Caltex v. Palomar GR L-19650, 29 September 1966 (18 SCRA 247) Facts: In 1960, Caltex (Phils) Inc.

conceived a promotional scheme Caltex Hooded Pump Contest calculated to drum up patronage for its products, calling for partic ipants therein to estimate the actual number of liters a hooded gas pump at each Caltex station will dispense during a specified period. For the privilege to pa rticipate, no fee or consideration is required to be paid. Neither a purchase of Caltex products is required. Entry forms were available upon request at each Ca ltex station where a sealed can was provided for the deposit of accomplished ent ry stubs. Foreseeing the extensive use of the mails, not only as amongst the med iator publicizing the contest but also for the transmission of communications re lative thereto, representations were made by Caltex with the postal authorities for the contest to be cleared in advance for mailing, in view of sections 1954(a ), 1982 and 1983 of the Revised Administrative Code. Such overtures were formali zed in a letter to the Postmaster General, dated 31 October 1960, in which the C altex, thru counsel, enclosed a copy of the contest rules and endeavored to just ify its position that the contest does not violate the anti-lottery provisions o f the Postal Law. Unimpressed, the then Acting Postmaster General Enrico Palomar opined that the scheme falls within the purview of the provisions aforesaid and declined to grant the requested clearance. Caltex thereupon invoked judicial intervention by filing a petition for declarat ory relief against the Postmaster General, praying that judgment be rendered dec laring 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 conte st to the attention of the public. The trial court ruled that the contest does n ot violate the Postal Code and that the Postmaster General has no right to bar t he public distribution of the contest rules by the mails. The Postmaster General appealed to the Supreme Court. Issues: * Whether construction should be employed in the case. * Whether the contest is a lottery or a gift enterprise that violates the provis ions of the Postal Law. Held: Construction is the art or process of discovering and expounding the meani ng 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. In t he present case, the prohibitive provisions of the Postal Law inescapably requir e an inquiry into the intended meaning of the words used therein. This is as muc h a question of construction or interpretation as any other. The Court is tasked to look beyond the fair exterior, to the substance, in order to unmask the real element and pernicious tendencies that the law is seeking to prevent. Lottery extends to all schemes for the distribution of prizes by chance, such as p olicy playing, gift exhibitions, prize concerts, raffles at fairs, etc., and var ious forms of gambling. The three essential elements of a lottery are: (1) consi deration, (2) prize, and (3) chance. Gift enterprise, on the other hand, is common ly applied to a sporting artifice under which goods are sold for their market va lue but by way of inducement each purchaser is given a chance to win a prize. Fu rther, consonant to the well-known principle of legal hermeneutics noscitur a so ciis, 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 sligh test indicium of any intent to eliminate that element of consideration from the g ift enterprise therein included. Gratuitous distribution of property by lot or ch ance does not constitute lottery , if it is not resorted to as a device to evade th

e law and no consideration is derived, directly or indirectly, from the party re ceiving the chance, gambling spirit not being cultivated or stimulated thereby. Thus, gift enterprises and similar schemes therein contemplated are condemnable only if, like lotteries, they involve the element of consideration. In the prese nt case, there is no requirement in the rules that any fee be paid, any merchand ise be bought, any service be rendered, or any value whatsoever be given for the privilege to participate; for the scheme to be deemed a lottery. Neither is the re is a sale of anything to which the chance offered is attached as an inducemen t to the purchaser for the scheme to be deemed a gift enterprise. The scheme is merely a gratuitous distribution of property by chance. The Supreme Court affirmed the appealed judgment, without costs.