EN BANC

[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.

Solicitor General for respondent and appellant.

Ross, Selph & Carrascoso for petitioner and appellee.

SYLLABUS

1. DECLARATORY RELIEF; CONDITIONS SINE QUA NON BEFORE RELIEF CAN BE AVAILED OF. In
order that a declaratory relief may be available, the following conditions must be present: (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 Off. Gaz., No. 2,
pp. 578, 578-579; Edades vs. Edades, et al., G. R. No. L-8964, July 31, 1956).

2. ID.; ELEMENT OF JUSTICIABLE CONTROVERSY; CASE AT BAR. 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. There is an
active antagonistic assertion of a legal right on the part of the appellee and a denial thereof on the part
of appellant concerning a real question or issue. 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). Doubt, if any there was, has ripened into a justiciable controversy when 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 Theaters, 36 Ariz., 251, 284 Pac. 350).

3. STATUTORY CONSTRUCTION; CONSTRUCTION DEFINED; CASE AT BAR. 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, among others, by
reason of the fact that the given case is not explicitly provided for in the law (Black, Interpretation of
Laws, p. 1). In the present case, the question of 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. This is as much a question of construction or
interpretation as any other.

4. ID.; WEIGHT OF JUDICIAL DECISIONS. In this jurisdiction, judicial decisions assume the same
authority as the statute itself and, until authoritatively abandoned, necessarily become, to the extent

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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.

5. LOTTERY; ESSENTIAL ELEMENTS. 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 ("El Debate", Inc. vs. Topacio, 44 Phil., 278, 283-284, citing Horner vs.
United 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).

6. ID.; GRATUITOUS DISTRIBUTION OF PROPERTY BY CHANCE; ELEMENT OF CONSIDERATION NOT

PRESENT; CASE AT BAR. In respect to the 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 ("El Debate", Inc. vs. Topacio,
supra). Under the rules of the proposed contest there is no 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, the contest fails to exhibit any discernible consideration which would brand it as a
lottery. The scheme is but a gratuitous distribution of property by chance.

7. ID.; TEST TO DETERMINE PRESENCE OF CONSIDERATION. The element of consideration does

not consist of the benefit derived by the proponent of the contest. The true test 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 (People vs. Cardas, 28 P.
2d., 99, 137 Cal. App. [Supp.] 788). The standpoint of the contestant, not that of the sponsor, is all that
matters.

8. ID.; MEANING OF TERM "GIFT ENTERPRISE"; PROPOSED SCHEME NOT EMBRACED BY THE TERM.
The term "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 (54 C.J.S.,
850; 34 Am. Jur., 654; Black, Law Dictionary, 4th ed. 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, where there is no sale of
anything to which the chance offered is attached as an inducement to the purchaser, and where the
contest is open to all qualified contestants irrespective of whether or not they buy the appellee's
products.

9. POSTAL LAW; TERM "GIFT ENTERPRISE" IS USED IN ASSOCIATION WITH WORD "LOTTERY". In
the Postal Law the term "gift enterprise" is used in association with the word "lottery". Consonant to the

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well-known principle of legal hermeneutics noscitur a sociis, it is only logical that the term 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 the slightest indicium in the law of any intent to eliminate the
element of consideration from the "gift enterprise" therein included.

10. ID.; MAIL FRAUD ORDERS, PURPOSE OF. Mail fraud orders 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.

11. ID.; WHEN GIFT ENTERPRISES ARE CONDEMNABLE; CASE AT BAR. Under the prohibitive
provisions of the Postal Law, gift enterprises and similar schemes therein contemplated are
condemnable only if, like lotteries, they involve the element of consideration. Because there is none in
the contest herein in question, the appellee may not be denied the use of the mails for purposes
thereof.

DECISION

CASTRO, J p:

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.
cdphil

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 Eveready 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.

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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; P1,500
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
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:

(a) 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 reel 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,

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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 on 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." cdpr

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 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
petition do (sic) 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 or duties 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. 90 Phil., 83; Delumen, et al. vs. Republic of

5
the Philippines, 94 Phil., 287; 50 Off. Gaz., No. 2, pp. 578, 578-579; Edades vs. Edades, et al., 99 Phil.,
675). 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 light 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 interest 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).

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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, in 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 cannot 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 decision assume the same

7
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 above-mentioned 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. United 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 tasks is considerably lightened inasmuch as in the same case just
cited, this Court has laid down a definitive yardstick 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

8
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 liters 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 heed 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.

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. cdphil

9
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 proscribed?
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
predicted, 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 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. State, 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.

10
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 in so far as
the element of chance is concerned it is only logical that 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.

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. cdtai

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.

11
FIRST DIVISION

[G.R. No. 93833. September 28, 1995.]

SOCORRO D. RAMIREZ, petitioner, vs. HONORABLE COURT OF APPEALS and ESTER S. GARCIA,
respondent. cdll

E. Voltaire Garcia for petitioner.

Cesar V . Chavez for private respondent.

SYLLABUS

1. STATUTORY CONSTRUCTION; WHERE THE LANGUAGE OF A STATUTE IS CLEAR AND

UNAMBIGUOUS; RULE. Legislative intent is determined principally from the language of a statute.
Where the language of a statute is clear and unambiguous, the law is applied according to its express
terms, and interpretation would be resorted to only where a literal interpretation would be either
impossible or absurd or would lead to an injustice.

2. CRIMINAL LAW; ANTI-WIRE TAPPING LAW (R.A. 4200); MAKES NO DISTINCTION AS TO WHETHER
THE PARTY SOUGHT TO BE PENALIZED OUGHT TO BE A PARTY OTHER THAN OR DIFFERENT FROM THOSE
INVOLVED IN THE PRIVATE COMMUNICATION. Section 1 of R.A. 4200 entitled, "An Act to Prohibit and
Penalize Wire Tapping and Other Related Violations of Private Communication and Other Purposes,"
clearly and unequivocally makes it illegal for any person, not authorized by all the parties to any private
communication to secretly record such communication by means of a tape recorder. The law makes no
distinction as to whether the party sought to be penalized by the statute ought to be a party other than
or different from those involved in the private communication. The statute's intent to penalize all
persons unauthorized to make such recording is underscored by the use of the qualifier "any."
Consequently, as respondent Court of Appeals correctly concluded, "even a (person) privy to a
communication who records his private conversation with another without the knowledge of the latter
(will) qualify as a violator" under this provision of R.A. 4200.

3. ID.; ID.; NATURE OF CONVERSATION, IMMATERIAL TO A VIOLATION THEREOF. The nature of

the conversation is immaterial to a violation of the statute. The substance of the same need not be
specifically alleged in the information. What R.A. 4200 penalizes are the acts of secretly overhearing,
intercepting or recording private communications by means of the devices enumerated therein. The
mere allegation that an individual made a secret recording of a private communication by means of a
tape recorder would suffice to constitute an offense under Section 1 of R.A. 4200. As the Solicitor
General pointed out in his COMMENT before the respondent court: "Nowhere (in the said law) is it
required that before one can be regarded as a violator, the nature of the conversation, as well as its
communication to a third person should be professed."

4. ID.; ID.; "PRIVATE COMMUNICATION"; SCOPE. Petitioner's contention that the phrase
"private communication" in Section 1 of R.A. 4200 does not include "private conversations" narrows the
ordinary meaning of the word "communication" to a point of absurdity. The word communicate comes

12
from the Latin word communicare, meaning "to share or to impart." In its ordinary signification,
communication connotes the act of sharing or imparting, as in a conversation, or signifies the "process
by which meaning or thoughts are shared between individuals through a common system of symbols (as
language signs or gestures)." These definitions are broad enough to include verbal or non-verbal, written
or expressive communications of "meanings or thoughts" which are likely to include the emotionally-
charged exchange, on February 22, 1988, between petitioner and private respondent, in the privacy of
the latter's office. Any doubts about the legislative body's meaning of the phrase "private
communication" are, furthermore, put to rest by the fact that the terms "conversation" and
"communication" were interchangeably used by Senator Taada in his Explanatory Note to the bill,
quoted below: "It has been said that innocent people have nothing to fear from their conversations
being overheard. But this statement ignores the usual nature of conversations as well as the undeniable
fact that most, if not all, civilized people have some aspects of their lives they do not wish to expose.
Free conversations are often characterized by exaggerations, obscenity, agreeable falsehoods, and the
expression of anti-social desires of views not intended to be taken seriously. The right to the privacy of
communication, among others, has expressly been assured by our Constitution. Needless to state here,
the framers of our Constitution must have recognized the nature of conversations between individuals
and the significance of man's spiritual nature, of his feelings and of his intellect. They must have known
that part of the pleasures and satisfactions of life are to be found in the unaudited, and free exchange of
communication between individuals free from every unjustifiable intrusion by whatever means."
LexLibris

DECISION

KAPUNAN, J p:

A civil case for damages was filed by petitioner Socorro D. Ramirez in the Regional Trial Court of Quezon
City alleging that the private respondent, Ester S. Garcia, in a confrontation in the latter's office,
allegedly vexed, insulted and humiliated her in a "hostile and furious mood" and in a manner offensive
to petitioner's dignity and personality," contrary to morals, good customs and public policy." 1

In support of her claim, petitioner produced a verbatim transcript of the event and sought moral
damages, attorney's fees and other expenses of litigation in the amount of P610,000.00, in addition to
costs, interests and other reliefs awardable at the trial court's discretion. The transcript on which the
civil case was based was culled from a tape recording of the confrontation made by petitioner. 2 The
transcript reads as follows:

Plaintiff Soccoro D. Ramirez (Chuchi)

Good afternoon Ma'am.

Defendant Ester S. Garcia (ESG)

Ano ba ang nangyari sa 'yo, nakalimot ka na kung paano ka napunta rito, porke member ka na,
magsumbong ka kung ano ang gagawin ko sa iyo.

13
CHUCHI

Kasi, naka duty ako noon.

ESG

Tapos iniwan no. (Sic)

CHUCHI

Hindi ma'am, pero ilan beses na nila akong binalikan, sabing ganoon.

ESG

Ito and (sic) masasabi ko sa 'yo, ayaw kung (sic) mag explain ka, kasi hanggang, 10:00 p.m., kinabukasan
hindi ka na pumasok. Ngayon ako ang babalik sa 'yo, nag-aaply ka sa States, nag-aapply ka sa review mo,
kung kakailanganin ang certification mo, kalimutan mo na kasi hindi ka sa akin makakahingi.

CHUCHI

Hindi Ma'am. Kasi ang ano ko talaga noon i-cocontinue ko up to 10:00 p.m.

ESG

Bastos ka, nakalimutan mo na kung paano ka pumasok dito sa hotel. Magsumbong ka sa Union kung
gusto mo. Nakalimutan mo na kung paano ka nakapasok dito "Do you think that on your own
makakapasok ka kung hindi ako. Panunumbyoyan na kita (Sinusumbatan na kita).

CHUCHI

Itutuloy ko na Ma'am sana ang duty ko.

ESG

Kaso ilang beses na akong binabalikan doon ng mga no (sic) ko.

ESG

Nakalimutan mo na ba kung paano ka pumasok sa hotel, kung on your own merit alam ko naman kung
gaano ka "ka bobo" mo. Marami ang nag-aaply alam kong hindi ka papasa.

CHUCHI

Kukuha kami ng exam noon.

ESG

Oo, pero hindi ka papasa.

14
CHUCHI

Eh, bakit ako ang nakuha ni Dr. Tamayo.

ESG

Kukunin ka kasi ako.

CHUCHI

Eh, di sana

ESG

Huwag mong ipagmalaki na may utak ka kasi wala kang utak. Akala mo ba makukuha ka dito kung hindi
ako.

CHUCHI

Mag-eexplain ako.

ESG

Huwag na, hindi ako mag-papa-explain sa 'yo, makaalala ka kung paano ka puma-rito. "Putang-ina"
sasabi-sabihin mo kamag-anak ng nanay at tatay mo ang mga magulang ko.

ESG

Wala na akong pakialam, dahil nandito ka sa loob, nasa labas ka puwede ka ng hindi pumasok, okey yan
nasaloob ka umalis ka doon.

CHUCHI

Kasi M'am, binabalikan ako ng mga taga Union.

ESG

Nandiyan na rin ako, pero huwag mong kalimutan na hindi ka makakapasok kung hindi ako. Kung hindi
mo kinikilala yan okey lang sa akin, dahil tapos ka na.

CHUCHI

Ina-ano ko ma'am na utang na loob.

ESG

Huwag na lang, hindi mo utang na loob, kasi kung baga sa no, nilapastanganan mo ako.

CHUCHI

15
Paano kita nilapastanganan?

ESG

Mabuti pa lumabas ka na. Hindi na ako makikipagusap sa 'yo. Lumabas ka na. Magsumbong ka. 3

As a result of petitioner's recording of the event and alleging that the said act of secretly taping the
confrontation was illegal, private respondent filed a criminal case before the Regional Trial Court of
Pasay City for violation of Republic Act 4200, entitled "An Act to prohibit and penalize wire tapping and
other related violations of private communication, and other purposes." An information charging
petitioner of violation of the said Act, dated October 6, 1988 is quoted herewith:

INFORMATION

The Undersigned Assistant City Fiscal Accuses Socorro D. Ramirez of Violation of Republic Act No. 4200,
committed as follows:

That on or about the 22nd day of February, 1988, in Pasay City, Metro Manila, Philippines, and within
the jurisdiction of this honorable court, the above-named accused, Socorro D. Ramirez not being
authorized by Ester S. Garcia to record the latter's conversation with said accused, did then and there
wilfully, unlawfully and feloniously, with the use of a tape recorder secretly record the said conversation
and thereafter communicate in writing the contents of the said recording to other person.

Contrary to Law.

Pasay City, Metro Manila, September 16, 1988.

MARIANO M. CUNETA

Asst. City Fiscal

Upon arraignment, in lieu of a plea, petitioner filed a Motion to Quash the Information on the ground
that the facts charged do not constitute an offense, particularly a violation of R.A. 4200. In an order May
3, 1989, the trial court granted the Motion to Quash, agreeing with petitioner that 1) the facts charged
do not constitute an offense under R.A. 4200; and that 2) the violation punished by R.A. 4200 refers to
the taping of a communication by a person other than a participant to the communication. 4

From the trial court's Order, the private respondent filed a Petition for Review on Certiorari with this
Court, which forthwith referred the case to the Court of Appeals in a Resolution (by the First Division) of
June 19, 1989. cdtai

On February 9, 1990, respondent Court of Appeals promulgated its assailed Decision declaring the trial
court's order of May 3, 1989 null and void, and holding that:

"[T]he allegations sufficiently constitute an offense punishable under Section 1 of R.A. 4200. In thus
quashing the information based on the ground that the facts alleged do not constitute an offense, the
respondent judge acted in grave abuse of discretion correctible by certiorari." 5

16
Consequently, on February 21, 1990, petitioner filed a Motion for Reconsideration which respondent
Court of Appeals denied in its Resolution 6 dated June 19, 1990. Hence, the instant petition.

Petitioner vigorously argues, as her "main and principal issue" 7 that the applicable provision of Republic
Act 4200 does not apply to the taping of a private conversation by one of the parties to the
conversation. She contends that the provision merely refers to the unauthorized taping of a private
conversation by a party other than those involved in the communication. 8 In relation to this, petitioner
avers that the substance or content of the conversation must be alleged in the Information, otherwise
the facts charged would not constitute a violation of R.A. 4200. 9 Finally, petitioner argues that R.A.
4200 penalizes the taping of a "private communication," not a "private conversation" and that
consequently, her act of secretly taping her conversation with private respondent was not illegal under
the said act. 10

We disagree. prLL

First, legislative intent is determined principally from the language of a statute. Where the language of a
statute is clear and unambiguous, the law is applied according to its express terms, and interpretation
would be resorted to only where a literal interpretation would be either impossible 11 or absurd or
would lead to an injustice. 12

Section 1 of R.A. 4200 entitled, "An Act to Prohibit and Penalize Wire Tapping and Other Related
Violations of Private Communication and Other Purposes," provides:

SECTION 1. It shall be unlawful for any person, not being authorized by all the parties to any private
communication or spoken word, to tap any wire or cable, or by using any other device or arrangement,
to secretly overhear, intercept, or record such communication or spoken word by using a device
commonly known as a dictaphone or dictagraph or detectaphone or walkie-talkie or tape recorder, or
however otherwise described.

The aforestated provision clearly and unequivocally makes it illegal for any person, not authorized by all
the parties to any private communication to secretly record such communication by means of a tape
recorder. The law makes no distinction as to whether the party sought to be penalized by the statute
ought to be a party other than or different from those involved in the private communication. The
statute's intent to penalize all persons unauthorized to make such recording is underscored by the use
of the qualifier "any." Consequently, as respondent Court of Appeals correctly concluded, "even a
(person) privy to a communication who records his private conversation with another without the
knowledge of the latter (will) qualify as a violator" 13 under this provision of R.A. 4200.

A perusal of the Senate Congressional Records, moreover, supports the respondent court's conclusion
that in enacting R.A. 4200 our lawmakers indeed contemplated to make illegal, unauthorized tape
recording of private conversations or communications taken either by the parties themselves or by third
persons. Thus:

xxx xxx xxx

17
Senator Taada:

The qualified only 'overhear.'

Senator Padilla:

So that when it is intercepted or recorded, the element of secrecy would not appear to be material.
Now, suppose, Your Honor, the recording is not made by all the parties but by some parties and involved
not criminal cases that would be mentioned under Section 3 but would cover, for example civil cases or
special proceedings whereby a recording is made not necessarily by all the parties but perhaps by some
in an effort to show the intent of the parties because the actuation of the parties prior, simultaneous
even subsequent to the contract or the act may be indicative of their intention. Suppose there is such a
recording, would you say, Your Honor, that the intention is to cover it within the purview of this bill or
outside?

Senator Taada:

That is covered by the purview of this bill, Your Honor.

Senator Padilla:

Even if the record should be used not in the prosecution of offense but as evidence to be used in Civil
Cases or special proceedings?

Senator Taada:

That is right. This is a complete ban on tape recorded conversations taken without the authorization of
all the parties.

Senator Padilla:

Now, would that be reasonable, Your Honor?

Senator Taada:

I believe it is reasonable because it is not sporting to record the observation of one without his knowing
it and then using it against him. It is not fair, it is not sportsmanlike. If the purpose; Your honor, is to
record the intention of the parties. I believe that all the parties should know that the observations are
being recorded.

Senator Padilla:

This might reduce the utility of recorders.

Senator Taada:

18
Well no. For example, I was to say that in meetings of the board of directors where a tape recording is
taken, there is no objection to this if all the parties know. It is but fair that the people whose remarks
and observations are being made should know that these are being recorded.

Senator Padilla:

Now, I can understand.

Senator Taada:

That is why when we take statements of persons, we say: "Please be informed that whatever you say
here may be used against you." That is fairness and that is what we demand. Now, in spite of that
warning, he makes damaging statements against his own interest, well, he cannot complain any more.
But if you are going to take a recording of the observations and remarks of a person without him
knowing that it is being taped or recorded, without him knowing that what is being recorded may be
used against him, I think it is unfair.

xxx xxx xxx

(Congressional Record, Vol. III, No. 31, p. 584, March 12, 1964)

Senator Diokno:

Do you understand, Mr. Senator, that under Section 1 of the bill as now worded, if a party secretly
records a public speech, he would be penalized under Section 1? Because the speech is public, but the
recording is done secretly.

Senator Taada:

Well, that particular aspect is not contemplated by the bill. It is the communication between one person
and another person not between a speaker and a public.

xxx xxx xxx

(Congressional Record, Vol. III. No. 33, p. 626, March 12, 1964)

xxx xxx xxx

The unambiguity of the express words of the provision, taken together with the above-quoted
deliberations from the Congressional Record, therefore plainly supports the view held by the
respondent court that the provision seeks to penalize even those privy to the private communications.
Where the law makes no distinctions, one does not distinguish. cdlex

Second, the nature of the conversation is immaterial to a violation of the statute. The substance of the
same need not be specifically alleged in the information. What R.A. 4200 penalizes are the acts of
secretly overhearing, intercepting or recording private communications by means of the devices
enumerated therein. The mere allegation that an individual made a secret recording of a private

19
communication by means of a tape recorder would suffice to constitute an offense under Section 1 of
R.A. 4200. As the Solicitor General pointed out in his COMMENT before the respondent court: "Nowhere
(in the said law) is it required that before one can be regarded as a violator, the nature of the
conversation, as well as its communication to a third person should be professed." 14

Finally, petitioner's contention that the phrase "private communication" in Section 1 of R.A. 4200 does
not include "private conversations" narrows the ordinary meaning of the word "communication" to a
point of absurdity. The word communicate comes from the latin word communicare, meaning "to share
or to impart." In its ordinary signification, communication connotes the act of sharing or imparting, as in
a conversation, 15 or signifies the "process by which meanings or thoughts are shared between
individuals through a common system of symbols (as language signs or gestures)." 16 These definitions
are broad enough to include verbal or non-verbal, written or expressive communications of "meanings
or thoughts" which are likely to include the emotionally-charged exchange, on February 22, 1988,
between petitioner and private respondent, in the privacy of the latter's office. Any doubts about the
legislative body's meaning of the phrase "private communication" are, furthermore, put to rest by the
fact that the terms "conversation" and "communication" were interchangeably used by Senator Taada
in his Explanatory Note to the bill quoted below:

"It has been said that innocent people have nothing to fear from their conversations being overheard.
But this statement ignores the usual nature of conversations as well as the undeniable fact that most, if
not all, civilized people have some aspects of their lives they do not wish to expose. Free conversations
are often characterized by exaggerations, obscenity, agreeable falsehoods, and the expression of anti-
social desires of views not intended to be taken seriously. The right to the privacy of communication,
among others, has expressly been assured by our Constitution. Needless to state here, the framers of
our Constitution must have recognized the nature of conversations between individuals and the
significance of man's spiritual nature, of his feelings and of his intellect. They must have known that part
of the pleasures and satisfactions of life are to be found in the unaudited, and free exchange of
communication between individuals free from every unjustifiable intrusion by whatever means." 17

In Gaanan vs. Intermediate Appellate Court, 18 a case which dealt with the issue of telephone
wiretapping, we held that the use of a telephone extension for the purpose of overhearing a private
conversation without authorization did not violate R.A. 4200 because a telephone extension devise was
neither among those devises enumerated in Section 1 of the law nor was it similar to those "device(s) or
arrangement(s)" enumerated therein," 19 following the principle that "penal statutes must be construed
strictly in favor of the accused." 20 The instant case turns on a different note, because the applicable
facts and circumstances pointing to a violation of R.A. 4200 suffer from no ambiguity, and the statute
itself explicitly mentions the unauthorized "recording" of private communications with the use of tape-
recorders as among the acts punishable. cdtai

WHEREFORE, because the law, as applied to the case at bench is clear and unambiguous and leaves us
with no discretion, the instant petition is hereby DENIED. The decision appealed from is AFFIRMED.
Costs against petitioner.

20
SO ORDERED.

Padilla, Davide, Jr. and Bellosillo, JJ., concur.

Hermosisima, Jr., J., is on official leave.

Footnotes

1. Docketed as Civil Case No. 88-403, Regional Trial Court, Makati, Branch 64.

2. Rollo, p. 48.

3. Rollo, pp. 47-48.

4. Rollo, p. 9.

5. Rollo, p. 37. LexLibris

6. Rollo, p. 99, "H".

7. Rollo, p. 13.

8. Id.

9. Rollo, p. 14.

10. Rollo, pp. 14-15.

11. Pacific Oxygen and Acetylene Co. vs. Central Bank, 37 SCRA 685 (1971).

12. Casela v. Court of Appeals, 35 SCRA 279 (1970).

13. Rollo, p. 33.

14. Rollo, p. 67.

15. WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 460 (1976).

16. Id.

17. CONGRESSIONAL RECORD, Vol. III, No. 31 at 573 (March 10, 1964).

18. 145 SCRA 112 (1986). See also, Salcedo-Ortanez v. CA, 235 SCRA 111 (1994).

19. Id., at 120.

20. Id., at 121.

21
FIRST DIVISION

[G.R. No. 112170. April 10, 1996.]

CESARIO URSUA, petitioner, vs. COURT OF APPEALS AND PEOPLE OF THE PHILIPPINES, respondents.

Ceferino Padua Law Office for petitioner

The Solicitor General for respondents

SYLLABUS

1. STATUTORY CONSTRUCTION; STATUTES; CONSTRUED WITH REFERENCE TO THE INTENDED

SCOPE AND PURPOSE. Time and again we have decreed that statutes are to be construed in the light
of the purposes to be achieved and the evils sought to be remedied. Thus in construing a statute the
reason for its enactment should be kept in mind and the statute should be construed with reference to
the intended scope and purpose. The court may consider the spirit and reason of the statute, where a
literal meaning would lead to absurdity, contradiction, injustice, or would defeat the clear purpose of
the lawmakers.

2. ID.; COMMONWEALTH ACT 142, AS AMENDED (AN ACT TO REGULATE THE USE OF ALIASES);
PURPOSE IS TO REGULATE THE USE OF ALIASES IN BUSINESS TRANSACTION. The objective and
purpose of C.A. No. 142 have their origin and basis in Act No. 3883, An Act to Regulate the Use in
Business Transactions of Names other than True Names, Prescribing the Duties of the Director of the
Bureau of Commerce and Industry in its Enforcement, Providing Penalties for Violations thereof, and
other purposes, which was approved on 14 November 1931 and amended by Act No. 4147, approved on
28 November 1934. The enactment of C.A. No. 142 as amended was made primarily to curb the
common practice among the Chinese of adopting scores of different names and aliases which created
tremendous confusion in the field of trade. Such a practice almost bordered on the crime of using
fictitious names which for obvious reasons could not be successfully maintained against the Chinese
who, rightly or wrongly, claimed they possessed a thousand and one names. C.A. No. 142 thus penalized
the act of using an alias name, unless such alias was duly authorized by proper judicial proceedings and
recorded in the civil register.

3. CRIMINAL LAW; COMMONWEALTH ACT 142, AS AMENDED (AN ACT TO REGULATE THE USE OF
ALIASES); ALIAS, DEFINED. An alias is a name or names used by a person or intended to be used by
him publicly and habitually usually in business transactions in addition to his real name by which he is
registered at birth or baptized the first time or substitute name authorized by a competent authority. A
man's name is simply the sound or sounds by which he is commonly designated by his fellows and by
which they distinguish him but sometimes a man is known by several different names and these are
known as aliases.

4. ID.; ID.; USE OF FICTITIOUS NAME IN A SINGLE TRANSACTION WITHOUT INTENDING TO BE

KNOWN BY THIS NAME IN ADDITION TO HIS REAL NAME, NOT A VIOLATION THEREOF. The use of a
fictitious name or a different name belonging to another person in a single instance without any sign or

22
indication that the user intends to be known by this name in addition to his real name from that day
forth does not fall within the prohibition contained in C.A. No. 142 as amended.

5. ID.; ID.; ID.; CASE AT BAR. This is so in the case at bench. It is not disputed that petitioner
introduced himself in the Office of the Ombudsman as "Oscar Perez," which was the name of the
messenger of his lawyer who should have brought the letter to that office in the first place instead of
petitioner. He did so while merely serving the request of his lawyer to obtain a copy of the complaint in
which petitioner was a respondent. There is no question then that "Oscar Perez" is not an alias name of
petitioner. There is no evidence showing that he had used or was intending to use that name as his
second name in addition to his real name. The use of the name "Oscar Perez" was made by petitioner in
an isolated transaction where he was not even legally required to expose his real identity. For, even if he
had identified himself properly at the Office of the Ombudsman, petitioner would still be able to get a
copy of the complaint as a matter of right, and the Office of the Ombudsman could not refuse him
because the complaint was part of public records hence open to inspection and examination by anyone
under the proper circumstances. While the act of petitioner may be covered by other provisions of law,
such does not constitute an offense within the concept of C.A. No. 142 as amended under which he is
prosecuted. The confusion and fraud in business transactions which the anti-alias law and its related
statutes seek to prevent are not present here as the circumstances are peculiar and distinct from those
contemplated by the legislature in enacting C.A. No. 142 as amended. There exists a valid presumption
that undesirable consequences were never intended by a legislative measure and that a construction of
which the statute is fairly susceptible is favored, which will avoid all objectionable, mischievous,
indefensible, wrongful, evil and injurious consequences. Indeed, our mind cannot rest easy on the
proposition that petitioner should be convicted on a law that does not clearly penalize the act done by
him. Wherefore, the questioned decision of the Court of Appeals affirming that of the Regional Trial
Court of Davao City is REVERSED and SET ASIDE and petitioner CESARIO URSUA is ACQUITTED of the
crime charged.

6. STATUTORY CONSTRUCTION; A PENAL STATUTE LIKE COMMONWEALTH ACT 142, AS AMENDED,

CONSTRUED STRICTLY AGAINST THE STATE AND IN FAVOR OF THE ACCUSED. As C.A. No. 142 is a
penal statute, it should be construed strictly against the State and in favor of the accused. The reason
for this principle is the tenderness of the law for the rights of individuals and the object is to establish a
certain rule by conformity to which mankind would be safe, and the discretion of the court limited.

DECISION

BELLOSILLO, J p:

This is a petition for a review of the decision of the Court of Appeals which affirmed the conviction of
petitioner by the Regional Trial Court of Davao City for violation of Sec. 1 of C.A. No. 142, as amended by
R.A. No 6085, otherwise known as "An Act to Regulate the Use of Aliases." 1

Petitioner Cesario Ursua was a Community Environment and Natural Resources Officer assigned in
Kidapawan, Cotabato. On 9 May 1989 the Provincial Governor of Cotabato requested the Office of the
Ombudsman in Manila to conduct an investigation on a complaint for bribery, dishonesty, abuse of

23
authority and giving of unwarranted benefits by petitioner and other officials of the Department of
Environment and Natural Resources. The complaint was initiated by the Sangguniang Panlalawigan of
Cotabato through a resolution advising the Governor to report the involvement of petitioner and others
in the illegal cutting of mahogany trees and hauling of illegally-cut logs in the area. 2

On 1 August 1989 Atty. Francis Palmones, counsel for petitioner, wrote the Office of the Ombudsman in
Davao City requesting that he be furnished copy of the complaint against petitioner. Atty. Palmones
then asked his client Ursua to take his letter-request to the Office of the Ombudsman because his law
firm's messenger, Oscar Perez, had to attend to some personal matters. Before proceeding to the Office
of the Ombudsman petitioner talked to Oscar Perez and told him that he was reluctant to personally ask
for the document since he was one of the respondents before the Ombudsman. However, Perez advised
him not to worry as he could just sign his (Perez) name if ever he would be required to acknowledge
receipt of the complaint. 3

When petitioner arrived at the Office of the Ombudsman in Davao City he was instructed by the security
officer to register in the visitors' logbook. Instead of writing down his name petitioner wrote the name
"Oscar Perez" after which he was told to proceed to the Administrative Division for the copy of the
complaint he needed. He handed the letter of Atty. Palmones to the Chief of the Administrative Division,
Ms. Loida Kahulugan, who then gave him a copy of the complaint, receipt of which he acknowledged by
writing the name "Oscar Perez." 4

Before petitioner could leave the premises he was greeted by an acquaintance, Josefa Amparo, who also
worked in the same office. They conversed for a while then he left. When Loida learned that the person
who introduced himself as "Oscar Perez" was actually petitioner Cesario Ursua, a customer of Josefa
Amparo in her gasoline station, Loida reported the matter to the Deputy Ombudsman who
recommended that petitioner be accordingly charged.

On 18 December 1990, after the prosecution had completed the presentation of its evidence, petitioner
without leave of court filed a demurrer to evidence alleging that the failure of the prosecution to prove
that his supposed alias was different from his registered name in the local civil registry was fatal to its
cause. Petitioner argued that no document from the local civil registry was presented to show the
registered name of accused which according to him was a condition sine qua non for the validity of his
conviction. llcd

The trial court rejected his contentions and found him guilty of violating Sec. 1 of C.A. No. 142 as
amended by R.A. No. 6085. He was sentenced to suffer a prison term of one (1) year and one (1) day of
prision correccional minimum as minimum, to four (4) years of prision correccional medium as
maximum, with all the accessory penalties provided for by law, and to pay a fine of P4,000.00 plus costs.

Petitioner appealed to the Court of Appeals.

On 31 May 1993 the Court of Appeals affirmed the conviction of petitioner but modified the penalty by
imposing an indeterminate term of one (1) year as minimum to three (3) years as maximum and a fine of
P5,000.00.

24
Petitioner now comes to us for review of his conviction as he reasserts his innocence. He contends that
he has not violated C.A. No. 142 as amended by R.A. No. 6085 as he never used any alias name; neither
is "Oscar Perez" his alias. An alias, according to him, is a term which connotes the habitual use of
another name by which a person is also known. He claims that he has never been known as "Oscar
Perez" and that he only used such name on one occasion and it was with the express consent of Oscar
Perez himself. It is his position that an essential requirement for a conviction under C.A. No. 142 as
amended by R.A. No. 6085 has not been complied with when the prosecution failed to prove that his
supposed alias was different from his registered name in the Registry of Births. He further argues that
the Court of Appeals erred in not considering the defense theory that he was charged under the wrong
law. 5

Time and again we have decreed that statutes are to be construed in the light of the purposes to be
achieved and the evils sought to be remedied. Thus in construing a statute the reason for its enactment
should be kept in mind and the statute should be construed with reference to the intended scope and
purpose. 6 The court may consider the spirit and reason of the statute, where a literal meaning would
lead to absurdity, contradiction, injustice, or would defeat the clear purpose of the lawmakers. 7

For a clear understanding of the purpose of C.A. No. 142 as amended, which was allegedly violated by
petitioner, and the surrounding circumstances under which the law was enacted, the pertinent
provisions thereof, its amendments and related statutes are herein cited. C.A. No. 142, which was
approved on 7 November 1936, and before its amendment by R.A. No. 6085, is entitled An Act to
Regulate the Use of Aliases. It provides as follows:

Section 1. Except as a pseudonym for literary purposes, no person shall use any name different
from the one with which he was christened or by which he has been known since his childhood, or such
substitute name as may have been authorized by a competent court. The name shall comprise the
patronymic name and one or two surnames.

Section 2. Any person desiring to use an alias or aliases shall apply for authority therefor in
proceedings like those legally provided to obtain judicial authority for a change of name. Separate
proceedings shall be had for each alias, and each new petition shall set forth the original name and the
alias or aliases for the use of which judicial authority has been obtained, specifying the proceedings and
the date on which such authority was granted. Judicial authorities for the use of aliases shall be
recorded in the proper civil register. . . .

The above law was subsequently amended by R.A. No. 6085, approved on 4 August 1969. As amended,
C.A. No. 142 now reads:

Section 1. Except as a pseudonym solely for literary, cinema, television, radio or other
entertainment purposes and in athletic events where the use of pseudonym is a normally accepted
practice, no person shall use any name different from the one with which he was registered at birth in
the office of the local civil registry or with which he was baptized for the first time, or in case of an alien,
with which he was registered in the bureau of immigration upon entry; or such substitute name as may
have been authorized by a competent court: Provided, That persons whose births have not been

25
registered in any local civil registry and who have not been baptized, have one year from the approval of
this act within which to register their names in the civil registry of their residence. The name shall
comprise the patronymic name and one or two surnames.

Sec. 2. Any person desiring to use an alias shall apply for authority therefor in proceedings like those
legally provided to obtain judicial authority for a change of name and no person shall be allowed to
secure such judicial authority for more than one alias. The petition for an alias shall set forth the
person's baptismal and family name and the name recorded in the civil registry, if different, his
immigrant's name, if an alien, and his pseudonym, if he has such names other than his original or real
name, specifying the reason or reasons for the desired alias. The judicial authority for the use of alias,
the christian name and the alien immigrant's name shall be recorded in the proper local civil registry,
and no person shall use any name or names other than his original or real name unless the same is or
are duly recorded in the proper local civil registry.

The objective and purpose of C.A. No. 142 have their origin and basis in Act No. 3883, An Act to Regulate
the Use in Business Transactions of Names other than True Names, Prescribing the Duties of the Director
of the Bureau of Commerce And Industry in its Enforcement, Providing Penalties for Violations thereof,
and for other purposes, which was approved on 14 November 1931 and amended by Act No. 4147,
approved on 28 November 1934. 8 The pertinent provisions of Act No. 3883 as amended follow

Section 1. It shall be unlawful for any person to use or sign, on any written or printed receipt
including receipt for tax or business or any written or printed contract not verified by a notary public or
on any written or printed evidence of any agreement or business transactions, any name used in
connection with his business other than his true name, or keep conspicuously exhibited in plain view in
or at the place where his business is conducted, if he is engaged in a business, any sign announcing a
firm name or business name or style without first registering such other name, or such firm name, or
business name or style in the Bureau of Commerce together with his true name and that of any other
person having a joint or common interest with him in such contract agreement, business transaction, or
business . . . .

For a bit of history, the enactment of C.A. No. 142 as amended was made primarily to curb the common
practice among the Chinese of adopting scores of different names and aliases which created
tremendous confusion in the field of trade. Such a practice almost bordered on the crime of using
fictitious names which for obvious reasons could not be successfully maintained against the Chinese
who, rightly or wrongly, claimed they possessed a thousand and one names. C.A. No. 142 thus penalized
the act of using an alias name, unless such alias was duly authorized by proper judicial proceedings and
recorded in the civil register. 9

In Yu Kheng Chiau v. Republic 10 the Court had occasion to explain the meaning, concept and ill effects
of the use of an alias within the purview of C.A. No. 142 when we ruled

There can hardly be any doubt that petitioner's use of alias 'Kheng Chiau Young' in addition to his real
name 'Yu Cheng Chiau' would add to more confusion. That he is known in his business, as manager of
the Robert Reid, Inc., by the former name, is not sufficient reason to allow him its use. After all,

26
petitioner admitted that he is known to his associates by both names. In fact, the Anselmo Trinidad, Inc.,
of which he is a customer, knows him by his real name. Neither would the fact that he had encountered
certain difficulties in his transactions with government offices which required him to explain why he
bore two names, justify the grant of his petition, for petitioner could easily avoid said difficulties by
simply using and sticking only to his real name 'Yu Cheng Chiau.'

The fact that petitioner intends to reside permanently in the Philippines, as shown by his having filed a
petition for naturalization in Branch V of the abovementioned court, argues the more against the grant
of his petition, because if naturalized as a Filipino citizen, there would then be no necessity for his
further using said alias, as it would be contrary to the usual Filipino way and practice of using only one
name in ordinary as well as business transactions. And, as the lower court correctly observed, if he
believes (after he is naturalized) that it would be better for him to write his name following the
Occidental method, 'he can easily file a petition for change of name, so that in lieu of the name 'Yu
Kheng Chian,' he can, abandoning the same, ask for authority to adopt the name 'Kheng Chiau Young.'

All things considered, we are of the opinion and so hold, that petitioner has not shown satisfactory
proper and reasonable grounds under the aforequoted provisions of Commonwealth Act No. 142 and
the Rules of Court, to warrant the grant of his petition for the use of an alias name.

Clearly therefore an alias is a name or names used by a person or intended to be used by him publicly
and habitually usually in business transactions in addition to his real name by which he is registered at
birth or baptized the first time or substitute name authorized by a competent authority. A man's name is
simply the sound or sounds by which he is commonly designated by his fellows and by which they
distinguish him but sometimes a man is known by several different names and these are known as
aliases. 11 Hence, the use of a fictitious name or a different name belonging to another person in a
single instance without any sign or indication that the user intends to be known by this name in addition
to his real name from that day forth does not fall within the prohibition contained in C.A. No. 142 as
amended. This is so in the case at bench.

It is not disputed that petitioner introduced himself in the Office of the Ombudsman as "Oscar Perez,"
which was the name of the messenger of his lawyer who should have brought the letter to that office in
the first place instead of petitioner. He did so while merely serving the request of his lawyer to obtain
the copy of the complaint in which petitioner was a respondent. There is no question then that "Oscar
Perez" is not an alias name of petitioner. There is no evidence showing that he had used or was
intending to use that name as his second name in addition to his real name. The use of the name "Oscar
Perez" was made by petitioner in an isolated transaction where he was not even legally required to
expose his real identity. For, even if he had identified himself properly at the Office of the Ombudsman,
petitioner would still be able to get a copy of the complaint as a matter of right, and the Office of the
Ombudsman could not refuse him because the complaint was part of public records hence open to
inspection and examination by anyone under the proper circumstances.

While the act of petitioner may be covered by other provisions of law, such does not constitute an
offense within the concept of C.A. No. 142 as amended under which he is prosecuted. The confusion and

27
fraud in business transactions which the anti-alias law and is related statutes seek to prevent are not
present here as the circumstances are peculiar and distinct from those contemplated by the legislature
in enacting C.A. No. 142 as amended. There exists a valid presumption that undesirable consequences
were never intended by a legislative measure and that a construction of which the statute is fairly
susceptible is favored, which will avoid all objectionable, mischievous, indefensible, wrongful, evil and
injurious consequences. 12 Moreover, as C.A. No. 142 is a penal statute, it should be construed strictly
against the State and in favor of the accused. 13 The reason for this principle is the tenderness of the
law for the rights of individuals and the object is to establish a certain rule by conformity to which
mankind would be safe, and the discretion of the court limited. 14 Indeed, our mind cannot rest easy on
the proposition that petitioner should be convicted on a law that does not clearly penalize the act done
by him.

WHEREFORE, the questioned decision of the Court of Appeals affirming that of the Regional Trial Court
of Davao City is REVERSED and SET ASIDE and petitioner CESARIO URSUA is ACQUITTED of the crime
charged.

SO ORDERED.

Padilla, Vitug, Kapunan and Hermosisima, Jr., JJ ., concur.

Footnotes

1. Rollo, pp. 24-37.

2. Id., p. 26.

3. Records, p. 7.

4. Rollo, p. 26.

5. Id., p. 12.

6. People v. Purisima, Nos. L-42050-66, 28 November 1978, 86 SCRA 524.

7. Gregorio, Antonio L., Fundamentals of Criminal Law Review, 1985 Ed., p. 9; People v. Manantan,
No. L-14129, 31 July 1962, 5 SCRA 684.

