CALTEX vs PALOMAR

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

FACTS
In 1960 Caltex launched a promotional scheme where the participants estimates the
actual number of liters in a hooded gas pump at each Caltex station will dispense during
a specified period. It has three levels; Dealers, Regional and National. Each level has its
own prizes, the contestant whose estimate is closest to the actual number of liters
dispensed by the hooded pump will be awarded first place and gets the chance to play in
the next level.

Foreseeing the extensive use of the mails, Caltex request to be cleared in some
provisions of Postal Law.The Postal Law enumerates non-mailable matters, authorizes
issuance of fraud order, and identifies effect of violating said law. Some items under non-
mailable matters are advertising on lottery, gift enterprise, or other similar schemes. In
response to Caltex’s request, Postmaster Palomar denied Caltex’s plea saying that its
scheme falls under advertising for lottery, which constitute non-mailable matter

Caltex asked for reconsideration; Postmaster reiterated his stance and added that if
scheme pushes through, fraud order would be served. Caltex sought judicial
intervention. And trial court ruled in their favor. Postmaster now appealed.

ISSUE

Whether or not “Caltex Hooded Pump Contest” violate Postal Law?

RULING

The Supreme Court, speaking through Justice Castro, declares that the "Caltex Hooded
Pump Contest" as described in the rules submitted by the appellee does not transgress
the provisions of the Postal Law.

Caltex’s contest does include the elements of prize and chance but not consideration as
no purchase is required of participants. Is it a gift enterprise? Still no because no
purchase. Lottery is prohibited if there is consideration; thereby gift enterprise is also
prohibited if there is consideration, following noscitur a sociis. But as demonstrated,
neither is Caltex’s game a lottery nor a gift enterprise. Hence it should be allowed to
proceed.

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).

Construction is defined as 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”. It applies in this case in how the
ponencia examined the meaning of “lottery” to come to a conclusion. Specifically, it
applied when the court looked into what lottery meant: consideration, prize, and chance.
This allowed for a decisive interpretation of the word in question.