Republic of the Philippines

SUPREME COURT
Manila

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.

Office of the Solicitor General for respondent and appellant.

Ross, Selph and Carrascoso for petitioner and appellee.

CASTRO, J.:

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.

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 Everready 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. 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; Pl,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 to
 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:

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 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 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, 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 in 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".

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 and 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 petitioner does
 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 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., G.R. No. L-3062, September 28,
1951; Delumen, et al. vs. Republic of the Philippines, 50 O.G., No. 2, pp. 576, 578-579; Edades vs. Edades, et al.,
G.R. No. L-8964, July 31, 1956). 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 right 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 interests
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).

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, if 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 can 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 decisions assume the same 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 abovementioned
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. 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
task is considerably lightened inasmuch as in the same case just cited, this Court has laid down a definitive yard-
stick 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
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 liter 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 head 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.1awphl.nt

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.

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 prescribed? 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 predicated, 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 of 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. States, 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.

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 insofar as the element of chance is concerned
it is only logical that the term under a 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.

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.

Case Digest for Caltex vs Palomar 18 SCRA 247

BY IAMFREAKGEEK ON JUNE 16, 2013

G.R. No. L-19650

Caltex Philippines, Inc., petitioner-appellee

Vs.

Enrico Palomar, in his capacity as The Postmaster General, respondent-appellant

FACTS:

In the year 1960, Caltex Philippines conceived and laid the ground work for a promotional scheme
calculated to drum up patronage for its oil products. The contest was entitled Caltex Hooded Pump Contest,
which calls for participants to estimate the actual number of liters as hooded gas pump at each Caltex station will
dispense during a specific period.

Foreseeing the extensive use of the mails not only as amongst the media for publicizing the contest but also
for the transmission of communications, representations were made by Caltex with the postal authorities for the
contest to be cleared in advance for mailing. This was formalized in a letter sent by Caltex to the Post master
General, dated October 31, 1960, in which Caltex, thru its counsel, enclosed a copy of the contest rules and
endeavored to justify its position that the contest does not violate the The Anti-Lottery Provisions of the Postal
Law.

Unfortunately, the Palomar, the acting Postmaster General denied Caltexs request stating that the contest
scheme falls within the purview of the Anti-lottery Provision and ultimately, declined Clatexs request for
clearance.

Caltex sought reconsideration, stressing that there being no consideration involved in part of the
contestant, the contest was not commendable as a lottery. However, the Postmaster General maintained his view
that the contest involves consideration, or even it does not involve any consideration it still falls as Gift
Enterprise, which was equally banned by the Postal Law.

ISSUE:

Whether the petition states a sufficient cause of action for declaratory relief?

Whether or not the scheme proposed by Caltex the appellee is within the coverage of the prohibitive provisions of
the Postal Law?

HELD:

I.

By express mandate of Section 1 of Rule 66 of the old Rules of Court which deals with the applicability to invoke
declaratory relief which states: Declaratory relief is available to 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 rights
thereunder.

In amplification, conformably established jurisprudence on the matter, laid down certain conditions:

There must be a justiciable controversy.

The controversy must be between persons whose interests are adverse.

The party seeking declaratory relief must have a legal interest in the controversy.

The issue involved must be ripe for judicial determination.

With the appellees bent to hold the contest and the appellants threat to issue a fraud order if carried out, the
contenders are confronted by an ominous shadow of imminent and inevitable litigation unless their differences are
settled and stabilized by a declaration. And, contrary to the insinuation of the appellant, the time is long past when
it can rightly be said that merely the appellees 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.

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, amongst others, by reason of
the fact that the given case is not explicitly provided for in the law.

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.

II.

Is the Contest Scheme a Lottery?

Lottery

Extends to all schemes for the distribution of prizes by chance

e.g. policy playing, gift exhibitions, prize concerts, raffles and fairs as well as various forms of gambling.

Three Essential Elements:

Consideration

Prize

3. Chance

No, according to the Supreme Court, the contest scheme is not a lottery but it appears to be more of a
gratuitous distribution since nowhere in the rules is any requirements that any fee be paid, any merchandise be
bought, any services be rendered, or any value whatsoever be given for the privilege to participate. Since, a
prospective contestant has to do is 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. Because of this, the contest fails to exhibit any
discernible consideration which would brand it as a lottery.

Moreover, 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 it does condemn as criminal scheme in which
a valuable consideration of some kind is paid directly or indirectly for the chance to draw a prize.

Is the scheme, as sales promotion which would benefit the sponsor in the way of increased patronage be
considered as a consideration and thus violates the Postal Law?
 No, the required element of consideration does not consist of the benefit derived by the sponsors of the
contest. The true test lies on whether or not the participant pays a valuable consideration for the chance of
winning and not whether or not those conducting the enterprise receiver something of value for the distribution of
the prize.

Is the Contest Scheme a Gift Enterprise?

Even if the term Gift Enterprise is not yet defined explicitly, there appears to be a consensus among
lexicographers and standard authorities that the term is common applied to a sporting artifice of under which
goods are sold for their market value but by way of inducement to purchase the product, the purchaser is given a
chance to win a prize.

And thus, the term of gift enterprise cannot be established in the case at bar since there is not sale of
anything to which the chance offered is attached as an inducement to the purchaser. The contest is open to all
qualified contestant irrespective of whether or not they buy the appellees products.

The lesson that we derive from this state of the pertinent jurisprudence is that every case must be resolved upon
the particular phraseology of the applicable statutory provision. It is only logical that the term under a construction
should be accorded no other meaning than that which is consistent with the nature of the word associated
therewith.

