CASE: CALTEX V PALOMAR

FACTS:

In 1960, Caltext (Philippines) Inc. (hereinafter referred to as ‘Caltex’) devised a promotional scheme to increase patronage
for their oil products. This scheme was named the “Caltex Hood Pump Contest.” Participation for sold contest was
indiscriminately open for all motor vehicle owners and/or licensed drivers. There was no required fee or consideration to
be paid for entry in the contest. There was also no requirement of purchasing any products by Caltex. Entry forms were
to be made upon request at any Caltex station. In an attempt to foresee possible conflicts that could arise in information
dissemination through mail, Caltex made representations with postal authorities for the contest to be cleared in advance
for mailing. However, the Acting Postmaster General opines that the scheme violates the anti-lottery provisions of the
Postal Law. Caltex requests for consideration standing ground that the contest is not condemnable as a lottery. The
Postmaster General, citing a case from seven years prior to this incident, also stood his ground that if not condemnable
as a lottery, it is still condemnable as a “gift enterprise” which is also prohibited by the Postal Law. The Postmaster General
also threatens to order fraud claim if Caltex pursues the competition.

ISSUE:

1. Whether or not the petition states a sufficient cause of action for declaratory relief against the claims of the
respondent that the contest is in violation of The Postal Law, chapter 52 of the Revise Administrative Code.
2. Whether or not the “Caltex Pump Hood Contest” violates the Postal Law, chapter 52 of the Revised Administrative
Code.

RULING

1. The court rules in favour of the Petitioner stating that is has made out a case for declaratory relief. By express
mandate of section 1 of Rule 66 of the old Rules of Court, which was the legal basis for the remedy at the time,
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.”
2. No, the court ruled that that Caltex was not to be denied of the use of postal services and that the proposed
contest did not violate the Postal Law. The Postal Law, Chapter 52 of the Revised Administrative Code gave the
Postmaster General authority to issue fraud orders against or otherwise deny the use of facilities of the postal
service to, any information concerning “lottery, gift enterprise, or scheme for the distribution of money, or of any
real of personal property by lot, chance, or drawing of any kind. The term “lottery” was defined in the case as
“schemes for the distribution of prizes by chance.” On the other hand, while the term “gift enterprise” was not
explicitly defined, there was a consensus among lexicographers and standard authorities that it is commonly
defined as 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.” It was clear from the very beginning that the contest required no
fee or purchase from Caltex to submit an entry. Thus, the contest did not meet the definitions of “lottery” or “gift
enterprise.”
ENDENCIA V DAVID

FACTS

This was a joint appeal from the Court of First Instance of Manila declaring Section 13 of Republic Act No. 590
unconstitutional. The plaintiffs ordered the appellant, Saturnino David as Collector of Internal Revenue to re-fund Justice
Pastor M. Endencia the sum of PHP 1,744.45, representing the income tax collected on his salaray as Associate Justice of
the Court of Appeals in 1951, and to Justice Fernando Jugo the amount of PHP 2,345.46, as these were collected as income
tax from their salaries. The two cases were similar, thus jointly submitted to the lower court. Judge Hignio B. Macadaeg
presiding, considered the ruling in Perfecto v. Meer, wherein the income tax collected from the salaries of Justice Jugo and
Endencia would be considered as a diminution of their compensation, thus being in violation of the Constitution of the
Philippines. Solicitor General on behalf of appellant Collector of Internal Revenue stated that after the promulgation of
the ruling in Perfecto v. Meer, Congress enacted Republic Act No. 590 which states in Section 13 that “no salary of 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 diminution of his compensation fixed by the Constitution of by law” which
led them to believe that Congress was not in favour of their ruling in the case.

ISSUE

Whether or not Section 13 of Republic Act No. 590 was unconstitutional

RULING

The Court rules that Section 13 of Republic Act No. 590 was in contrary with Section 9, Article VIII of the
Constitution which states that “The members of the Supreme Court and all judges of inferior courts shall hold office during
good behaviour, 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.” Furthermore, the court reiterated that in the case of Perfecto v. Meer, the collection of income tax from members
of the Supreme Court and judges from inferior courts is considered as a diminution of salary. It was also added by the
court that defining and interpreting the law is a judicial function and the legislative branch cannot limit the power granted
to the courts by the Constitution. When it is clear that a statute is in contrast with what is written in the constitution, it is
the duty of the courts to declare the act unconstitutional.