Petitioners PCPPI and PEPSICO engaged the
PEPSI-COLA PRODUCTS PHILIPPINES,
INCORPORATED, and PEPSICO,
INCORPORATED, Petitioners, v. PEPE B.
PAGDANGANAN, and PEPITO A. LUMAJAN,
Respondents.
This case stemmed from a Complaint6 filed
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.
1
services of D.G. Consultores, a Mexican
consultancy firm 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.
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-selected7
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 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
five 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 verification from the list of the 25
pre-selected8 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
xxx
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.
However, as an act of goodwill to our
customers, we will redeem the non-winning
349 crowns for P500.00 each until June 12,
1992 at all Pepsi plants & warehouses.
xxx
2
Sincerely,
ROD SALAZAR
President
PEPSI-COLA PRODUCTS PHILS., INC.
Despite the foregoing announcement, on 9
July 1992, respondent Pagdanganan
demanded from petitioners PCPPI and
PEPSICO and the DTI the payment of the
corresponding cash prize of each of his
"349" bearing crown, specifically, four 7-Up9
crowns and two Mirinda10 crowns, each
displaying the cash prize of P1,000,000.00 in
addition to one 7-Up11 crown showing the
cash prize of P100,000.00. Notably, all seven
crowns bore the security code L-2560-FQ.
For his part, respondent Lumahan similarly
insisted that petitioners PCPPI and PEPSICO
pay him the cash value of his two "winning"
crowns, that is, two 7-Up crowns with one
exhibiting the cash value of P1,000,000.00
and the other the amount of P100,000.00.
Petitioners PCPPI and PEPSICO refused to
take heed of the aforementioned demands.
Affronted by the seeming injustice,
respondents Pagdanganan and Lumahan
filed a collective complaint12 for Sum of
Money and Damages before the RTC of
Pasig City, Branch 163, against petitioners
PCPPI and PEPSICO.
After trial on the merits, the RTC rendered
its decision on 3 August 2000, the
dispositive part of which states that:
WHEREFORE, for failure of the plaintiffs to
establish a cause of action against
defendants, the instant case is hereby
DISMISSED.
The defendants are hereby ordered to pay
plaintiffs Pagdanganan and Lumahan the
amounts of P3,500.00 and P1,000.00,
respectively.
Without costs.
SO ORDERED.
In dismissing the complaint, the RTC
ratiocinated that:
The preponderance of evidence now on
record does not appear to support the
assertion of the plaintiffs that number 349
with security code number L-2560-FQ won
the Pepsico's sales promotion game for May
26, 1992. While it is true that number 349
was used both as a winning and non-
winning number, still the winning 349 must
tally with the corresponding security code
contained in the master list of winning
crowns.
xxx
x x x [a]mong the 349s enumerated in the
list of winning crowns (citation omitted) as
winning numbers were 349 V-2421-JC; 349
A-7963-IS; 349 B-4860-IG; 349 C-3984-RP;
349 D-5863-CO; 349 E-3800-EL; 349 U-3501-
MN (sic) and 349 U-3246-NP. Nowhere to be
found were nos. 349 L-2560-FQ and L-3560-
FQ. This means that it was not possible for
both defendants to have won during the
entire extended period of the sales
promotion of Pepsi Cola because the
number did not appear in the master list. It
3
was made clear in the advertisements and
posters put up by defendants that to win,
the 3-digit number must be matched with
the proper security code. The Department
of Trade and Industry had been duly
informed of the mechanics of the Pepsi Cola
sales promotion for the protection of the
interest of the public.
Anent the award of P3,500.00 and
P1,000.00 to respondents Pagdanganan and
Lumahan, respectively, the RTC justified
such grant, by stating to wit:
x x x since the defendants have voluntarily
announced their desire to pay holders of
caps or crowns of their products bearing
non-winning number 349 as a sign of
goodwill, the Court feels that this privilege
should also be extended to the plaintiffs
despite the institution of the instant case.
Their Partial Motion for Reconsideration13
having been denied in an Order14 dated 23
August 2000, respondents Pagdanganan and
Lumahan appealed their case to the Court of
Appeals.