In the end, the Supreme Court ruled out that under the prohibitive provision of the Postal Law, gift enterprise and
similar schemes therein contemplated are condemnable only if, like lotteries, they involve the element of
consideration. Finding non in the contest, it was ruled out that the appellee may not be denied the use of the mails
for the purpose thereof.
18 SCRA 247 Statutory Construction Construction; defined Noscitur A Sociis

In 1960, Caltex (Philippines), Inc. announced its Caltex Hooded Pump Contest. The mechanics of the
contest were as follows:

1. Participants must estimate the actual number of liters a hooded gas pump at each Caltex station will
dispense during a specified period;

2. Contest is open to all car owners or licensed drivers;

3. Participants need not buy any Caltex products to be eligible. No fee is required.

4. Participants just need to fill out a form and drop their entries at the nearest Caltex station.

To publicize their contest, Caltex sought the assistance of the Philippine Postal Office. However, then
acting Postmaster Enrico Palomar denied the request of Caltex as Palomar deemed that the contest is a
violation of the Postal Law (Chapter 52 of the Revised Administrative Code [RAC]).

Palomar cited Section 1954 of the RAC:

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
to 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:

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.

According to Palomar, the contest is a lottery hence, communications pertaining thereto cannot be
mailed by Caltex via Philippine Post.

Feeling aggrieved, Caltex brought the issue before the regular courts thru a petition for declaratory
relief. Caltex argued that their contest is not a lottery; that under prevailing jurisprudence, lottery
consists of the following elements:

a. consideration;

b. prize;

c. chance.

Caltex insists that their contest is not a lottery because the first element, consideration, is missing. Said
element is missing because participants are not required to pay anything theres no consideration on
the part of the participants.

Palomar assailed the petition as he argued that the same is not proper. He insisted that he was merely
applying the law and that there is no legal issue at all; that there is no need for the courts to call for a
construction on the statute in question. Palomar further argued that even if the said contest, assuming
arguendo, is not considered a lottery, the same is considered as a gift enterprise which is still prohibited
by the Postal Law to be mailed.

ISSUES:

1. Whether or not Caltexs petition for declaratory relief is proper.

2. Whether or not the Caltex contest is a lottery/gift enterprise.

HELD:

1. Yes. The petition is proper. Construction of a law is in order if what is in issue is an inquiry into the
intended meaning of the words used in a certain law. As defined in Blacks Law Dictionary: 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, amongst
others, by reason of the fact that the given case is not explicitly provided for in the law.

2. No.

The contest is not a lottery. The contention of Caltex is well taken, i.e., the first element is lacking (no
consideration).

The contest is also not a gift enterprise. The Supreme Court went on to discuss that under prevailing
jurisprudence and legal doctrines as well as definitions provided by legal luminaries, there is no explicit
definition as to what a gift enterprise is. However, under the Postal Law, the term gift enterprise was
used in association with the term lottery. As such, the principle of noscitur a sociis, a principle in
statutory construction, is applicable. Under this principle, it is only logical that the term under a
construction should be accorded no other meaning than that which is consistent with the nature of the
word associated therewith. Hence, applying noscitur a sociis, if lottery is prohibited only if it involves a
consideration, so also must the term gift enterprise be so construed. Therefore, since the contest does
not include a consideration, it is neither a lottery nor a gift enterprise. Caltex should be allowed to avail
of the Philippine postal service.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-6355-56 August 31, 1953

PASTOR M. ENDENCIA and FERNANDO JUGO, plaintiffs-appellees,

vs.
SATURNINO DAVID, as Collector of Internal Revenue, defendant-appellant.

Office of the Solicitor General Juan R. Liwag and Solicitor Jose P. Alejandro for appellant.
Manuel O. Chan for appellees.

MONTEMAYOR, J.:

This is a joint appeal from the decision of the Court of First Instance of Manila declaring section 13 of Republic Act
No. 590 unconstitutional, and ordering the appellant Saturnino David as Collector of Internal Revenue to re-fund to
Justice Pastor M. Endencia the sum of P1,744.45, representing the income tax collected on his salary as Associate
Justice of the Court of Appeals in 1951, and to Justice Fernando Jugo the amount of P2,345.46, representing the
income tax collected on his salary from January 1,1950 to October 19, 1950, as Presiding Justice of the Court of
Appeals, and from October 20, 1950 to December 31,1950, as Associate Justice of the Supreme Court, without
special pronouncement as to costs.

Because of the similarity of the two cases, involving as they do the same question of law, they were jointly
submitted for determination in the lower court. Judge Higinio B. Macadaeg presiding, in a rather exhaustive and
well considered decision found and held that under the doctrine laid down by this Court in the case of Perfecto vs.
Meer, 85 Phil., 552, the collection of income taxes from the salaries of Justice Jugo and Justice Endencia was a
diminution of their compensation and therefore was in violation of the Constitution of the Philippines, and so
ordered the refund of said taxes.

We see no profit and necessity in again discussing and considering the proposition and the arguments pro and
cons involved in the case of Perfecto vs. Meer, supra, which are raised, brought up and presented here. In that
case, we have held despite the ruling enunciated by the United States Federal Supreme Court in the case of O
'Malley vs. Woodrought 307 U. S., 277, that taxing the salary of a judicial officer in the Philippines is a diminution of
such salary and so violates the Constitution. We shall now confine our-selves to a discussion and determination of
the remaining question of whether or not Republic Act No. 590, particularly section 13, can justify and legalize the
collection of income tax on the salary of judicial officers.

According to the brief of the Solicitor General on behalf of appellant Collector of Internal Revenue, our decision in
the case of Perfecto vs. Meer, supra, was not received favorably by Congress, because immediately after its
promulgation, Congress enacted Republic Act No. 590. To bring home his point, the Solicitor General reproduced
what he considers the pertinent discussion in the Lower House of House Bill No. 1127 which became Republic Act
No. 590.

For purposes of reference, we are reproducing section 9, Article VIII of our Constitution:.

