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Pepzi Fool Caze
Pepzi Fool Caze
DECISION
CHICO-NAZARIO , J : p
The Case
For review under Rule 45 of the Rules of Court, as amended, is the 13 February
2004 Decision 1 and 26 June 2005 Resolution 2 of the Court of Appeals in CA-G.R. CV
No. 68290, reversing and setting aside the 3 August 2000 3 Decision and 23 August
2000 4 Order of the Regional Trial Court of Pasig City, Branch 163, 5 in Civil Case No.
62726.
The Facts
This case stemmed from a Complaint 6 led by herein respondents Pepe B.
Pagdanganan (Pagdanganan) and Pepito A. Lumahan (Lumahan) against herein
petitioners Pepsi-Cola Products Philippines, Incorporated (PCPPI) and PEPSICO,
Incorporated (PEPSICO) on 22 December 1992, before the Regional Trial Court (RTC)
of Pasig City, Branch 163, for Sum of Money and Damages.
The facts are beyond dispute. As culled from the records of the case, they are as
follows:
Petitioners PCPPI and PEPSICO launched a Department of Trade and Industry
(DTI) approved and supervised under-the-crown promotional campaign entitled
"Number Fever" sometime in 1992. With said marketing strategy, it undertook to give
away cash prizes to holders of specially marked crowns and resealable caps of PEPSI-
COLA softdrink products, i.e., Pepsi, 7-Up, Mirinda and Mountain Dew. Specially marked
crowns and resealable caps were said to contain a) a three-digit number, b) a seven-
digit alpha-numeric security code, and c) the amount of the cash prize in any of the
following denominations — P1,000.00; P10,000.00; P50,000.00; P100,000.00; and
P1,000,000.00.
Petitioners PCPPI and PEPSICO engaged the services of D.G. Consultores, a
Mexican consultancy rm with experience in handling similar promotion in other
countries, to randomly pre-select 60 winning three-digit numbers with their matching
security codes out of 1000 three-digit numbers seeded in the market, as well as the
corresponding artworks appearing on a winning crown and/or resealable cap. acCETD
The mechanics of the "Number Fever" promo was simple — From Monday to
Friday, starting 17 February 1992 to 8 May 1992, petitioners PCPPI and PEPSICO will
announce, on national and local broadcast and print media, a randomly pre-selected 7
winning three-digit number. All holders of specially marked crowns bearing the winning
three-digit number will win the corresponding amount printed on said crowns and/or
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resealable caps.
On account of the success of the promotional campaign, petitioners PCPPI and
PEPSICO extended or stretched out the duration of the "Number Fever" for another ve
weeks or until 12 June 1992.
For the extended period, petitioners PCPPI and PEPSICO again sought the
services of D.G. Consultores to pre-select 25 winning three-digit numbers with their
matching security codes as well as the corresponding artworks to appear on a winning
crown and/or resealable cap.
On 25 May 1992, petitioners PCPPI and PEPSICO announced the notorious
three-digit combination "349" as the winning number for the next day, 26 May 1992. On
the same night of the announcement, however, petitioners PCPPI and PEPSICO learned
of reports that numerous people were trying to redeem "349" bearing crowns and/or
resealable caps with incorrect security codes "L-2560-FQ" and "L-3560-FQ." Upon
veri cation from the list of the 25 pre-selected 8 winning three-digit numbers,
petitioners PCPPI and PEPSICO and the DTI learned that the three-digit combination
"349" was indeed the winning combination for 26 May 1992 but the security codes "L-
2560-FQ" and "L-3560-FQ" do not correspond to that assigned to the winning number
"349".
Subsequently, petitioners PCPPI and PEPSICO issued a statement stating in part
that:
DEAR VALUED CUSTOMERS
Some 349 crowns have winning security codes as per the list held in a
bank vault by the Department of Trade and Industry and will be redeemed at full
value like all other authenticated winning crowns.
Some other 349 crowns which have security codes L-2560-FQ and L-3560-
FQ are not winning crowns.
Sincerely,
ROD SALAZAR
President
PEPSI-COLA PRODUCTS PHILS., INC.
Without costs.
SO ORDERED.
II.
WHETHER OR NOT RODRIGO, MENDOZA, PATAN AND DE MESA ARE BINDING
ALTHOUGH RESPONDENTS WERE NOT PARTIES THEREIN;
III.
WHETHER OR NOT THE RESPONDENTS RAISE ANY ISSUE THAT HAS NOT BEEN
PREVIOUSLY RESOLVED IN RODRIGO, MENDOZA, PATAN OR DE MESA;
IV.
WHETHER OR NOT THE SENATE AND DTI TASK FORCE REPORTS ARE EVEN
RELEVANT, OR CONTROLLING; and
V.
WHETHER OR NOT RESPONDENTS MAY SEEK AFFIRMATIVE RELIEF WITHOUT
HAVING APPEALED.
In essence, the present petition raises as fundamental issue for resolution by the
Court the question of whether or not the instant case is already barred by our rulings in
the cases of Rodrigo, 1 7 Mendoza, 1 8 Patan 1 9 and, the most recent, De Mesa. 2 0
The Court's Ruling
In ordering petitioners PCPPI and PEPSICO to pay respondents Pagdanganan
and Lumahan the amounts of P5,000,000.00 and P1,200,000.00, the appellate court
articulated that:
. . . [w]e fully agree with the contention of plaintiffs-appellants that such
deviation or additional requirement, that is the winning crown must have a
corresponding winning security code, imposed by PEPSI was a deviation from the
rules approved by DTI.
Petitioners PCPPI and PEPSICO fault the appellate court for disregarding this
Court's pronouncements in four other Pepsi/"349" cases i.e., Mendoza, Rodrigo, Patan
and De Mesa — that the "349" bearing crowns and/or resealable caps with security
codes L-2560-FQ and L-3560-FQ, like those held by respondents Pagdanganan and
Lumahan, are non-winning crowns under the terms of the "Number Fever" promo. They
reckon that, by virtue of the principle of stare decisis, the aforementioned cases have
already settled the issue of whether or not petitioners PCPPI and PEPSICO are liable to
holders of non-winning "349" bearing crowns and/or resealable caps. Simply put, the
principle of stare decisis should have been determinative of the outcome of the case at
bar. "Rodrigo, Mendoza, Patan and De Mesa cases having ruled on the very same issues
raised in the case at bar, they constitute binding judicial precedents on how Pepsi/"349"
litigations must be disposed of.
On the other hand, respondents Pagdanganan and Lumahan justify the non-
application of the principle of stare decisis by stating that "it is required that the legal
rights and relations of the parties, and the facts, and the applicable laws, the issue and
evidence are exactly the same, (sic) as those decided in the cases of Rodrigo, Mendoza
and later the de Mesa . . .". 2 1 They contend, however, that "a comparison of the subject
cases show that they are not the same nor identical . . . as evident in the different
questions of law, the ndings of facts and evidence and issues involved in said cases . .
. ." 2 2 In fact, respondents Pagdanganan and Lumahan particularly argue that the basis
of their action is Breach of Contract while that of the Rodrigo and Mendoza cases
involved complaints for Specific Performance.
The petition is meritorious.
There is no question that the cases of Mendoza, Rodrigo, Patan and De Mesa,
including the case at bar, arose from the same set of facts concerning the "Number
Fever" promo debacle of petitioners PCPPI and PEPSICO. Mendoza, Rodrigo, Patan, De
Mesa, Pagdanganan and Lumahan are among those holding supposedly winning "349"
Pepsi/7-Up/Mirinda/Mountain Dew soft drink crowns and/or resealable caps. Said
crowns and/or resealable caps were not honored or allowed to be cashed in by
petitioners PCPPI and PEPSICO for failing to contain the correct security code
assigned to such winning combination. As a result, the rejected crown and/or
resealable cap holders led separate complaints for speci c performance/sum of
money/breach of contract, with damages, all against petitioners PCPPI and PEPSICO.
A survey of said cases is imperative in order to determine whether or not the
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principle of stare decisis will, indeed, bar the relitigation of the instant case.
In 2001, in the case of Mendoza v. Pepsi-Cola Products Phils., Inc. and Pepsico,
Inc. , the RTC dismissed the complaint for speci c performance and damages
23
against herein petitioners PCPPI and PEPSICO. On appeal 2 4 with the Court of Appeals,
the latter dismissed the appeal for lack of merit and a rmed the dismissal of the
complaint. It rationalized that:
The mechanics for the "Number Fever" promo, both in the original period
and for the extension period, was duly approved by the DTI. Television, radio and
print advertisements for the promo passed through and were by the DTI. Posters
explaining the promo mechanics were posted all over the country and warning
ads in newspapers highlighted the importance of the security code. Plaintiff-
appellant admitted to have read and understood the mechanics of the promo. His
different interpretation of the security code's function should not mean that PEPSI
was grossly negligent. The mechanics were clear. A winning number had its own
unique, matching security code which must be authenticated by PEPSI against its
o cial list. The importance of a matching security code had been adequately
emphasized in the Warning Ads (citation omitted) and in the new campaign
posters (citation omitted) during the extension period both of which were duly
approved by DTI.
