultivation, and that large sums of money go abroad every year for the purchase of food substances
which might be grown here. Every dollar's worth of food which the farmer produces and sells in
these Islands adds directly to the wealth of the country. On the other hand, in the process of
distribution of commodities to the ultimate consumer, no direct increase in value results solely from
their transfer from one person to another in the course of commercial transactions. It is fairly to be
inferred from the statute that the object and purpose of the Legislature was, in general terms, to levy
the tax in question, significantly termed the "merchant's tax," upon all persons engaged in making a
profit upon goods produced by others, but to exempt from the tax all persons directly producing
goods from the land. In order to accomplish this purpose the Legislature, instead of attempting an
enumeration of exempted products, has grouped them all under the general designation of
"agricultural products."

It seems to require no argument to demonstrate that it is just as much to the public interest to
encourage the artificial propagation and growth of fish as of corn, pork, milk or any other food
substance. If the artificial production of fish is held not to be included within the exemption of the
statute this conclusion must be based upon the inadequacy of the language used by the Legislature
to express its purpose, rather than the assumption that it was actually intended to exclude producers
of artificially grown fish from the benefits conferred upon producers of other substances brought into
the store of national wealth by the arts of husbandry and animal industry.

While we have no doubt that the land occupied by the ponds in which the fish in question are grown
is agricultural land within the meaning of the Acts of Congress and of the Philippine Commission
under consideration in the case of Map vs. Insular Government (10 Phil. Rep., 175) and others cited
in the original majority opinion, it does not seem to us that this conclusion solves the problem. A man
might cultivate the surface of a tract of land patented to him under the mining law, but the products
of such soil would not for that reason, we apprehend, be any the less "agricultural products."
Conversely, the admission that the land upon which these fishponds are constructed is not to be
classified as mineral or forest land, does not lead of necessity to the conclusion that everything
produced upon them is for that reason alone to be deemed an "agricultural product" within the
meaning of the statute under consideration.

"Agriculture" is an English word made upon of Latin words "ager," a field, and "cultura," cultivation. It
is defined by Webster's New International Dictionary as meaning in its broader sense, "The science
and art of the production of plants and animal useful to man . . ."
In Dillard vs. Webb (55 Ala., 468) it is held that the words "agriculture" includes "the rearing, feeding
and managing of live stock." The same view was expressed in the case of Binzel vs. Grogan (67
Wis., 147).

Webster defines "product" to be "anything that is produced, whether as the result of generation,
growth, labor, or thought ... ," while "grow" is defined in the Century Dictionary as meaning "to cause
to grow; cultivate; produce, raise . . .."

While it is true that in a narrow and restricted sense agricultural products are limited to vegetable
substances directly resulting from the tillage of the soil, it is evident from the definitions quoted that
the term also includes animal which derived their sustenance from vegetable growths, and are
therefore indirectly the product of the land. Thus it has been held that "The product of the dairy and
the product of the poultry yard, while it does not come directly out of the soil is necessarily
connected with the soil . . . and is therefore farm produce. (District of Columbia vs. Oyster, 15 D. C.,
285.)

In the case of Mayor vs. Davis (6 Watts & Sergeant [Penn. Rep.], 269) the court said:

Swine horses, meat cattle, sheep, manure, cordwood, hay, vegetables, fruits, eggs, milk,
butter, lard . . . are strictly produce of the farm . . .

Without attempting to further multiply examples, we think it may safely be asserted that courts and
lexicographers are in accord in holding that the term "agricultural products" is not limited in its
meaning to vegetable growth, but includes everything which serves to satisfy human needs which is
grown upon the land, whether it pertain to the vegetable kingdom, or to the animal kingdom. It is true
that there is no decision which as yet has held that the fish grown in ponds are an agricultural
product, but that is no reason why we should not so hold if we find that such fish fall within the scope
of the meaning of the term. Of necessity, the products of land tend constantly to multiply in number
and variety, as population increases and new demands spring up. In California there are farms
devoted to the growth of frogs for the market. In many places in North America foxes and other
animals usually found wild are reared in confinement for their fur. In Japan land is devoted to the
culture of the silkworm and the growth of the plants necessary for the food of those insects. Bees are
everywhere kept for the wax and honey into which the land is made to produce by those engaged in
these occupations are "agricultural products" in the same sense in which poultry, eggs, and butter
have been held to be agricultural products.

