CALTEX VS.

PALOMAR
G.R. No. L-19650, September 29, 1966

FACTS:
In 1960, Caltex conceived a promotional scheme called “Caltex Hooded Pump Contest”.
Participants are to estimate the number of liters a hooded gas pump at each Caltex
station will dispense during a specified period. For the privilege to participate, no fees or
consideration is required to be paid, nor purchase of Caltex products required to be
made.
Foreseeing the extensive use of the mails, representations were made by Caltex with
the postal authorities for the contest to be cleared in advance for mailing. And thru
counsel, Caltex positioned that the contest does not violate the anti-lottery provisions of
the postal law. The Acting Postmaster General opined that it is within the purview of the
provision’s sections 1954, 1982 and 1983, and declined to grant the requested
clearance. Caltex then sought for reconsideration, stressing that there being involved no
consideration in the part of the contestant, the contest was not, under controlling
authorities, condemnable as a lottery. The Postmaster General maintained his view and
not only denied the use of mails but as well as threatened that if contest was conducted
a fraud order will have to be issued against Caltex.

ISSUE:
Whether or not the petition states a sufficient cause of action for declaratory relief, and
whether or not Caltex has violated the provisions of the postal law.

RULING:
Caltex has made out a case for declaratory relief. A declaratory relief is available to any
person whose rights are affected by a statute, it is to determine any question of
construction or validity arising under the statute and for a declaration of his rights
thereunder. In the present controversy, a number of points stand out between Caltex
and the Postmaster regarding their interpretation of the enforcement of the postal law –
sections 1954, 1982 and 1983, mostly regarding anti-lottery and anti-fraud sent thru
mails.

Caltex Hooded Pump Contest does not qualify as lottery or gift enterprise. The essential
elements of lottery are: 1.) considerations, 2.) prize and 3.) Chance; a gift enterprise is
commonly applied in sporting artifice of which goods are sold for their market value but
by way of inducement each purchaser is given a chance. Hence in Caltex’s contest,
participants are not required to purchase any considerations nor any items from Caltex,
is a mere gratuitous distribution of property by chance.