SEC. 9. The members of the Supreme Court and all judges of inferior courts shall hold office during good
behavior, until they reach the age of seventy years, or become incapacitated to discharge the duties of
their office. They shall receive such compensation as may be fixed by law, which shall not be diminished
 during their continuance in office. Until the Congress shall provide otherwise, the Chief Justice of the
Supreme Court shall receive an annual compensation of sixteen thousand pesos, and each Associate
Justice, fifteen thousand pesos.

As already stated construing and applying the above constitutional provision, we held in the Perfecto case that
judicial officers are exempt from the payment of income tax on their salaries, because the collection thereof by the
Government was a decrease or diminution of their salaries during their continuance in office, a thing which is
expressly prohibited by the Constitution. Thereafter, according to the Solicitor General, because Congress did not
favorably receive the decision in the Perfecto case, Congress promulgated Republic Act No. 590, if not to
counteract the ruling in that decision, at least now to authorize and legalize the collection of income tax on the
salaries of judicial officers. We quote section 13 of Republic Act No. 590:

SEC 13. No salary wherever received by any public officer of the Republic of the Philippines shall be
considered as exempt from the income tax, payment of which is hereby declared not to be dimunition of
his compensation fixed by the Constitution or by law.

So we have this situation. The Supreme Court in a decision interpreting the Constitution, particularly section 9,
Article VIII, has held that judicial officers are exempt from payment of income tax on their salaries, because the
collection thereof was a diminution of such salaries, specifically prohibited by the Constitution. Now comes the
Legislature and in section 13, Republic Act No. 590, says that "no salary wherever received by any public officer of
the Republic (naturally including a judicial officer) shall be considered as exempt from the income tax," and
proceeds to declare that payment of said income tax is not a diminution of his compensation. Can the Legislature
validly do this? May the Legislature lawfully declare the collection of income tax on the salary of a public official,
specially a judicial officer, not a decrease of his salary, after the Supreme Court has found and decided otherwise?
To determine this question, we shall have to go back to the fundamental principles regarding separation of
powers.

Under our system of constitutional government, the Legislative department is assigned the power to make and
enact laws. The Executive department is charged with the execution of carrying out of the provisions of said laws.
But the interpretation and application of said laws belong exclusively to the Judicial department. And this authority
to interpret and apply the laws extends to the Constitution. Before the courts can determine whether a law is
constitutional or not, it will have to interpret and ascertain the meaning not only of said law, but also of the
pertinent portion of the Constitution in order to decide whether there is a conflict between the two, because if
there is, then the law will have to give way and has to be declared invalid and unconstitutional.

Defining and interpreting the law is a judicial function and the legislative branch may not limit or restrict
the power granted to the courts by the Constitution. (Bandy vs. Mickelson et al., 44N. W., 2nd 341, 342.)

When it is clear that a statute transgresses the authority vested in the legislature by the Constitution, it is
the duty of the courts to declare the act unconstitutional because they cannot shrink from it without
violating their oaths of office. This duty of the courts to maintain the Constitution as the fundamental law
of the state is imperative and unceasing; and, as Chief Justice Marshall said, whenever a statute is in
violation of the fundamental law, the courts must so adjudge and thereby give effect to the Constitution.
Any other course would lead to the destruction of the Constitution. Since the question as to the
constitutionality of a statute is a judicial matter, the courts will not decline the exercise of jurisdiction
upon the suggestion that action might be taken by political agencies in disregard of the judgment of the
judicial tribunals. (11 Am. Jur., 714-715.)

Under the American system of constitutional government, among the most important functions in trusted
to the judiciary are the interpreting of Constitutions and, as a closely connected power, the determination
of whether laws and acts of the legislature are or are not contrary to the provisions of the Federal and
State Constitutions. (11 Am. Jur., 905.).
By legislative fiat as enunciated in section 13, Republic Act NO. 590, Congress says that taxing the salary of a
judicial officer is not a decrease of compensation. This is a clear example of interpretation or ascertainment of the
meaning of the phrase "which shall not be diminished during their continuance in office," found in section 9,
Article VIII of the Constitution, referring to the salaries of judicial officers. This act of interpreting the Constitution
or any part thereof by the Legislature is an invasion of the well-defined and established province and jurisdiction of
the Judiciary.

The rule is recognized elsewhere that the legislature cannot pass any declaratory act, or act declaratory of
what the law was before its passage, so as to give it any binding weight with the courts. A legislative
definition of a word as used in a statute is not conclusive of its meaning as used elsewhere; otherwise, the
legislature would be usurping a judicial function in defining a term. (11 Am. Jur., 914, emphasis supplied)

The legislature cannot, upon passing a law which violates a constitutional provision, validate it so as to
prevent an attack thereon in the courts, by a declaration that it shall be so construed as not to violate the
constitutional inhibition. (11 Am. Jur., 919, emphasis supplied)

We have already said that the Legislature under our form of government is assigned the task and the power to
make and enact laws, but not to interpret them. This is more true with regard to the interpretation of the basic
law, the Constitution, which is not within the sphere of the Legislative department. If the Legislature may declare
what a law means, or what a specific portion of the Constitution means, especially after the courts have in actual
case ascertain its meaning by interpretation and applied it in a decision, this would surely cause confusion and
instability in judicial processes and court decisions. Under such a system, a final court determination of a case
based on a judicial interpretation of the law of the Constitution may be undermined or even annulled by a
subsequent and different interpretation of the law or of the Constitution by the Legislative department. That
would be neither wise nor desirable, besides being clearly violative of the fundamental, principles of our
constitutional system of government, particularly those governing the separation of powers.