Now, if the purpose of agriculture, in the broader sense of the term, is to obtain from the land the
products to which it is best adapted and through which it will yield the greatest return upon the
expenditure of a given amount of labor and capital, can it not be said that it is just as much an
agricultural process to enclose a given area of land with dykes, flood it with water, grow aquatic
plants in it, and feed fish with the plants so produced as to fence in it and allow poultry to feed upon
the plants naturally or artificially grown upon the surface? In the last analysis the result is the same
— a given area of land produces a certain amount of food. In the one case it is the flesh of poultry, in
the other the flesh of fish. It has been agreed between the parties that an important article of diet
consumed by fish grown in a pond consists of certain marine plants which grow from roots which
affix themselves to the bottom of the pond. In a real sense, therefore, the fish are just as truly a
product of the land as are poultry or swine, living upon its vegetable growths, aquatic or terrestrial.
Thus, land may truly be said to produce fish, although it is true that the producer is not a fisherman.
Neither is one who grows foxes for their pelts a hunter. As contended by counsel, the inquiry is not
whether fish in general constitute an agricultural product, but whether fish artificially grown and fed in
confinement are to be so regarded. Honey produced by one who devotes his land to apiculture might
be so regarded, even if we were to admit that wild honey gathered in the forest is not. Pigeons kept
in domestication and fed by the owner would fall within the definition. Wild pigeons obtained by a
hunter would not. Firewood gathered in a natural forest is not an agricultural product, but firewood
cut from bacauan trees planted for that purpose has been held to be such a product, and its
producer exempt from the merchant's tax. (Mercado vs. Collector of Internal Revenue, 32 Phil. Rep.,
271.) Other comparisons might be made, many of which will be found in the opinion in which two of
the members of the court expressed their dissent from the original majority opinion, but enough have
been given to make our position clear.

During the many hears that the statute before us has been in existence, since it first appeared,
substantially in its present form, in section 142 of Act No. 1189, passed in 1904, no attempt has
been made, until this case arose, to construe it as not applying to fish grown in ponds, and much
weight should be given to this long continued administrative interpretation. The opinion of the
Attorney-General, cited by Justice Malcolm, will be found on examination to have no bearing upon
the present inquiry, as in that case question was, not whether fish grown and fed in ponds were
agricultural products, but whether ". . . fishermen, shell and pearl gatherers . . ." were liable to the
occupation tax. There is nothing in the opinion to indicate that the word "fishermen" was used to
mean men growing fish in ponds, and it must, therefore, be assumed that it was used in its proper
grammatical sense to designate persons engaged in catching fish not artificially produced.

The decision in the case of The United States vs. Laxa (36 Phil. Rep., 670) is not controlling, as the
reasoning upon which it is based was not concurred in by four members of the court. Furthermore,
the Laxa case might be distinguished from the one now under consideration, were it necessary to do
so, in that it has been stipulated in this case that fish cultivated in ponds subsist largely upon aquatic
plants which grow from roots which attach themselves to the bottom of the pond, and are therefore
in a real sense a product of the land, while in the Laxa case the evidence was that they subsisted
solely upon free floating algae.

We are therefore of the opinion, and so hold, that the decision heretofore rendered herein must be
set aside, and the judgment of the lower court affirmed. So ordered.

Arellano, C.J., Torres and Johnson, JJ., concur.

Araullo, J., dissents.

Separate Opinions

STREET, J., concurring:

At the original hearing, I became quite firmly convinced, as I supposed, that the product of a fishery
maintained in the manner shown in this case ought not to be considered an agricultural products,
within the meaning of the provision of the Internal Revenue Law which exempts agricultural products
from the merchant's tax. Upon fuller reflection, and further consideration of the arguments advanced
at the rehearing in favor of the other contention, I have come to the conclusion that I was wrong. I
therefore take this opportunity to recede from my former position and to express my conformity with
the opinion which now becomes the opinion of the majority of the court.

