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

Petitioners Pepsi-Cola Products Philippines, Inc. (PCPPI) and PEPSICO, Inc. launched the DTI-supervised “Number Fever” promotional campaign. The mechanics required a participant to possess a crown bearing both the announced winning three-digit number and the correct matching security code pre-selected by a consultancy firm and held in a bank vault. For the extended promo period, the winning number for 26 May 1992 was announced as “349”. However, petitioners discovered that numerous crowns with the number “349” bore incorrect security codes “L-2560-FQ” and “L-3560-FQ,” which were not on the official winning list. Petitioners publicly announced that only crowns with the winning security codes would be redeemed at full value, but offered a P500 goodwill payment for the non-winning “349” crowns.
Respondents Pagdanganan and Lumahan, holders of “349” crowns with the non-winning security code “L-2560-FQ” (purportedly showing cash prizes of up to P1,000,000), demanded full payment. Upon petitioners’ refusal, respondents filed a complaint for sum of money and damages. The Regional Trial Court dismissed the complaint, finding that the respondents’ crowns did not match the winning security codes in the master list. The Court of Appeals reversed this decision, prompting petitioners to elevate the case to the Supreme Court.

ISSUE

Whether the respondents are entitled to claim the advertised cash prizes for their “349” crowns despite bearing security codes not found in the official master list of winning combinations.

RULING

The Supreme Court REVERSED the Court of Appeals and REINSTATED the RTC decision dismissing the complaint. The legal logic is anchored on the nature of a conditional obligation and the principle of res judicata. The promo mechanics created a conditional obligation for petitioners to pay, with the condition precedent being the possession of a crown bearing the winning number and its DTI-approved matching security code. Respondents failed to fulfill this condition as their security codes were not on the official list, thus no enforceable right to the grand prize accrued.
Crucially, the Court applied the doctrine of res judicata, specifically “law of the case.” The identical issue—the entitlement of holders of “349” crowns with the security codes “L-2560-FQ” or “L-3560-FQ”—had been conclusively settled in a series of final and executory decisions by the Supreme Court (e.g., Rodrigo v. Pepsi-Cola). In those cases, the Court uniformly ruled that such holders were not entitled to the grand prize because their crowns did not satisfy the essential condition of matching the pre-selected security code. This ruling constitutes a binding precedent that must be followed in the present case to ensure uniformity and finality of judgments. The Court of Appeals erred in disregarding this settled jurisprudence.