CASE DIGEST: CALTEX V PALOMAR

Caltex vs Palomar
G.R. No. L-19650

29 September 1966

Facts:
      In the year 1960, Caltex conceived a promotional scheme and called it "Caltex
Hooded Pump Contest". It calls for participants to estimate the actual number of liters a
hooded gas pump at each Caltex Station will dispense during a specified period. For the
priviledge to participate, no fees or consideration, nor purchase of Caltex products were
required.

        Forseeing the extensive use of mails relative to the contest, representations were made by
Caltex with the postal authorities for the contest to be cleared in advanced for mailing. The acting
Postmaster General opined that the scheme falls within the purview of sections 1954, 1982 and
1983 of the Revised Administrative Code and declined to grant the requested clearance. 

Issues:
         W/N construction should be employed in this case and W/N the contest violates the provisions
of the Postal Law

Held: 
         Yes. Construction of a law is in order if what is in issue is an inquiry into the intended meaning
of the words used in a certain law. As defined in Black's Law Dictionary:Construction is the art or
process of discovering and expounding the meaning and intention of the author's of the law with
respect 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
therein. This is as much as 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 prize by chance. The three essential
elements of a lottery are: (1) consideration, (2) prize, and (3) chance. Gift enterprise 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. Gratuitous distribution of property by
lot or chance does not constitute lottery. In the present case, the element of consideration is not
observed. No payment or purchase of a merchandise was required for the priviledge to participate.