So much for the constitutional aspect of the case. Considering the practical side thereof, we believe that the
collection of income tax on a salary is an actual and evident diminution thereof. Under the old system where the
in-come tax was paid at the end of the year or sometime thereafter, the decrease may not be so apparent and
clear. All that the official who had previously received his full salary was called upon to do, was to fulfill his
obligation and to exercise his privilege of paying his income tax on his salary. His salary fixed by law was received
by him in the amount of said tax comes from his other sources of income, he may not fully realize the fact that his
salary had been decreased in the amount of said income tax. But under the present system of withholding the
income tax at the source, where the full amount of the income tax corresponding to his salary is computed in
advance and divided into equal portions corresponding to the number of pay-days during the year and actually
deducted from his salary corresponding to each payday, said official actually does not receive his salary in full,
because the income tax is deducted therefrom every payday, that is to say, twice a month. Let us take the case of
Justice Endencia. As Associate Justice of the Court of Appeals, his salary is fixed at p12,000 a year, that is to say, he
should receive P1,000 a month or P500 every payday, fifteenth and end of month. In the present case, the
amount collected by the Collector of Internal Revenue on said salary is P1,744.45 for one year. Divided by twelve
(months) we shall have P145.37 a month. And further dividing it by two paydays will bring it down to P72.685,
which is the income tax deducted form the collected on his salary each half month. So, if Justice Endencia's salary
as a judicial officer were not exempt from payment of the income tax, instead of receiving P500 every payday, he
would be actually receiving P427.31 only, and instead of receiving P12,000 a year, he would be receiving but
P10,255.55. Is it not therefor clear that every payday, his salary is actually decreased by P72.685 and every year is
decreased by P1,744.45?

Reading the discussion in the lower House in connection with House Bill No. 1127, which became Republic Act No.
590, it would seem that one of the main reasons behind the enactment of the law was the feeling among certain
legislators that members of the Supreme Court should not enjoy any exemption and that as citizens, out of
patriotism and love for their country, they should pay income tax on their salaries. It might be stated in this
connection that the exemption is not enjoyed by the members of the Supreme Court alone but also by all judicial
officers including Justices of the Court of Appeals and judges of inferior courts. The exemption also extends to
other constitutional officers, like the President of the Republic, the Auditor General, the members of the
Commission on Elections, and possibly members of the Board of Tax Appeals, commissioners of the Public Service
Commission, and judges of the Court of Industrial Relations. Compares to the number of all these officials, that of
the Supreme Court Justices is relatively insignificant. There are more than 990 other judicial officers enjoying the
exemption, including 15 Justices of the Court of Appeals, about 107 Judges of First Instance, 38 Municipal Judges
and about 830 Justices of the Peace. The reason behind the exemption in the Constitution, as interpreted by the
United States Federal Supreme Court and this Court, is to preserve the independence of the Judiciary, not only of
this High Tribunal but of the other courts, whose present membership number more than 990 judicial officials.

The exemption was not primarily intended to benefit judicial officers, but was grounded on public policy. As said by
Justice Van Devanter of the United States Supreme Court in the case of Evans vs. Gore (253 U. S., 245):

The primary purpose of the prohibition against diminution was not to benefit the judges, but, like the
clause in respect of tenure, to attract good and competent men to the bench and to promote that
independence of action and judgment which is essential to the maintenance of the guaranties, limitations
and pervading principles of the Constitution and to the administration of justice without respect to person
and with equal concern for the poor and the rich. Such being its purpose, it is to be construed, not as a
private grant, but as a limitation imposed in the public interest; in other words, not restrictively, but in
accord with its spirit and the principle on which it proceeds.

Having in mind the limited number of judicial officers in the Philippines enjoying this exemption, especially when
the great bulk thereof are justices of the peace, many of them receiving as low as P200 a month, and considering
further the other exemptions allowed by the income tax law, such as P3,000 for a married person and P600 for
each dependent, the amount of national revenue to be derived from income tax on the salaries of judicial officers,
were if not for the constitutional exemption, could not be large or substantial. But even if it were otherwise, it
should not affect, much less outweigh the purpose and the considerations that prompted the establishment of the
constitutional exemption. In the same case of Evans vs. Gore, supra, the Federal Supreme Court declared "that
they (fathers of the Constitution) regarded the independence of the judges as far as greater importance than any
revenue that could come from taxing their salaries.

When a judicial officer assumed office, he does not exactly ask for exemption from payment of income tax on his
salary, as a privilege . It is already attached to his office, provided and secured by the fundamental law, not
primarily for his benefit, but based on public interest, to secure and preserve his independence of judicial thought
and action. When we come to the members of the Supreme Court, this excemption to them is relatively of short
duration. Because of the limited membership in this High Tribunal, eleven, and due to the high standards of
experience, practice and training required, one generally enters its portals and comes to join its membership quite
late in life, on the aver-age, around his sixtieth year, and being required to retire at seventy, assuming that he does
not die or become incapacitated earlier, naturally he is not in a position to receive the benefit of exemption for
long. It is rather to the justices of the peace that the exemption can give more benefit. They are relatively more
numerous, and because of the meager salary they receive, they can less afford to pay the income tax on it and its
diminution by the amount of the income tax if paid would be real, substantial and onerous.