My conformity with the opinion first written was based on the conviction that the term "agricultural
products," as used in this statute, had reference to articles produced by purely agricultural
processes, more especially by the tillage of the fields. As I now view the case, this conception of the
meaning of agricultural is too narrow. It must be admitted that poultry, eggs, pigs, and other ordinary
produce of farm and country are agricultural products within the meaning of the statute; and no
sufficient reason is discernible for excluding fish produced under the conditions revealed in this case.

CARSON, J., dissenting:

I dissent.

As I understand them, the contentions of counsel in support of the motion for a rehearing and
reconsideration are substantially identical with those adduced in briefs and the oral arguments when
the case was originally submitted.

I have heard nothing which would lead me to modify my views or my vote when the case was
decided and the decision promulgated.

MALCOLM, J., dissenting:

This case well illustrates how on the same facts, the same law, and the same authorities, judges can
arrive at diametrically opposed conclusions.

Take the facts. They are stipulated. The only difference is that possibly unconsciously, in order to
fortify the conclusion, the decision of the majority on reconsideration would stress the point that an
important article of diet consumed by fish grown in a pond consists of certain marine plants which
grow from roots which affix themselves to the bottom of the pond, while the original decision as well
as the decision in the Laxa case,1 possibly also in order to fortify their conclusions, would stress the
scientific fact that the food of the bangus includes marine plants, that these algae are of seven
classes, that one of these plants is rooted, that some of the others are very loosely attached to the
ground but not rooted, and that generally the algae float on the water.

Or take the law. The section in dispute is made up of a few simple words. In reality, the meaning of
the phrase, "agricultural products," is only to be ascertained. The primary duty of the court is, of
course, to ascertain legislative intention. But here again the two decisions radically differ. The
decision of the majority on reconsideration in a laudable endeavor to encourage commercial
development would make this the purpose of the law and would follow this idea consistently to the
end. On the other hand, the original decision would start with the same presumption but finding that
to so construe the law would result in judicial amendment must then necessarily reach a different
result; if the Legislature had intended to exempt all classes of domestic products which would
include fish, it would undoubtedly have done so in plain language.

Or take the authorities. The Supreme Court of Georgia (Davis vs. Mayor [1879], 64 Ga., 128) would
confine "agricultural products" to the yield of the soil, as corn, wheat, rye, hay, etc. Possibly this court
was right. The supreme courts Alabama and Wisconsin would go further and would include as"
agricultural products" the rearing, feeding, and management of live stock. In this construction, these
courts may have been right for, as one example, it is merely a matter of comparative profit to the
farmer whether he markets his corn in the ear or on the hoof in the shape of swine. The Supreme
Court of Pennsylvania (Mayor vs. Davis [1843], 6 W. S., 269) would go still further and would include
as "agricultural products" swine, horses, meat, cattle, sheep, manure, cord, wood, hay, poultry
vegetables, fruit, eggs, milk, butter, and lard, that is, domestic animals and products of the farm.
Possibly, this court was right. And now the Supreme Court of the Philippine Islands in granting the
motion for reconsideration would go even further and would include in the term "agricultural
products," frogs, foxes, bees, pigeons, silkworms, silk, honey, and fish. Possibly, this court is right.
Try as I may, for I am gratified to have this decision of the court, I cannot bring myself to this view.
Without giving way to the temptation to use ironical and facetious language because of this result, let
me merely make the observation that where the limit will reached is beyond my poor mind to
comprehend. Another court could very well instead of prolonging the examples ad infinitum merely
judicially repeal the word "agricultural" and include everything which would fall under the word
"products."

My views and those of three other members of the court are fully set out in the first decision.
Restatement or reargument will avail nothing. Suffice it to say that the argument on motion for
reconsideration and the decision of the majority have failed to convince me that fish — or to accede
to the critical suggestion of the majority — that fish produced as were those upon which the tax in
question was levied, are an agricultural product. The administrative ruling of the Attorney-General,
the decision of this court in United States vs. Laxa ([1917], 36 Phil., 670), and the original decision in
the instant case should not be overturned by granting this motion.

Footnotes

1 37 Phil. Rep., 545.

MALCOLM, J., dissenting: