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PEPSI-COLA PRODUCTS PHILIPPINES v. PEPE B. PAGDANGANAN

FACTS:

Pepe B. Pagdanganan and Pepito A. Lumahan filed a complaint against Pepsi-Cola Products Philippines, Incorporated (PCPPI) and PEPSICO, Incorporated (PEPSICO) for sum of money and damages. The complaint was in relation to a promotional campaign called "Number Fever" launched by PCPPI and PEPSICO, wherein cash prizes were to be given to holders of specially marked crowns and resealable caps of PEPSI-COLA soft drink products. PCPPI and PEPSICO engaged the services of a Mexican consultancy firm to pre-select winning numbers and corresponding security codes. However, problems arose when the announced winning combination "349" led to numerous people attempting to redeem crowns with incorrect security codes. In response, PCPPI and PEPSICO released a statement stating that only crowns bearing the number "349" and the correct security codes would be redeemed, while those with incorrect security codes would not. Respondents Pagdanganan and Lumahan demanded the payment of cash prizes for their crowns with incorrect security codes, but PCPPI and PEPSICO refused. The trial court dismissed the complaint due to failure to establish a cause of action, but the Court of Appeals reversed the decision and ordered PCPPI and PEPSICO to pay the respondents. PCPPI and PEPSICO filed a petition for review, raising various issues.

ISSUES:

  1. Whether or not the additional requirement imposed by PEPSI, that the winning crown must have a corresponding winning security code, is valid.

  2. Whether or not the principle of stare decisis should be applied in this case.

  3. Whether the crowns presented by the plaintiffs-appellants are winning crowns.

  4. Whether the correct security code is an essential requirement to be entitled to the cash prize.

  5. Whether the appellate court committed reversible error in failing to consider the final and executory decisions of the Supreme Court as judicial precedents.

  6. Whether respondents are entitled to goodwill compensation.

RULING:

  1. The Court ruled that the additional requirement imposed by PEPSI is not valid. The promo mechanics clearly state that a person is a winner as long as they have in their possession the crown with the winning number. The matching winning security code is not required. Therefore, respondents Pagdanganan and Lumahan, who possess crowns with winning numbers, are entitled to the cash prizes indicated on their crowns.

  2. The Court held that the principle of stare decisis should not be applied in this case. While there have been previous cases involving the same "Number Fever" promo, the legal rights and relations of the parties, facts, applicable laws, issues, evidence, and questions of law in those cases are different from the present case. Thus, the previous cases do not constitute binding judicial precedents in the resolution of the instant case.

  3. The crowns held by the plaintiffs-appellants are not winning crowns.

  4. The correct security code is an indispensable requirement to be entitled to the cash prize.

  5. The Supreme Court held that the appellate court committed reversible error in failing to consider the final and executory decisions of the Supreme Court as judicial precedents. The correct security code is an essential requirement to become entitled to the amount printed on a "349" crown.

  6. The Supreme Court ruled that respondents Pagdanganan and Lumahan are not entitled to the award of P3,500.00 and P1,000.00, respectively, as goodwill compensation. The petitioner's offer of P500 for every non-winning "349" crown had already expired, and respondent Patan, Jr. had rejected the offer. The principle of stare decisis and the necessity for certainty and stability in the law dictate that the previous decisions on goodwill compensation should be followed.

PRINCIPLES:

  • The deviation from the rules of a promotional campaign approved by the regulatory agency is not valid.

  • A person is deemed a winner in a promotional campaign as long as they possess the crown with the winning number, regardless of the matching winning security code requirement.

  • The principle of stare decisis applies only when the legal rights and relations of the parties, facts, applicable laws, issues, evidence, and questions of law in the previous and present cases are exactly the same.

  • The security code is a major component of each crown and distinguishes the real winning crown from fake or tampered ones.

  • The correct security code is an essential requirement to be entitled to the cash prize.

  • Judicial decisions applying or interpreting the laws or the Constitution form part of the legal system and must be respected. 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.

  • The Constitution forms a part of the legal system of the Philippines.

  • Final and executory decisions of the Supreme Court attain the status of judicial precedents.

  • Courts should adhere to principles of law and apply them to all future cases with substantially similar facts.

  • Stare decisis embodies the legal maxim that a principle or rule of law established by a court of controlling jurisdiction will be followed in other similar cases.

  • The abandonment of a judicial precedent must be based on strong and compelling reasons.

  • Certainty and stability in the law are necessary to maintain public confidence.