Considering exemption in the abstract, there is nothing unusual or abhorrent in it, as long as it is based on public
policy or public interest. While all other citizens are subject to arrest when charged with the commission of a
crime, members of the Senate and House of Representatives except in cases of treason, felony and breach of the
peace are exempt from arrest, during their attendance in the session of the Legislature; and while all other citizens
are generally liable for any speech, remark or statement, oral or written, tending to cause the dishonor, discredit
or contempt of a natural or juridical person or to blacken the memory of one who is dead, Senators and
Congressmen in making such statements during their sessions are extended immunity and exemption.
And as to tax exemption, there are not a few citizens who enjoy this exemption. Persons, natural and juridical, are
exempt from taxes on their lands, buildings and improvements thereon when used exclusively for educational
purposes, even if they derive income therefrom. (Art. VI, Sec. 22 [3].) Holders of government bonds are exempted
from the payment of taxes on the income or interest they receive therefrom (sec. 29 (b) [4], National Internal
Revenue Code as amended by Republic Act No. 566). Payments or income received by any person residing in the
Philippines under the laws of the United States administered by the United States Veterans Administration are
exempt from taxation. (Republic Act No. 360). Funds received by officers and enlisted men of the Philippine Army
who served in the Armed Forces of the United States, allowances earned by virtue of such services corresponding
to the taxable years 1942 to 1945, inclusive, are exempted from income tax. (Republic Act No. 210). The payment
of wages and allowances of officers and enlisted men of the Army Forces of the Philippines sent to Korea are also
exempted from taxation. (Republic Act No. 35). In other words, for reasons of public policy and public interest, a
citizen may justifiably by constitutional provision or statute be exempted from his ordinary obligation of paying
taxes on his income. Under the same public policy and perhaps for the same it not higher considerations, the
framers of the Constitution deemed it wise and necessary to exempt judicial officers from paying taxes on their
salaries so as not to decrease their compensation, thereby insuring the independence of the Judiciary.

In conclusion we reiterate the doctrine laid down in the case of Perfecto vs. Meer, supra, to the effect that the
collection of income tax on the salary of a judicial officer is a diminution thereof and so violates the Constitution.
We further hold that the interpretation and application of the Constitution and of statutes is within the exclusive
province and jurisdiction of the Judicial department, and that in enacting a law, the Legislature may not legally
provide therein that it be interpreted in such a way that it may not violate a Constitutional prohibition, thereby
tying the hands of the courts in their task of later interpreting said statute, specially when the interpretation
sought and provided in said statute runs counter to a previous interpretation already given in a case by the highest
court of the land.

In the views of the foregoing considerations, the decision appealed from is hereby affirmed, with no
pronouncement as to costs.
93 Phil. 699 Political Law The Judiciary Te Legislature Separation of Powers

Statutory Construction Who May Interpret Laws

Saturnino David, the then Collector of Internal Revenue, ordered the taxing of Justice Pastor Endencias
and Justice Fernando Jugos (and other judges) salary pursuant to Sec. 13 of Republic Act No. 590 which
provides that

No salary wherever received by any public officer of the Republic of the Philippines shall be considered
as exempt from the income tax, payment of which is hereby declared not to be a diminution of his
compensation fixed by the Constitution or by law.

The judges however argued that under the case of Perfecto vs Meer, judges are exempt from taxation
this is also in observance of the doctrine of separation of powers, i.e., the executive, to which the
Internal Revenue reports, is separate from the judiciary; that under the Constitution, the judiciary is
independent and the salaries of judges may not be diminished by the other branches of government;
that taxing their salaries is already a diminution of their benefits/salaries (see Section 9, Art. VIII,
Constitution).

The Solicitor General, arguing in behalf of the CIR, states that the decision in Perfecto vs Meer was
rendered ineffective when Congress enacted Republic Act No. 590.

ISSUE: Whether or not Sec 13 of RA 590 is constitutional.

HELD: No. The said provision is a violation of the separation of powers. Only courts have the power to
interpret laws. Congress makes laws but courts interpret them. In Sec. 13, R.A. 590, Congress is already
encroaching upon the functions of the courts when it inserted the phrase: payment of which [tax] is
hereby declared not to be a diminution of his compensation fixed by the Constitution or by law.

Here, Congress is already saying that imposing taxes upon judges is not a diminution of their salary. This
is a clear example of interpretation or ascertainment of the meaning of the phrase which shall not be
diminished during their continuance in office, found in Section 9, Article VIII of the Constitution,
referring to the salaries of judicial officers. This act of interpreting the Constitution or any part thereof
by the Legislature is an invasion of the well-defined and established province and jurisdiction of the
Judiciary.

The rule is recognized elsewhere that the legislature cannot pass any declaratory act, or act declaratory
of what the law was before its passage, so as to give it any binding weight with the courts. A legislative
definition of a word as used in a statute is not conclusive of its meaning as used elsewhere; otherwise,
the legislature would be usurping a judicial function in defining a term.

The interpretation and application of the Constitution and of statutes is within the exclusive province
and jurisdiction of the judicial department, and that in enacting a law, the Legislature may not legally
provide therein that it be interpreted in such a way that it may not violate a Constitutional prohibition,
thereby tying the hands of the courts in their task of later interpreting said statute, especially when the
interpretation sought and provided in said statute runs counter to a previous interpretation already
given in a case by the highest court of the land.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-32717 November 26, 1970

AMELITO R. MUTUC, petitioner,

vs.
COMMISSION ON ELECTIONS, respondent.

Amelito R. Mutuc in his own behalf.

Romulo C. Felizmena for respondent.

FERNANDO, J.:

The invocation of his right to free speech by petitioner Amelito Mutuc, then a candidate for delegate to the
Constitutional Convention, in this special civil action for prohibition to assail the validity of a ruling of respondent
Commission on Elections enjoining the use of a taped jingle for campaign purposes, was not in vain. Nor could it be
considering the conceded absence of any express power granted to respondent by the Constitutional Convention
Act to so require and the bar to any such implication arising from any provision found therein, if deference be paid
to the principle that a statute is to be construed consistently with the fundamental law, which accords the utmost
priority to freedom of expression, much more so when utilized for electoral purposes. On November 3, 1970, the
very same day the case was orally argued, five days after its filing, with the election barely a week away, we issued
a minute resolution granting the writ of prohibition prayed for. This opinion is intended to explain more fully our
decision.

In this special civil action for prohibition filed on October 29, 1970, petitioner, after setting forth his being a
resident of Arayat, Pampanga, and his candidacy for the position of delegate to the Constitutional Convention,
alleged that respondent Commission on Elections, by a telegram sent to him five days previously, informed him
that his certificate of candidacy was given due course but prohibited him from using jingles in his mobile units
equipped with sound systems and loud speakers, an order which, according to him, is "violative of [his]
constitutional right ... to freedom of speech." 1 There being no plain, speedy and adequate remedy, according to
petitioner, he would seek a writ of prohibition, at the same time praying for a preliminary injunction. On the very
next day, this Court adopted a resolution requiring respondent Commission on Elections to file an answer not later
than November 2, 1970, at the same time setting the case for hearing for Tuesday November 3, 1970. No
preliminary injunction was issued. There was no denial in the answer filed by respondent on November 2, 1970, of
the factual allegations set forth in the petition, but the justification for the prohibition was premised on a provision
of the Constitutional Convention Act, 2which made it unlawful for candidates "to purchase, produce, request or
distribute sample ballots, or electoral propaganda gadgets such as pens, lighters, fans (of whatever nature),
flashlights, athletic goods or materials, wallets, bandanas, shirts, hats, matches, cigarettes, and the like, whether of
domestic or foreign origin." 3It was its contention that the jingle proposed to be used by petitioner is the recorded
or taped voice of a singer and therefore a tangible propaganda material, under the above statute subject to
confiscation. It prayed that the petition be denied for lack of merit. The case was argued, on November 3, 1970,
with petitioner appearing in his behalf and Attorney Romulo C. Felizmena arguing in behalf of respondent.
This Court, after deliberation and taking into account the need for urgency, the election being barely a week away,
issued on the afternoon of the same day, a minute resolution granting the writ of prohibition, setting forth the
absence of statutory authority on the part of respondent to impose such a ban in the light of the doctrine
ofejusdem generis as well as the principle that the construction placed on the statute by respondent Commission
on Elections would raise serious doubts about its validity, considering the infringement of the right of free speech
of petitioner. Its concluding portion was worded thus: "Accordingly, as prayed for, respondent Commission on
Elections is permanently restrained and prohibited from enforcing or implementing or demanding compliance with
its aforesaid order banning the use of political jingles by candidates. This resolution is immediately executory." 4

1. As made clear in our resolution of November 3, 1970, the question before us was one of power. Respondent
Commission on Elections was called upon to justify such a prohibition imposed on petitioner. To repeat, no such
authority was granted by the Constitutional Convention Act. It did contend, however, that one of its provisions
referred to above makes unlawful the distribution of electoral propaganda gadgets, mention being made of pens,
lighters, fans, flashlights, athletic goods or materials, wallets, bandanas, shirts, hats, matches, and cigarettes, and
concluding with the words "and the like." 5 For respondent Commission, the last three words sufficed to justify
such an order. We view the matter differently. What was done cannot merit our approval under the well-known
principle of ejusdem generis, the general words following any enumeration being applicable only to things of the
same kind or class as those specifically referred to. 6 It is quite apparent that what was contemplated in the Act
was the distribution of gadgets of the kind referred to as a means of inducement to obtain a favorable vote for the
candidate responsible for its distribution.

The more serious objection, however, to the ruling of respondent Commission was its failure to manifest fealty to
a cardinal principle of construction that a statute should be interpreted to assure its being in consonance with,
rather than repugnant to, any constitutional command or prescription. 7 Thus, certain Administrative Code
provisions were given a "construction which should be more in harmony with the tenets of the fundamental
law." 8 The desirability of removing in that fashion the taint of constitutional infirmity from legislative enactments
has always commended itself. The judiciary may even strain the ordinary meaning of words to avert any collision
between what a statute provides and what the Constitution requires. The objective is to reach an interpretation
rendering it free from constitutional defects. To paraphrase Justice Cardozo, if at all possible, the conclusion
reached must avoid not only that it is unconstitutional, but also grave doubts upon that score. 9

2. Petitioner's submission of his side of the controversy, then, has in its favor obeisance to such a cardinal precept.
The view advanced by him that if the above provision of the Constitutional Convention Act were to lend itself to
the view that the use of the taped jingle could be prohibited, then the challenge of unconstitutionality would be
difficult to meet. For, in unequivocal language, the Constitution prohibits an abridgment of free speech or a free
press. It has been our constant holding that this preferred freedom calls all the more for the utmost respect when
what may be curtailed is the dissemination of information to make more meaningful the equally vital right of
suffrage. What respondent Commission did, in effect, was to impose censorship on petitioner, an evil against
which this constitutional right is directed. Nor could respondent Commission justify its action by the assertion that
petitioner, if he would not resort to taped jingle, would be free, either by himself or through others, to use his
mobile loudspeakers. Precisely, the constitutional guarantee is not to be emasculated by confining it to a speaker
having his say, but not perpetuating what is uttered by him through tape or other mechanical contrivances. If this
Court were to sustain respondent Commission, then the effect would hardly be distinguishable from a previous
restraint. That cannot be validly done. It would negate indirectly what the Constitution in express terms assures. 10

3. Nor is this all. The concept of the Constitution as the fundamental law, setting forth the criterion for the validity
of any public act whether proceeding from the highest official or the lowest functionary, is a postulate of our
system of government. That is to manifest fealty to the rule of law, with priority accorded to that which occupies
the topmost rung in the legal hierarchy. The three departments of government in the discharge of the functions
with which it is entrusted have no choice but to yield obedience to its commands. Whatever limits it imposes must
be observed. Congress in the enactment of statutes must ever be on guard lest the restrictions on its authority,
whether substantive or formal, be transcended. The Presidency in the execution of the laws cannot ignore or
disregard what it ordains. In its task of applying the law to the facts as found in deciding cases, the judiciary is
called upon to maintain inviolate what is decreed by the fundamental law. Even its power of judicial review to pass
upon the validity of the acts of the coordinate branches in the course of adjudication is a logical corollary of this
basic principle that the Constitution is paramount. It overrides any governmental measure that fails to live up to its
mandates. Thereby there is a recognition of its being the supreme law.

To be more specific, the competence entrusted to respondent Commission was aptly summed up by the present
Chief Justice thus: "Lastly, as the branch of the executive department although independent of the President
to which the Constitution has given the 'exclusive charge' of the 'enforcement and administration of all laws
relative to the conduct of elections,' the power of decision of the Commission is limited to purely 'administrative
questions.'" 11 It has been the constant holding of this Court, as it could not have been otherwise, that respondent
Commission cannot exercise any authority in conflict with or outside of the law, and there is no higher law than the
Constitution. 12 Our decisions which liberally construe its powers are precisely inspired by the thought that only
thus may its responsibility under the Constitution to insure free, orderly and honest elections be adequately
fulfilled. 13 There could be no justification then for lending approval to any ruling or order issuing from respondent
Commission, the effect of which would be to nullify so vital a constitutional right as free speech. Petitioner's case,
as was obvious from the time of its filing, stood on solid footing.

WHEREFORE, as set forth in our resolution of November 3, 1970, respondent Commission is permanently
restrained and prohibited from enforcing or implementing or demanding compliance with its aforesaid order
banning the use of political taped jingles. Without pronouncement as to costs.
G.R. No. L-32717 November 26, 1970

AMELITO R. MUTUC vs. COMELEC

FACTS:

Petitioner Mutuc was a candidate for delegate to the Constitutional Convention. He filed a special civil action
against the respondent COMELEC when the latter informed him through a telegram that his certificate of
candidacy was given due course but he was prohibited from using jingles in his mobile units equipped with sound
systems and loud speakers. The petitioner accorded the order to be violative of his constitutional right to freedom
of speech. COMELEC justified its prohibition on the premise that the Constitutional Convention act provided that it
is unlawful for the candidates to purchase, produce, request or distribute sample ballots, or electoral propaganda
gadgets such as pens, lighters, fans (of whatever nature), flashlights, athletic goods or materials, wallets, bandanas,
shirts, hats, matches, cigarettes, and the like, whether of domestic or foreign origin. COMELEC contended that the
jingle or the recorded or taped voice of the singer used by petitioner was a tangible propaganda material and was,
under the above statute, subject to confiscation.

ISSUE:

Whether or not the usage of the jingle by the petitioner form part of the prohibition invoked by the COMELEC.

HELD:

The Court held that the general words following any enumeration being applicable only to things of the same kind
or class as those specifically referred to. The COMELECs contention that a candidates jingle form part of the
prohibition, categorized under the phrase and the like, could not merit the courts approval by principle of
Ejusdem Generis. It is quite apparent that what was contemplated in the Act was the distribution of gadgets of the
kind referred to as a means of inducement to obtain a favorable vote for the candidate responsible for its
distribution.

Furthermore, the COMELEC failed to observe construction of the statute which should be in consonance to the
express terms of the constitution. The intent of the COMELEC for the prohibition may be laudable but it should not
be sought at the cost of the candidates constitutional rights.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-32717 November 26, 1970

AMELITO R. MUTUC, petitioner,

vs.

COMMISSION ON ELECTIONS, respondent.

Amelito R. Mutuc in his own behalf.

Romulo C. Felizmena for respondent.

DECISION

FERNANDO, J.:

The invocation of his right to free speech by petitioner Amelito Mutuc, then a candidate for delegate to the
Constitutional Convention, in this special civil action for prohibition to assail the validity of a ruling of respondent
Commission on Elections enjoining the use of a taped jingle for campaign purposes, was not in vain. Nor could it be
considering the conceded absence of any express power granted to respondent by the Constitutional Convention
Act to so require and the bar to any such implication arising from any provision found therein, if deference be paid
to the principle that a statute is to be construed consistently with the fundamental law, which accords the utmost
priority to freedom of expression, much more so when utilized for electoral purposes. On November 3, 1970, the
very same day the case was orally argued, five days after its filing, with the election barely a week away, we issued
a minute resolution granting the writ of prohibition prayed for. This opinion is intended to explain more fully our
decision.

In this special civil action for prohibition filed on October 29, 1970, petitioner, after setting forth his being a resident
of Arayat, Pampanga, and his candidacy for the position of delegate to the Constitutional Convention, alleged that
respondent Commission on Elections, by a telegram sent to him five days previously, informed him that his certificate
of candidacy was given due course but prohibited him from using jingles in his mobile units equipped with sound
systems and loud speakers, an order which, according to him, is violative of [his] constitutional right to freedom
of speech. 1 There being no plain, speedy and adequate remedy, according to petitioner, he would seek a writ of
prohibition, at the same time praying for a preliminary injunction. On the very next day, this Court adopted a
resolution requiring respondent Commission on Elections to file an answer not later than November 2, 1970, at the
same time setting the case for hearing for Tuesday November 3, 1970. No preliminary injunction was issued. There
was no denial in the answer filed by respondent on November 2, 1970, of the factual allegations set forth in the
petition, but the justification for the prohibition was premised on a provision of the Constitutional Convention
Act, 2 which made it unlawful for candidates to purchase, produce, request or distribute sample ballots, or electoral
propaganda gadgets such as pens, lighters, fans (of whatever nature), flashlights, athletic goods or materials, wallets,
bandanas, shirts, hats, matches, cigarettes, and the like, whether of domestic or foreign origin. 3 It was its
contention that the jingle proposed to be used by petitioner is the recorded or taped voice of a singer and therefore
a tangible propaganda material, under the above statute subject to confiscation. It prayed that the petition be denied
for lack of merit. The case was argued, on November 3, 1970, with petitioner appearing in his behalf and Attorney
Romulo C. Felizmena arguing in behalf of respondent.