8. Aquino, Ramon C., The Revised Penal Code, 1961 Ed., Vol. II, pp. 1008-1009.

9. Francisco, Vicente J., The Revised Penal Code Annotated, 1954 Ed., Vol. II, p. 331; Guevarra,
Guillermo B., Commentaries on the Revised Penal Code, 1946 Ed., P. 359.

10. 106 Phil 762 (1959).

11. Words and Phrases, Permanent Edition, Vol. III, West Publishing Co., p. 139.

12. See Note 6.

28
13. People v. Uy Jui Pio, 102 Phil 679 (1957).

14. See Note 6.

29
EN BANC

[G.R. No. 19190. November 29, 1922.]

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs. VENANCIO CONCEPCION, defendant-
appellant.

Recaredo Ma. Calvo for appellant.

Attorney-General Villa-Real for appellee.

SYLLABUS

1. BANKS AND BANKING; "CREDIT AND LOAN." DEFINED AND DISTINGUISHED. The "credit" of an
individual means his ability to borrow money by virtue of the confidence or trust reposed by a lender
that he will pay what he may promise. A "loan" means the delivery by one party and the receipt by the
other party of a given sum of money, upon an agreement, expresses or implied, to repay the sum
loaned, with or without interest. The concession of a "credit" necessarily involves the granting of "loans"
up to the limit of the amount fixed in the "credit."

2. ID.' "LOAN" AND "DISCOUNT" DISTINGUISHED. To discount a paper is a mode of loaning

money, with these distinctions: (1) In a discount, interest is deducted in advanced, while in a loan,
interest is taken at the expiration of a credit; (2) a discount is always on double-name paper; a loan is
generally on single name paper.

3. STATUTES; INTERPRETATION AND CONSTRUCTION; IN GENERAL. In the interpretation and

construction of statutes, the primary rule is to ascertain and give effect to the intention of the
Legislature.

4. ID.; ID.; SECTION 35 OF ACT NO. 2747; PROHIBITION AGAINST INDIRECT LOANS. The purpose
of the Legislature in enacting section 35 of Act No. 2747 was to erect a wall of safety against temptation
for a director of the Philippine National Bank. The prohibition against indirect loans is a recognition of
the familiar maxim that no man may serve two masters that where personal interest clashes with
fidelity to duty the latter almost always suffers.

5. ID.; ID.; ID. A loan to a partnership of which the wife of a director is a member falls within the
prohibition in section 35 of Act No. 2747 against indirect loans.

6. ID., ID.; ID.; PROHIBITION ON CORPORATION. When the corporation itself is forbidden to do
an act, the prohibition extends to the board of directors, and to each director separately and
individually.

7. ID.; REPEAL; EFFECT UPON VIOLATIONS OF THE OLD LAW. Where an Act of the Legislature
which penalizes an offense repeals a former Act which penalized the same offense, such repeal does not
have the effect of thereafter depriving the courts of jurisdiction to try, convict, and sentence offenders
charged with violations of the old law.

30
8. CRIMINAL LAW; ACT NO. 2747; GOOD FAITH AS A DEFENSE Under section 35 of Act No. 2747,
criminal intent is not necessarily material. The doing of the inhibited act, inhibited on account of public
policy and public interest, constitutes the crime.

9. ID.; ID.; ID.; The law will not allow private profit from a trust, and will not listen to any proof
of honest intent.

DECISION

MALCOLM, J p:

By telegrams and a letter of confirmation to the manager of the Aparri branch of the Philippine National
Bank, Venancio Conception, President of the Philippine National Bank, between April 10, 1919, and May
7, 1919, authorized an extension of credit in favor of "Puno y Conception, S. en C." in the amount of
P300,000. This special authorization was essential in view of the memorandum order of President
Conception dated May 17, 1918, limiting the discretional power of the local manager at Aparri, Cagayan,
to grant loans and discount negotiable documents to P5,000, which, in certain cases, could be increased
to P10,000. Pursuant to this authorization, credit aggregating P300,000, was granted the firm of "Puno y
Conception, S. en C.," the only security required consisting of six demand notes. The notes, together
with the interest, were taken up and paid by July 17, 1919.

"Puno y Concepcion, S. en C." was a copartnership capitalized at P100,000. Anacleto Concepcion

contributed P5,000; Clara Vda. de Concepcion, P5,000; Miguel S. Concepcion, P20,000; Clemente Puno,
P20,000; and Rosario San Agustin, "casada con. Gral. Venancio Concepcion," P50,000. Member Miguel S.
Conception was the administrator of the company.

On the facts recounted, Venancio Concepcion, as President of the Philippine National Bank and as
member of the board of directors of this bank, was charged in the Court of First Instance of Cagayan
with a violation of section 35 of Act No. 2747. He was found guilty by the Honorable Enrique V Filamor,
Judge of First Instance, and was sentenced to imprisonment for one year and six months, to pay a fine of
P3,000, with subsidiary imprisonment in case of insolvency, and the costs.

Section 35 of Act No. 2747, effective on February 20, 1918, just mentioned, to which reference must
hereafter repeatedly be made, reads as follows: "The National Bank shall not, directly or indirectly, grant
loans to any of the members of the board of directors of the bank nor to agents of the branch banks."
Section 49 of the same Act provides: "Any person who shall violate any of the provisions of this Act shall
be punished by a fine not to exceed ten thousand pesos, or by imprisonment not to exceed five years, or
by both such fine and imprisonment." These two sections were in effect in 1919 when the alleged
unlawful acts took place, but were repealed by Act No. 2938, approved on January 30, 1921.

Counsel for the defense assign ten errors as having been committed by the trial court. These errors they
have argued adroitly and exhaustively in their printed brief, and again in oral argument. Attorney-
General Villa-Real, in an exceptionally accurate and comprehensive brief, answers the propositions of
appellant one by one.

31
The questions presented are reduced to their simplest elements in the opinion which follows:

I. Was the granting of a credit of P300,000 to the copartnership "Puno y Concepcion, S. en C." by
Venacio Concepcion, President of the Philippine National Bank, a "loan" within the meaning of section
35 of Act No. 2747?

Counsel argue that the documents of record do not prove that the authority to make a loan was given,
but only show the concession of a credit. In this statement of fact, counsel is correct, for the exhibits in
question speak of a "credito" (credit) and not of a "prestamo" (loan).

The "credit" of an individual means his ability to borrow money by virtue of the confidence or trust
reposed by a lender that he will pay what he may promise. (Donnell vs. Jones [1848], 13 Ala., 490;
Bouvier's Law Dictionary.) A "loan" means the delivery by one party and the receipt by the other party of
a given sum of money, upon an agreement, express or implied, to repay the sum loaned, with or without
interest. (Payne vs. Gardiner [1864], 29 N.Y., 146, 167.) The concession of a "credit" necessarily involves
the granting of "loans" up to the limit of the amount fixed in the "credit."

II. Was the granting of a credit of P300,000 to the copartnership "Puno y Conception, S. en C.," by
Venancio Conception, President of the Philippine National Bank, a "loan" or a "discount."

