G.R. No. 150394 - Pepsi Cola Products , Inc. vs. Espiritu

Case Summary (G.R. No. 150394)

Factual Background

PCI launched the “Number Fever” promotional campaign in several Latin American countries in 1984. Its success led PCPPI to introduce the same campaign in the Philippines. On January 15, 1992, PCPPI requested DTI permission to conduct a nationwide promotion in which buyers of Pepsi Cola products, including Pepsi, 7-Up, Merinda and Mountain Dew, could win amounts printed under specially marked crowns or resealable caps. On January 23, 1992, DTI approved the application.

DTI supervised the production and seeding of winning crowns into the trade. A Mexican consultancy firm, D.G. Consultores, randomly preselected winning numbers with corresponding security codes using a computer and sent lists of both winning and non-winning numbers to PCPPI. To prevent manipulation of the predetermined winning numbers, PCPPI and DTI agreed to deposit the list of winning numbers and corresponding security codes in a safety deposit box in the vault of UCPB, Legaspi Village Branch, accessible only by two keys—one held by DTI and the other by PCPPI.

PCPPI advertised the promotion on television, radio, and printed materials, instructing consumers to look for the winning three-digit numbers under the crowns or resealable caps. During the promotional period, PCPPI announced daily, except Saturdays and Sundays, the winning three-digit numbers. Consumers who presented crowns bearing the announced numbers claimed the indicated amounts at designated redemption stations. PCPPI paid prizes only after it confirmed that the crowns were not tampered with or fabricated.

Because the promotion succeeded, PCPPI extended the “Number Fever” promotion for five more weeks. For the extension, PCPPI submitted a second list of randomly predetermined winning numbers with matching security codes, kept in a safety deposit box in the vault of UCPB, Aguirre Branch, similarly requiring two keys—again held by PCPPI and DTI.

All proceeded until the afternoon of May 25, 1992, when 349 was announced as the winning number for the following day. Large numbers of people queued at redemption stations to claim prizes. Respondents presented crowns bearing the number 349 with security code L-2560-FQ. When PCPPI learned that many of the “349” crowns carried security codes other than those in the official authorized list, it recalled “349” as the winning number for the day and replaced it with 134 as the winning number for June 12, 1992.

As public outrage intensified, DTI and PCPPI decided to open the safety deposit box holding the complete list of winning numbers and their matching security codes for the entire extended period. On May 28, 1992, PCPPI announced the winning number as 349 along with the corresponding security codes. The authorized list reflected security codes associated with varying prize amounts, and the security code L-2560-FQ appearing in respondents’ crowns did not appear in that authorized list.

PCPPI refused to pay prize amounts printed on “349” crowns bearing incorrect security codes. It nevertheless attempted to appease the public by offering P500.00 per crown to holders of “349” crowns with non-winning security codes, if they presented their crowns on or before June 12, 1992. Approximately 486,170 holders availed of the offer, costing PCPPI an aggregate amount of P240 million.

Respondents among many other rejected crown holders did not accept the goodwill offer. Instead, they joined Ugnayan 349 Association Inc., organized for the purpose of prosecuting claims against PCPPI. Ugnayan 349 sent demand letters. With no response, a complaint for collection of sum of money and damages was filed on November 9, 1992 before the Regional Trial Court (RTC) of Quezon City. The action was docketed as part of a cluster of suits arising from the same incident, including Civil Case No. Q-92-13950.

Trial Court Proceedings

In a decision dated June 24, 1996, the RTC of Quezon City ruled that the plaintiffs, including the respondents herein, were “not entitled to their crowns.” Despite this, it ordered PCPPI to pay each plaintiff P10,000.00 as moral damages. Thus, the RTC declared the plaintiffs not entitled to the crowns but nonetheless granted moral damages in favor of each plaintiff.

The Parties' Contentions on Appeal

Dissatisfied, three respondents—Armando Enriquez, Victorino Alcano, and Jane Geronimo—appealed to the CA. They argued that the trial court erred in holding that their “349” crowns were not winning crowns.

For its part, PCPPI appealed, contending that the RTC erred in ordering it to pay P10,000.00 each as moral damages to the plaintiffs, including the respondents.

CA Ruling

In its Decision dated July 3, 2001, the CA affirmed with modifications. It adjudged the plaintiffs entitled only to moral damages and not to the prizes printed on the crowns. It considered, however, that the amount of moral damages should be increased and that attorney’s fees should also be awarded.

Accordingly, the CA modified the RTC judgment by ordering PCPPI to pay each respondent P30,000.00 as moral damages and to pay a collective attorney’s fee of P30,000.00, together with the costs of suit.

PCPPI moved for reconsideration, but the CA denied the motion in its Resolution dated October 16, 2001.

Issues Raised in the Petition

In the petition under Rule 45, PCPPI assailed the CA’s award of moral damages and attorney’s fees to respondents. The petition relied heavily on prior adjudications involving the same “Pepsi 349” incident and the same decisive factual/legal conclusion reached in earlier cases.

Legal Basis and Reasoning

The Supreme Court granted the petition. The Court noted that the “Pepsi 349” incident spawned several cases nationwide, and that some complaints filed by other rejected crown holders had already been resolved with final and executory rulings. Following stare decisis, the Court considered it bound to respect those final determinations.

The Court cited Mendoza v. PCPPI and PCI (G.R. No. 153183, July 24, 2002), where the RTC dismissed Mendoza’s complaint for specific performance and damages arising from the same Number Fever fiasco, a CA dismissal followed, and a petition for review to the Supreme Court was likewise denied. It also cited Rodrigo v. PCPPI and PCI (G.R. No. 149411, October 1, 2001), where the RTC dismissed a similar complaint for specific performance and damages, the CA affirmed, and the Supreme Court denied the petition for review and subsequent motion for reconsideration.

The Court further explained that in De Mesa v. Pepsi Cola Products, Phils., Inc. (G.R. Nos. 153063-70, August 19, 2005), it had reiterated the doctrine of stare decisis et non quieta movere, anchored in Article 8 of the Civil Code. The Court stated that Article 8 treats judicial decisions applying or interpreting the law or the Constitution as part of the legal system, thereby enjoining adherence to judicial precedents and requiring courts to follow a rule established in a final Supreme Court decision in subsequent cases.

In De Mesa, the Supreme Court reasoned that the legal rights and relations of the parties, the facts, the applicable laws, the causes of action, the i

Case Syllabus (G.R. No. 150394)

Parties and Procedural Posture

Pepsi Cola Products (Phils.), Inc. (PCPPI) filed a petition for review under Rule 45 assailing the Court of Appeals (CA) issuances in CA-G.R. CV No. 54604.
The respondents were Efren Espiritu, Lourdes Crisostomo, Aurora Buenaventura, Armando Enriquez, Jane Geronimo, and Victorino Alcano, who were plaintiffs in the court of origin.
The CA decision dated July 3, 2001 affirmed with modification the Regional Trial Court (RTC) of Quezon City decision that had held PCPPI liable for moral damages.
The CA resolution dated October 16, 2001 denied PCPPI’s motion for reconsideration.
The RTC initially declared the plaintiffs “not entitled to their crowns” yet awarded them moral damages.
The CA increased the moral damages to P30,000.00 each and awarded collective attorney’s fees of P30,000.00 plus costs.

Key Factual Allegations

PepsiCo, Inc. launched the “Number Fever” promotional campaign in several Latin American countries in 1984, and the campaign proved successful.
Years later, PCPPI as franchise holder of PepsiCo in the Philippines decided to introduce the “Number Fever” campaign domestically.
On January 15, 1992, PCPPI requested Department of Trade and Industry (DTI) permission to conduct a nationwide Number Fever promotion where buyers could win amounts printed under specially marked crowns or resealable caps.
On January 23, 1992, DTI approved PCPPI’s application.
D.G. Consultores, a Mexican consultancy firm, randomly preselected winning numbers and corresponding security codes using a computer and provided PCPPI with lists of both winning and non-winning numbers.
DTI supervised the production of winning crowns and their seeding into the trade to limit manipulation.
PCPPI and DTI agreed to deposit the list of winning numbers and matching security codes in a safety deposit box at UCPB, Legaspi Village Branch, with one key held by DTI and the other held by PCPPI.
PCPPI advertised the promotion through television, radio, and printed materials, and its posters instructed consumers to look for the winning three-digit numbers under the crowns or caps.
During the promotion, PCPPI announced daily, except Saturdays and Sundays, the winning three-digit numbers.
Consumers bearing the announced three-digit numbers claimed prizes at designated redemption stations after PCPPI verified that the crowns were not tampered with or fabricated.
PCPPI extended the promotion for five more weeks after submitting a second list of randomly predetermined winning numbers with matching security codes.
The second list was kept in another safety deposit box at UCPB, Aguirre Branch, again requiring two keys held by PCPPI and DTI.
The controversy arose on the afternoon of May 25, 1992 when 349 was announced as the winning number for the following day.
Large numbers of consumers, including the respondents, queued to claim prizes based on crowns bearing number 349.
PCPPI discovered that many “349” crowns carried security codes different from the official authorized and predetermined list.
PCPPI recalled “349” as the winning number for that day and replaced it with “134” as the winning number for June 12, 1992.
As public outrage developed, DTI and PCPPI opened the safety deposit box containing the complete list of winning numbers and their matching security codes for the extended promo period.
On May 28, 1992, PCPPI announced “349” together with the complete list of cash prizes and corresponding security codes, including entries for codes under which winners should fall.
The security code L-2560-FQ, appearing in respondents’ “349” crowns, did not appear in the authorized and predetermined security code numbers.
PCPPI refused to pay holders of “349” crowns that did not bear the correct security codes.
PCPPI nevertheless offered P500.00 per crown as a goodwill gesture for holders who presented their crowns on or before June 12, 1992.
Approximately 486,170 holders accepted the goodwill offer, costing PCPPI an aggregate amount of P240 million.
Respondents rejected the goodwill offer and joined Ugnayan 349 Association Inc. to prosecute their claims against PCPPI.
After demand letters by Ugnayan 349 Association Inc., respondents caused the filing of a complaint for collection of sum of money and damages on November 9, 1992 before the RTC of Quezon City.
The RTC case was docketed as Civil Case No. Q-92-13950, and it was one of several suits arising from the Pepsi 349 incident.

Trial Court Disposition

In its decision dated June 24, 1996, the RTC found that the plaintiffs were “not entitled to their crowns.”
Despite that finding, the RTC ordered PCPPI and co-defendants to pay each plaintiff P10,000.00 as moral damages.
The RTC’s judgment declared a lack of entitlement to the prizes but still imposed moral damages as relief.

Appellate Court Rulings

Only three respondents, namely Armando Enriquez, Victorino Alcano, and Jane Geronimo, together with PCPPI, appealed to the CA.
The CA consolidated