ADMIN LAW | B2015

CASES

Uy v. Palomar  Such plan is a modification of the original scheme presented by Uy to the

Assistant Postmaster General, which the latter considered as violative of the
1969 Postal Law.
Zaldivar  Uy advertised the plan in metropolitan newspapers of nationwide
alycat circulation weekly, for almost a month.
 The Postmaster General Enrico Palomar issued a Fraud Order No. 3. Uy
SUMMARY: Uy is an agent of the PCSO. For the Grand Christmas Sweepstakes Draw, learned of the order two weeks after its issuance, when his parcels
the PCSO directed its agents to undertake every means possible to achieve its sales containing sweepstakes tickets and other mail matters of purely personal
goal. As such, Uy devised a “Grand Christmas Bonus Award” plan, where the sub- nature, were refused for acceptance for mailing.
agents who sell winning tickets, and the purchasers of the tickets themselves, in  Uy filed a complaint alleging that in issuance of the fraud order, the
addition to the prize money from PCSO, would win certain items. Pursuant to this, Postmaster acted arbitrarily or gravely exceeded his authority, and/ or
Postmaster Palomar issued a Fraud Order and ordered Uy’s parcels containing committed an error of law.
sweepstakes tickets and other personal mail to be refused for acceptance for mailing,  The Postmaster answered that the Postal Law served as basis for his action,
on the basis of the Postal Law which proscribes the use of the mail system to conduct which authorizes him to issue fraud orders upon satisfactory evidence that
lotteries, gift enterprises, schemes, etc. Uy filed a complaint challenging the issuance any person or company is engaged in conducting any lottery, gift enterprise,
of the fraud order. The SC ruled that it has authority to review the Postmaster’s scheme, etc. through the mails. (Sec. 1982)
decision, and that Uy’s plan did not constitute a lottery.  The CFI Manila ruled that the fraud order is contrary to law.

DOCTRINE: Even though the Postal Law contains no provision for judicial review of RELEVANT ISSUE: WON the Postmaster’s decision (to issue a fraud order) can be
decisions of the Postmaster General, the Court, however, has ruled that the action of reviewed by the Court – YES
the Postmaster General is subject to revision by the courts in case he exceeded his
authority or his act is palpably wrong, and that the courts may interfere with the RATIO:
decision of the Postmaster General if it is clearly of opinion that the Postmaster was The Postal Law contains no provision for judicial review of the decision of the
wrong. The Court, by ruling thus, recognizes the availability of judicial review over Postmaster General. The Court, however, in Reyes v. Topacio has stated that the
the action of the Postmaster General, notwithstanding the absence of statutory action of the Postmaster General is subject to revision by the courts in case he
provision for judicial review of his action. exceeded his authority or his act is palpably wrong. And in El Debate Inc. v. Topacio,
the Court said that the courts will not interfere with the decision of the Postmaster
FACTS: General as to what is, and what is not, mailable matter, unless it is clearly of opinion
 The Philippine Charity Sweepstakes Office (PCSO) is a government entity that the Postmaster was wrong. The Court, by said rulings, recognizes the availability
created and empowered to hold sweepstakes draws and lotteries for of judicial review over the action of the Postmaster General, notwithstanding the
charitable and public purposes. absence of statutory provision for judicial review of his action.
 Manuel Uy is an agent of the PCSO, and is engaged in the sale and
distribution of sweepstakes and lottery tickets. For this purpose, he It may not be amiss to state that said rulings are in consonance with American
employs sub-agents, through which not less than 70% of Uy’s total sales for jurisprudence to the effect that the absence of statutory provisions for judicial review
each draw are made. With the consent of the PCSO, Uy agrees to give 10% of does not necessarily mean that access to the courts is barred. The silence of the
a prize-winning ticket to the sub-agent who sells such. Congress is not to be construed as indicating a legislative intent to preclude judicial
 For the Grand Christmas Sweepstakes Draw of December 1963, the PCSO review. In American School of Magnetic Healing v. McAnnulty, the U.S. Supreme Court
directed its agents to undertake every means possible to help achieve its held that it is entirely true that the conduct of the post office is part of the
P6M sales goal. The prizes were fixed at 700k, 350k, and 175k for 1 st, 2nd, administrative department of the Government, but that does not necessarily and
and 3rd prize, in that order. always oust the courts of jurisdiction to grant relief to a party aggrieved.
 Uy devised a “Grand Christmas Bonus Award” plan, where both his sub-
agents and purchasers of winning sweepstakes tickets, in addition to the The Postmaster also invokes the doctrine of exhaustion of administrative remedies,
regular prize money, would each win bonuses and awards. (1 st prize: and asserts that the action of Uy in the present case was premature because he had
Volkswagen sedan; 2nd: TV; 3rd: refrigerator; 4th: sewing machine; charity not first appealed the fraud order to higher administrative authorities. This assertion
prize: radio) Sub-agents and purchasers of sweepstakes tickets did not have has no merit. The rule on exhaustion of administrative remedies is not a hard and
to pay any amount on top of the amount paid for the ticket, to benefit from fast one. It admits of exceptions, amongst which are: (1) where the question involved
the plan. is purely a legal one, and (2) where there are circumstances indicating the urgency of
judicial intervention. The question involved in the present case is legal: whether or
ADMIN LAW | B2015
CASES