This Court, after deliberation and taking into account the need for urgency, the election being barely a week away,
issued on the afternoon of the same day, a minute resolution granting the writ of prohibition, setting forth the
absence of statutory authority on the part of respondent to impose such a ban in the light of the doctrine ofejusdem
generis as well as the principle that the construction placed on the statute by respondent Commission on Elections
would raise serious doubts about its validity, considering the infringement of the right of free speech of petitioner.
Its concluding portion was worded thus: Accordingly, as prayed for, respondent Commission on Elections is
permanently restrained and prohibited from enforcing or implementing or demanding compliance with its aforesaid
order banning the use of political jingles by candidates. This resolution is immediately executory. 4

1. As made clear in our resolution of November 3, 1970, the question before us was one of power. Respondent
Commission on Elections was called upon to justify such a prohibition imposed on petitioner. To repeat, no such
authority was granted by the Constitutional Convention Act. It did contend, however, that one of its provisions
referred to above makes unlawful the distribution of electoral propaganda gadgets, mention being made of pens,
lighters, fans, flashlights, athletic goods or materials, wallets, bandanas, shirts, hats, matches, and cigarettes, and
concluding with the words and the like.5For respondent Commission, the last three words sufficed to justify such
an order. We view the matter differently. What was done cannot merit our approval under the well-known principle
of ejusdem generis, the general words following any enumeration being applicable only to things of the same kind
or class as those specifically referred to. 6 It is quite apparent that what was contemplated in the Act was the
distribution of gadgets of the kind referred to as a means of inducement to obtain a favorable vote for the candidate
responsible for its distribution.

The more serious objection, however, to the ruling of respondent Commission was its failure to manifest fealty to a
cardinal principle of construction that a statute should be interpreted to assure its being in consonance with, rather
than repugnant to, any constitutional command or prescription. 7 Thus, certain Administrative Code provisions were
given a construction which should be more in harmony with the tenets of the fundamental law. 8 The desirability
of removing in that fashion the taint of constitutional infirmity from legislative enactments has always commended
itself. The judiciary may even strain the ordinary meaning of words to avert any collision between what a statute
provides and what the Constitution requires. The objective is to reach an interpretation rendering it free from
constitutional defects. To paraphrase Justice Cardozo, if at all possible, the conclusion reached must avoid not only
that it is unconstitutional, but also grave doubts upon that score. 9

2. Petitioners submission of his side of the controversy, then, has in its favor obeisance to such a cardinal precept.
The view advanced by him that if the above provision of the Constitutional Convention Act were to lend itself to the
view that the use of the taped jingle could be prohibited, then the challenge of unconstitutionality would be difficult
to meet. For, in unequivocal language, the Constitution prohibits an abridgment of free speech or a free press. It has
been our constant holding that this preferred freedom calls all the more for the utmost respect when what may be
curtailed is the dissemination of information to make more meaningful the equally vital right of suffrage. What
respondent Commission did, in effect, was to impose censorship on petitioner, an evil against which this
constitutional right is directed. Nor could respondent Commission justify its action by the assertion that petitioner,
if he would not resort to taped jingle, would be free, either by himself or through others, to use his mobile
loudspeakers. Precisely, the constitutional guarantee is not to be emasculated by confining it to a speaker having his
say, but not perpetuating what is uttered by him through tape or other mechanical contrivances. If this Court were
to sustain respondent Commission, then the effect would hardly be distinguishable from a previous restraint. That
cannot be validly done. It would negate indirectly what the Constitution in express terms assures. 10

3. Nor is this all. The concept of the Constitution as the fundamental law, setting forth the criterion for the validity
of any public act whether proceeding from the highest official or the lowest functionary, is a postulate of our system
of government. That is to manifest fealty to the rule of law, with priority accorded to that which occupies the topmost
rung in the legal hierarchy. The three departments of government in the discharge of the functions with which it is
entrusted have no choice but to yield obedience to its commands. Whatever limits it imposes must be observed.
Congress in the enactment of statutes must ever be on guard lest the restrictions on its authority, whether
substantive or formal, be transcended. The Presidency in the execution of the laws cannot ignore or disregard what
it ordains. In its task of applying the law to the facts as found in deciding cases, the judiciary is called upon to maintain
inviolate what is decreed by the fundamental law. Even its power of judicial review to pass upon the validity of the
acts of the coordinate branches in the course of adjudication is a logical corollary of this basic principle that the
Constitution is paramount. It overrides any governmental measure that fails to live up to its mandates. Thereby there
is a recognition of its being the supreme law.

To be more specific, the competence entrusted to respondent Commission was aptly summed up by the present
Chief Justice thus: Lastly, as the branch of the executive department although independent of the President
to which the Constitution has given the exclusive charge of the enforcement and administration of all laws relative
to the conduct of elections, the power of decision of the Commission is limited to purely administrative
questions.' 11 It has been the constant holding of this Court, as it could not have been otherwise, that respondent
Commission cannot exercise any authority in conflict with or outside of the law, and there is no higher law than the
Constitution. 12 Our decisions which liberally construe its powers are precisely inspired by the thought that only thus
may its responsibility under the Constitution to insure free, orderly and honest elections be adequately
fulfilled. 13 There could be no justification then for lending approval to any ruling or order issuing from respondent
Commission, the effect of which would be to nullify so vital a constitutional right as free speech. Petitioners case,
as was obvious from the time of its filing, stood on solid footing.

WHEREFORE, as set forth in our resolution of November 3, 1970, respondent Commission is PERMANENTLY
RESTRAINED and prohibited from enforcing or implementing or demanding compliance with its aforesaid order
banning the use of political taped jingles. Without pronouncement as to costs.