STATUTORY CONSTRUCTION (CASE DIGEST)

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Case Digest for Caltex vs Palomar 18 SCRA 247
Corpus Juris Secundum

In 1960, Caltex announced its Caltex Hooded Pump Contest. The aim thereof is to let participants estimate the
actual number of liters a hooded gas pump at each Caltex station dispense during a specified period. In order to
join, 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. 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 and to make sure that the contest
does not violate the anti-lottery provision of the Revised Administrative Code. Palomar however denied the mailing
of such contest rules according to him violates the said provision. He contends that the contest can be subject to
fraud order if pursued because it falls under 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 which is not allowed by the Postal Law.
Caltex referred the case to the trial court and the trial court ruled in favor of Caltex. Palomar appealed arguing that
Caltex has no sufficient cause of action to seek declaratory relief (and decisions can only be advisory in nature) and
that the proposed contest does violate the Postal Law.

ISSUE: Whether or not the contest violates the Postal Law (Chap 52 of the Revised Administrative Code).

HELD: The issue at bar cannot be passed upon. Judgment has to be made otherwise Caltex will have no definite
recourse. Hence, Caltex has sufficient cause of action for declaratory relief.
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. The elements of prize and chance are too obvious
in the disputed scheme to be the subject of contention. 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 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. 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. The scheme does not only appear to be, but actually is, a gratuitous distribution of
property by chance. And that the purchase of any Caltex product is not a pre-requisite in joining the said contest.
Further, the required 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. 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. 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. Lottery and
gift enterprise must be construed as the same.