not the plan of Uy is a lottery or gift enterprise. The Court noted that the Grand chance, and not whether those conducting the enterprise received something of
Christmas Sweepstakes draw (December 15) in conjunction with which Uy's plan value in return for the distribution of the prize.
was offered, was scheduled barely five days from the date when Uy learned of the 3. Postmaster: Even assuming that the element of consideration is lacking, the
issuance of the fraud order (December 10). Time was of the essence to Uy. scheme is still a gift enterprise, which is also prohibited by the Postal Law, as per
Opinion No. 217 of the Secretary of Justice, which ruled that the elements of a
MAIN ISSUE OF THE CASE: WON Uy’s plan constitutes a lottery, gift enterprise, or gift enterprise are only chance and prize.
similar scheme proscribed by the Postal Law, as would authorize the Postmaster to Court: In the Postal Law, the term “gift enterprise” is used in association with the
issue a fraud order – NO term “lottery.” Consonant to the well-known principle of legal hermeneutics
**NOTE: The bulk of the case discusses this issue (Page 5 onwards). It is not noscitu a sociis, it is only logical that the term should be accorded no other
connected to our Admin lesson, but is the substantive issue. 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
RATIO: also must the term “gift enterprise” be construed.
1. Postmaster: All the elements of a lottery, presented in the case of El Debate, are
present. RULING: Affirmed. The fraud order in question is contrary to law.
- Prize: There are goods to be awarded to the winners.
- Chance: The determination of winners depends on the results of the
sweepstakes draw.
- Consideration: One must buy (for ticket buyers)/ buy and resell (for
sub-agents) Uy’s ticket. By analogy, there is consideration with respect
to persons who will buy Uy’s tickets merely to win prizes in addition to
regular sweepstakes prizes. Also, the persons patronizing the Uy
Sweepstakes Agency do not all receive the same amount.
Court: There is no presence of the element of consideration. It is true that to be a
participant in the plan, one must buy a sweepstakes ticket sold by the Uy
Sweepstakes Agency. But the payment for the price of the sweepstakes ticket is
the consideration for the chance to win any of the prizes offered by the PCSO; it
cannot also be deemed as consideration for the chance to win prizes offered by
Uy. Nothing is asked of the buyer of the ticket more than the authorized price.
The test laid down in El Debate seems to favor Uy. The test in the case is:
“If the reason for the subscription to El Debate was the desire to subscribe
regardless of any prize offered, then there was no consideration insofar as the
prize plan is concerned.” In the instant case, there are two groups of participants
in Uy’s plan: the ticket buyers and the sub-agents. It cannot be denied that the
sub-agents, who have continued to be Uy’s sub-agents, would have sold Uy’s
tickets regardless of the plan. Anyway, they stood to receive 10% of a prize-
winning ticket sold. On the other hand, the probability is that the general public
would have purchased Uy’s tickets regardless of the inducement offered by Uy to
win additional prizes. Every person who purchased tickets from the Uy
Sweepstakes Agency must have been induced, not by the prizes offered by Uy,
but by the substantial prizes.
2. Postmaster: The patronage for Uy tickets constitutes a consideration, because
from increased sales, Uy derives benefits in the form of returns on his
investment.
Court: The question of consideration is not to be determined from the
standpoint of Uy, but from the sub-agents of Uy and the ticket buyers. In the
cases of Caltex v. Postmaster General and State v. Hundling, the Court held that
the true test is whether the participant pays a valuable consideration for the