In a Decision15 promulgated on 13 February
2004, the Court of Appeals reversed and set
aside the decision of the RTC, the fallo of
which reads:
WHEREFORE, the appeal is hereby
GRANTED. The decision of the Regional Trial
Court of Pasig, Branch 163, in Civil Case No.
62726 is REVERSED. Defendants-appellants
are hereby ORDERED to pay plaintiffs-
appellants Pepe Pagdanganan the sum of P5
million and Pepito Lumahan the sum of P1.2
million.

In a Resolution dated 26 April 2005, the
Court of Appeals denied petitioners PCPPI
and PEPSICO's Motion for Reconsideration.
The Issues
Hence, this Petition for Review on Certiorari
under Rule 45 of the Rules of Court, as
amended, predicated on the following
issues:16
I.
WHETHER OR NOT PETITIONERS ARE
ESTOPPED FROM RAISING STARE DECISIS;
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.
4
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,17 Mendoza,18
Patan19 and, the most recent, De Mesa.20
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:
x x x [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.
xxx
x x x [i]t appeared that the matching
winning security with code is not an express
requirement in order to win. Taken together
with printed promo mechanics, this means
that one is a winner as long as he has in his
possession the crown with the winning
number. The matching winning security
code is not required.
With the promo mechanics as the guide, it is
undisputable that plaintiffs-appellants are
very well entitled to the cash prizes
indicated on their crowns. To deny their
claim despite their compliance with the
unequivocal requirements of the promotion
is contrary to the principle of good faith.
xxx
It is highly inequitable for PEPSI to impose
an additional requirement in order to win as
a way to evade the unusually large number
of 349 winner-claimants. x x x.
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
5
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 x x x".21 They
contend, however, that "a comparison of
the subject cases show that they are not the
same nor identical x x x as evident in the
different questions of law, the findings of
facts and evidence and issues involved in
said cases x x x."22 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 filed separate complaints for specific
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 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.,23
the RTC dismissed the complaint for specific
performance and damages against herein
petitioners PCPPI and PEPSICO. On appeal24
with the Court of Appeals, the latter
dismissed the appeal for lack of merit and
affirmed 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 official
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
6
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 official 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. x x x 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
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
filed 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.25
Similarly, in 2002, in Rodrigo v. Pepsi Cola
Products (Phils.), Inc. and Pepsico, Inc., the
RTC therein dismissed the complaint for
Specific Performance and Damages filed
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 major
component of each and every crown. In
subsequent posters, the companies clarified
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 verified 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.)
Also (sic) the companies published that:
'Every crown/cap with a winning number
and Authenticated security wins the amount
printed on the crown/cap.' (Citation
omitted.)
Given said advertisements, the impression
an ordinary consumer gets is that the
security code distinguishes the 'real' or
7
genuine from the fake winning crown,
especially considering the conditions
surrounding their issuance i.e., that as early
as March 1992, various complaints of
tampered crowns had reached the DTI. This
construction is bolstered by the subsequent
release of the 'NUMBER FEVER MORE
CHANCES TO WIN' posters during the
extension period wherein the security code
is defined as a 'measure against tampering
or faking of crowns' (citation omitted) and in
the subsequent advertisements which
warned the consuming public that the
appellee companies would not honor under
any circumstances any fake or tampered
crown. (Citation omitted.)
The inescapable conclusion is that the
crowns held by the appellants are not
winning crowns. x x x .
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.) v. Patan, Jr., the RTC therein
dismissed two consolidated complaints for
specific performance and damages against
herein petitioners PCPPI and PEPSICO for
lack of cause of action. The Court of Appeals
substantially affirmed the findings 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 finding that the correct security code is
an indispensable requirement to be entitled
to the cash prize is concerned, was affirmed.
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.
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
Mesa et al., filed 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 affirmed 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 final decision
8
in the said cases must be respected. This
Court's hands are now tied by the finality 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:26
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 final, 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.27 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, x x x who availed
themselves of the goodwill money offered
by the petitioner, respondent Patan, Jr.
rejected the same.
xxx
In this case, the petitioner's offer of P500 for
every non-winning "349" crown had long
expired on June 12, 1992. The petitioner
cannot now be compelled to pay
respondent Patan, Jr. P500 as a "goodwill
gesture," since he had already rejected the
same.
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
9
bound to enforce obedience thereto."29
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.
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.30
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.