xxx xxx xxx
The function of the security code is not limited to the determination of
whether or not a crown is tampered with or fake. It also serves to authenticate the
winning number combination whether it had the correct alpha-numeric security
code uniquely assigned to each crown as appearing in PEPSI's o cial list. The
campaign posters for the promo period February 17, 1992 to May 10, 1992 as
well as for the extension period from May 11, 1992 to June 12, 1992 uniformly
enumerated three (3) essential elements of a participating winning crown, to wit:
(1) 3-digit winning number; (2) prize denomination; and (3) 7-digit alpha-numeric
security code. . . . The promo mechanics stressed that the 3-digit winning number
combination must have an authenticated security code, which security code was
unique to every crown. Thus, plaintiff-appellant's '349' crown must also be
measured against the essential elements of a winning participating crown
pursuant to the promo's mechanics.
xxx xxx xxx
Thus, PEPSI's obligation to redeem plaintiff-appellant's '349' crown did not
arise as his crown did not bear the correct security code, a condition precedent to
winning the proffered prize.
A Petition for Review on Certiorari was then led with this Court. In a Resolution
dated 24 July 2002, we denied Mendoza's petition for review for failing to show that the
Court of Appeals committed reversible error. 2 5
Similarly, in 2002, in Rodrigo v. Pepsi Cola Products (Phils.), Inc. and Pepsico,
Inc., the RTC therein dismissed the complaint for Speci c Performance and Damages
led against herein petitioners PCPPI and PEPSICO. The Court of Appeals then
affirmed the dismissal of the complaint, stating that:
To resolve the pivotal issue of whether the appellants are the real winners
of the promo, the various advertisements must be read together to give effect to
all. From the start of the promotion, Pepsi had highlighted the security code as a
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major component of each and every crown. In subsequent posters, the companies
clari ed its role as a measure against tampering or faking crowns. (sic), and
emphasized the important role of the security code in identifying and verifying the
real winning crown. In its 'Warning Cheaters' posters, the third paragraph
succinctly provides that:
'Thus if a supposed winning crown is presented to us where the
security code does not match the real security code of the winning number
as veri ed with our master list (known only to authorized personnel of
Pepsi and DTI), then we know that the Crown is either fake or tampered
with.' (Citation omitted.)
Undaunted, Rodrigo went to this Court via a Petition for Review on Certiorari but we
subsequently denied his petition, in a Resolution dated 1 October 2001, for failure to
show that a reversible error was committed by the Court of Appeals, hence the
aforequoted disquisition was affirmed.
Promulgated in 2003, in Pepsi Cola Products (Phils.) vs. Patan, Jr., the RTC
therein dismissed two consolidated complaints for speci c performance and damages
against herein petitioners PCPPI and PEPSICO for lack of cause of action. The Court of
Appeals substantially a rmed the ndings of the trial court that therein respondents
did not win in the petitioners' "Number Fever" promotional campaign as their crowns
were not the winning crowns. The appellate court, however, awarded therein
respondents P500 each in the interest of justice. When the case came to the Court by
means of a Petition for Review on Certiorari, the nding that the correct security code is
an indispensable requirement to be entitled to the cash prize is concerned, was
a rmed. The award of P500 though was deleted as it was our stance that the offer of
P500 for every non-winning "349" crown had long expired on 12 June 1992. SEIcHa
And, in the 2005 case of De Mesa v. Pepsi Cola Products Phils., Inc., the RTC
dismissed the case under the principle of stare decisis. It elucidated that the instant
case, as well as the 2001 Mendoza case, not only are the legal rights and relations of
the parties substantially the same as those passed upon in the 2002 Rodrigo case, but
the facts, the applicable laws, the causes of action, the issues, and the testimonial and
documentary evidence are identical such that a ruling in one case, under the principle of
stare decisis, is a bar to any attempt to relitigate the same issue. Subsequently, De
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Mesa et al., led a Petition for Review on Certiorari before us challenging the
application of the principle of stare decisis to said case. In a Decision promulgated 19
August 2005, we denied their recourse to this court and a rmed the dismissal of the
complaint. We held that:
In the instant case, the legal rights and relations of the parties, the facts,
the applicable laws, the causes of action, the issues, and the evidence are exactly
the same as those in the decided cases of Mendoza and Rodrigo, supra. Hence,
nothing is left to be argued. The issue has been settled and this Court's nal
decision in the said cases must be respected. This Court's hands are now tied by
the nality of the said judgments. We have no recourse but to deny the instant
petition.
The principle of stare decisis et non quieta movere (to adhere to precedents and
not to unsettle things which are established) is well entrenched in Article 8 of the Civil
Code, to wit: 2 6
ART. 8. Judicial decisions applying or interpreting the laws or the
Constitution shall form a part of the legal system of the Philippines.
With the above provision of law, in tandem with the foregoing judicial
pronouncements, it is quite evident that the appellate court committed reversible error
in failing to take heed of our nal, and executory decisions — those decisions
considered to have attained the status of judicial precedents in so far as the
Pepsi/"349" cases are concerned. For it is the better practice that when a court has laid
down a principle of law as applicable to a certain state of facts, it will adhere to that
principle and apply it to all future cases where the facts are substantially the same. 2 7 In
the case at bar, therefore, we have no alternative but to uphold the ruling that the
correct security code is an essential, nay, critical, requirement in order to become
entitled to the amount printed on a "349" bearing crown and/or resealable cap.
Likewise, the same principle of judicial precedent will prevent respondents
Pagdanganan and Lumahan from receiving the amounts of P3,500.00 and P1,000.00,
respectively, as goodwill compensation. As we have stated on the case of Patan:
Neither is the award of P500 to respondent Patan, Jr. "in the interest of
justice and equity" warranted. Respondent Patan, Jr. had consistently refused the
petitioner's offer of P500 for his non-winning "349" crown. Unlike the other holders
of the non-winning "349" crowns, . . . who availed themselves of the goodwill
money offered by the petitioner, respondent Patan, Jr. rejected the same. aSDCIE
The doctrine of stare decisis embodies the legal maxim that a principle or rule of
law which has been established by the decision of a court of controlling jurisdiction will
be followed in other cases involving a similar situation. It is founded on the necessity
for securing certainty and stability in the law and does not require identity of or privity
of parties. 2 8 This is unmistakable from the wordings of Article 8 of the Civil Code. It is
even said that such decisions "assume the same authority as the statute itself and, until
authoritatively abandoned, necessarily become, to the extent that they are applicable,
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the criteria which must control the actuations not only of those called upon to decide
thereby but also of those in duty bound to enforce obedience thereto." 2 9 Abandonment
thereof must be based only on strong and compelling reasons, otherwise, the
becoming virtue of predictability which is expected from this Court would be
immeasurably affected and the public's con dence in the stability of the solemn
pronouncements diminished.
To reiterate, there is naught that is left to be brought to court. Those things which
have been so often adjudged ought to rest in peace. 3 0
WHEREFORE, premises considered, the instant petition is GRANTED. The
assailed 13 February 2004 Decision and 26 April 2005 Resolution both of the Court of
Appeals in CA-G.R. CV No. 68290, are hereby REVERSED and SET ASIDE. The Decision
of the Regional Trial Court of Pasig City, Branch 163, in Civil Case No. 62726 dismissing
the complaint for Sum of Money and Damages is REINSTATED. Further, respondents
Pepe B. Pagdanganan and Pepito A. Lumahan, are not entitled to the award of
P3,500.00 and P1,000.00, respectively, as goodwill compensation. DHIETc
SO ORDERED.
Panganiban, C.J., Ynares-Santiago, Austria-Martinez and Callejo, Sr., JJ., concur.
Footnotes
1. Penned by Court of Appeals Associate Justice Eloy R. Bello, Jr. with Associate Justices
Amelita G. Tolentino and Arsenio J. Magpale concurring; Annex "A" of the Petition; rollo,
pp. 111-120.
2. Annex "B" of the Petition; rollo, pp. 121-124.
7. In compliance with the terms and conditions set by the DTI, the list of the winning
crowns was placed in the safety deposit box of the United Coconut Planter Bank (UCPB)
in Makati City. The DTI-approved printed posters advertising the "Number Fever"
promotional campaign enjoined the participants to look for the winning three-digit
number and security code under the crowns or resealable caps.
8. As in the original promo period, in compliance with the terms and conditions set by the
DTI, the new list of winning crowns were again placed in the safety deposit bow of the
United Coconut Planters Bank (UCPB) in Makati.
9. Index of Exhibits, p. 127.
10. Id.
11. Id.
12. Numerous holders of crowns and/or resealable caps bearing the winning three-digit
number with incorrect security codes filed separate complaints for specific performance
and damages.
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13. Records, Vol. II, pp. 136-138.
14. Supra note 4.
15. Supra note 1.
16. Petitioners PCPPI and PEPSICO's Memorandum, p. 17.
17. Rodrigo v. Pepsi Cola Products (Phils.), Inc. and Pepsico, Inc., G.R. No. 149411, 1
October 2001.
18. Mendoza v. Pepsi-Cola Products Philippines, Inc., G.R. No. 153183, 24 July 2002.
19. Pepsi Cola Products (Phils.) v. Patan, Jr., G.R. No. 152927, 14 January 2004, 419 SCRA
417.
20. De Mesa v. Pepsi Cola Products Phils., Inc., G.R. Nos. 153063-70, 19 August 2005, 467
SCRA 433.