In a letter dated August 7, 1916, H. Parker Willis, then President of the National Bank, inquired of the
Insular Auditor whether section 37 of Act No. 2612 was intended to apply to discounts as well as to
loans. The ruling of the Acting Insular Auditor, dated August 11, 1916, was to placed no restriction upon
discount transactions. It be becomes material, therefore, to discover the distinction between a "loan"
and a "discount," and to ascertain if the instant transaction comes under the first or the latter
denomination.

Discounts are favored by bankers because of their liquid nature, growing, as they do, out of an actual,
live transaction. But in its last analysis, to discount a paper is only a mode of loaning money, with,
however, these distinctions: (1) In a discount, interest is deducted in advance, while in a loan, interest is
taken at the expiration of a credit; (2) a discount is always on double-name paper; a loan is generally on
single-name paper.

Conceding, without deciding, that, as ruled by the Insular Auditor, the law covers loans and not
discounts, yet the conclusion is inevitable that the demand notes signed by the firm "Puno y
Concepcion, S. en C." were not discount paper but were mere evidences of indebtedness, because (1)
interest was not deducted from the face of the notes, but was paid when the notes fell due; and (2) they
were single-name and not double-name paper.

The facts of the instant case having relation to this phase of the argument are not essentially different
from the facts in the Binalbagan Estate case. Just as there it was declared that the operations
constituted a loan and not a discount, so should we here lay down the same ruling.

32
III. Was the granting of a credit of P300,000 to the copartnership, "Puno y Concepcion, S. en C." by
Venancio Concepcion, President of the Philippine National Bank, an "indirect loan" within the meaning
of section 35 of Act No. 2747?

Counsel argue that a loan to the partnership "Puno y Concepcion, S. en C." was not an "indirect loan." In
this connection, it should be recalled that the wife of the defendant held one-half of the capital of this
partnership.

In the interpretation and construction of statutes, the primary rule is to ascertain and give effect to the
intention of the Legislature. In this instance, the purpose of the Legislature is plainly to erect a wall of
safety against temptation for a director of the bank. The prohibition against indirect loans is a
recognition of the familiar maxim that no man may serve two masters that where personal interest
clashes with fidelity to duty the latter almost always suffers. If, therefore, it is shown that the husband is
financially interested in the success or failure of his wife's business venture, a loan to a partnership of
which the wife of a director is a member, falls within the prohibition.

Various provisions of the Civil Code serve to establish the familiar relationship called a conjugal
partnership. (Articles 1315, 1393, 1401, 1408, and 1412 can be specially noted.) A loan, therefore, to a
partnership of which the wife of a director of a bank is a member, is an indirect loan to such director.

That it was the intention of the Legislature to prohibit exactly such an occurrence is shown by the
acknowledged fact that in this instance the defendant was tempted to mingle his personal and family
affairs with his official duties, and to permit the loan of P300,000 to a partnership of no established
reputation and without asking for collateral security.

In the case of Lester and Wife vs. Howard bank ([1870], 33 Md., 558; 3 Am. Rep., 211), the Supreme
Court of Maryland said:

"What then was the purpose of the law when it declared that no director or officer should borrow of the
bank, and "if any director,' etc., 'shall be convicted,' etc., 'of directly or indirectly violating this section he
shall be punished by fine imprisonment?" We say to protect the stockholders, depositors and creditors
of the bank, against the temptation to which the directors and officers might be exposed, and the power
which as such they must necessarily possess in the control and management of the bank, and the
legislature unwilling to rely upon the implied understanding that in assuming this relation they would
not acquire any interest hostile or adverse to the most exact and faithful discharge of duty, declared in
express terms that they should not borrow, etc., of the bank."

In the case of People vs. Knapp ([1912], 206 N.Y., 373), relied upon in the Binalbagan Estate decision, it
was said:

"We are of opinion the statute forbade the loan to his copartnership firm as well as to himself directly.
The loan was made indirectly to him through his firm."

IV. Could Venancio Concepcion, President of the Philippine National Bank, be convicted of a
violation of section 35 of Act No. 2747 in relation with section 49 of the same Act, when these portions

33
of Act No. 2747 were repealed by Act No. 2938, prior to the filing of the information and the rendition of
the judgment?

As noted along toward the beginning of this opinion, section 49 of Act No. 2747, in relation to section 35
of the same Act, provides a punishment for any person who shall violate any of the provisions of the Act.
It is contended, however, by the appellant, that the repeal of these sections of Act No. 2747 by Act No.
2747 by Act No. 2938 has served to take away the basis for criminal prosecution.

This same question has been previously submitted and has received an answer adverse to such
contention in the cases of United States vs. Cuna ([1908], 12 Phil., 241); People vs. Concepcion ([1922],
43 Phil., 653); and Ong Chang Wing and Kwong Fok vs. United States ([1910], 218 U.S., 272; 40 Phil.,
1046). In other words, it has been the holding, and it must again be the holding, that where an Act of the
Legislature which penalizes an offense, such repeal does not have the effect of thereafter depriving the
courts of jurisdiction to try, convict, and sentence offenders charged with violations of the old law.

V. Was the granting of a credit of P300,000 to the copartnership "Puno y Concepcion, S. en C." by
Venancio Concepcion, President of the Philippine national Bank, in violation of section 35 of Act No.
2747, penalized by this law?

Counsel argue that since the prohibition contained in section 35 of Act No. 2747 is on the bank, and
since section 49 of said Act provides a punishment not on the bank when it violates any provision of the
law, but on a person violating any provision of the law, but on a person violating any provision of the
same, and imposing imprisonment as part of the penalty, the prohibition, contained in said 35 is without
penal sanction.

The answer is that when the corporation itself is forbidden to do an act, the prohibition extends to the
board of directors, and to each director separately and individually. (People vs. Concepcion, supra.)

VI. Does the alleged good faith of Venancio Concepcion, President of the Philippine National Bank,
in extending the credit of P300,000 to the copartnership "Puno y Concepcion, S. en C." constitute a legal
defense?

Counsel argue that if defendant committed the acts of which he was convicted, it was because he was
misled by rulings coming from the Insular Auditor. It is furthermore stated that since the loans made to
the copartnership "Puno y Concepcion, S. en C." have been paid, no loss has been suffered by the
Philippine National Bank.

Neither argument, even if conceded to be true, is conclusive. Under the statute which the defendant has
violated, criminal intent is not necessarily material. The doing of the inhabited act, inhibited on account
of public policy and public interest, constitutes the crime. And, in this instance, as previously
demonstrated, the acts of the President of the Philippine National Bank do not fall within the purview of
the rulings have controlling effect.

Morse, in his work, Banks and Banking, section 125, says:

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"It is fraud for directors to secure by means of their trust, any advantage not common to the other
stockholders. The law will not allow private profit from a trust, and will not listen to any proof of honest
intent."

JUDGMENT

On a review of the evidence of record, with reference to the decision of the trial court, and the errors
assigned by the appellant, and with reference to previous decisions of this court on the same subject,
we are irresistibly led to the conclusion that no reversible error was committed in the trial of this case,
and that the defendant has been proved guilty beyond a reasonable doubt of the crime charged in the
information. The penalty imposed by the trial judge falls within the limits of the punitive provisions of
the law.

Judgment is affirmed, with the costs of this instance against the appellant. So ordered.

Araullo, C.J., Johnson, Street, Avancea, Villamor, Ostrand, Johns, and Romualdez, JJ., concur.

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