Case Brief: Pepsi-Cola Products v Pagdanganan (Pepsi 349 case)

G.R. No. 167866   October 12, 2006

PEPSI-COLA PRODUCTS PHILIPPINES, INCORPORATED, and PEPSICO, INCORPORATED, petitioners,
vs.
PEPE B. PAGDANGANAN, and PEPITO A. LUMAJAN, respondents.

 

Facts:

The respondents filed a complained against petitioners (Pepsi-Cola for brevity) for sum of money and damages.

The issue stemmed from the fact that Pepsi-Cola launched a DTI-approved and supervised under-the-crown promotional campaign entitled “Number Fever” in 1992. They undertook to give away cash prizes to holders of specially marked crowns and resealable caps of Pepsi-Cola softdrink products. 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 doing so, they engaged in the services of a consultancy firm with experience in handling similar promotion, 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.

On May 1992, Pepsi-Cola announced the notorious three-digit combination “349” as the winning number. On the same night, they learned of reports that numerous people were trying to redeem “349” crowns/caps with incorrect security codes “L-2560-FQ” and “L-3560-FQ.” Upon verification from the list of the 25 pre-selected winning three-digit numbers, Pepsi-Cola and DTI learned that the three-digit combination “349” was indeed the winning combination but the security codes “L-2560-FQ” and “L-3560-FQ” do not correspond to that assigned to the winning number “349”. As “goodwill” however, Pepsi-Cola offered to give the respondents a small sum of money.

Respondents demanded the payment of the corresponding cash prizes, but Pepsi-Cola refused to take heed. This prompted the respondents to file a collective coomplaint for sum of money and damages before the RTC.

RTC dimissed the same for lack of action, holding that the three-digit number must tally with the corresponding security code, and that it was made clear in the advertisements and posters put up by Pepsi-Cola that the defendants must acquire both.

After the motion for reconsideration was denied by the same tribunal, they elevated the case to Court of Appeals, which reversed the RTC’s order. Hence, the appeal under Rule 45 of the Rules of Court.

 

Arguments:

Pepsi-Cola: In the previous Pepsi/”349″ cases, i.e., Mendoza, Rodrigo, Patan, and De Mesa, SC held that both the three-digit number and the security code must be acquired in order for the person to be entitled to such cash prize. Pepsi-Cola raised this, alleging that the principle of stare decisis should have been determinative of the outcome of the case at bar.

Respondents: They justified the non-application of stare decises 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. They contended that they are not similar nor identical with the previous cases, and that their basis of their action is Breach of Contract whereas the Mendoza case involved complains for Specific Performance.

 
Issue:
Whether or not Pepsi-Cola is estopped from raising stare decisis as a defense.

 

Held:

SC held that the cases of Mendoza (and the other previous Pepsi/”349″ cases), including the case at bar, arose from the same set of facts concerning the “Number Fever” promo debacle of Pepsi-Cola. Like the respondents, Mendoza (and the other previous Pepsi/”349″ cases) were also the holders of supposedly-winning crowns, but were not honored for failing to contain the correct security code assigned to such winning combination. In those old cases, SC held that the announced mechanics clearly indicated the need for the authenticated security number in order to prevent tampering or faking crowns; that in those cases, 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 preceding cases.

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: ART. 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines. 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. In the case at bar, therefore, SC had 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.

The same judicial principle should also prevent respondents from receiving the money as goodwill compensation, as the respondents rejected the same and that Pepsi-Cola’s offer of small money had long expired.

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.28 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, 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.” 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 confidence in the stability of the solemn pronouncements diminished.

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