SO ORDERED.
THE DEPARTMENT OF HEALTH,
REPRESENTED BY SECRETARY ENRIQUE T.
ONA, AND THE FOOD AND DRUG
ADMINISTRATION (FORMERLY THE
BUREAU OF FOOD AND DRUGS),
REPRESENTED BY ASSISTANT SECRETARY
OF HEALTH NICOLAS B. LUTERO III,
OFFICER-IN-CHARGE, Petitioners, v. PHILIP
MORRIS PHILIPPINES MANUFACTURING,
INC., Respondent.

DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on
certiorari1 are the Decision2 dated August
26, 2011 and the Resolution3 dated August
3, 2012 rendered by the Court of Appeals
(CA) in CA-G.R. SP No. 109493, finding grave
abuse of discretion on the part of
petitioners the Department of Health (DOH)
and the Food and Drug Administration
(FDA), then known as the Bureau of Food
and Drugs (BFAD), for denying respondent
Philip Morris Philippines Manufacturing,
Inc.’s (PMPMI) permit applications for its
tobacco sales promotions.
The Facts
On November 19, 2008, PMPMI, through
the advertising agency PCN Promopro, Inc.
(PCN), by virtue of Article 1164 of Republic
Act No. (RA) 73945 or the “Consumer Act of
the Philippines,” applied for a sales
promotion permit before the BFAD, now the
FDA, for its Gear Up Promotional Activity
(Gear Up Promo).6 The application included
the mechanics for the promotional activity,
as well as relevant materials and fees.7
With more than fifteen (15) days lapsing
without the BFAD formally acting upon the
application, PMPMI then inquired about its
status. However, PMPMI was only verbally
informed of the existence of a
Memorandum issued by the DOH
purportedly prohibiting tobacco companies
from conducting any tobacco promotional
10
activities in the country. On January 8, 2009,
PCN requested8 the BFAD to formally place
on record the lack of any formal action on
its Gear Up Promo application.9
Meanwhile, on November 28, 2008, PMPMI,
through another advertising agency, Arc
Worldwide Philippines Co. (AWPC), filed
another application for a sales promotional
permit, this time for its Golden Stick
Promotional Activity (Golden Stick Promo)
which the BFAD, however, refused outright,
pursuant to a directive of the BFAD Director
that all permit applications for promotional
activities of tobacco companies will no
longer be accepted. Despite inquiries, the
BFAD merely advised AWPC to await the
formal written notice regarding its
application.10
Eventually, in a letter11 dated January 5,
2009, the BFAD, through Director IV Leticia
Barbara B. Gutierrez, M.S. (Dir. Gutierrez),
denied PMPMI’s Gear Up Promo application
in accordance with the instructions of the
Undersecretary of Health for Standards and
Regulations, directing that as of July 1, 2008,
“all promotions, advertisements and/or
sponsorships of tobacco products are
already prohibited,” based on the provisions
of RA 921112 or the “Tobacco Regulation
Act of 2003.”13
On January 19, 2009, PMPMI filed an
administrative appeal14 before the DOH
Secretary, assailing the BFAD’s denial of its
Gear Up Promo application, as well as its
refusal to accept the Golden Stick Promo
application. In its appeal, PMPMI
maintained that under RA 9211, promotion
is not prohibited but merely restricted, and
that while there are specific provisions
therein totally banning tobacco advertising
and sponsorships, no similar provision could
be found banning promotion.15 It likewise
averred that it had acquired a vested right
over the granting of its sales promotional
permit applications, considering that the
BFAD has been granting such applications
prior to January 5, 2009. Finally, it insisted
that the denial of its promotional permit
applications was tantamount to a violation
of its right to due process as well as their
right to property.16
The DOH Ruling
In a Consolidated Decision17 dated April 30,
2009, then DOH Secretary Francisco T.
Duque III (Sec. Duque) denied PMPMI’s
appeal, as well as all other similar actions
filed by other tobacco companies and
thereby affirmed the action of the BFAD
denying their sales promotional permit
applications, pursuant to the provisions of
RA 9211.18
In denying PMPMI’s and other tobacco
companies’ promotional applications, the
DOH ruled that the issuance of permits for
sales promotional activities was never a
ministerial duty of the BFAD; rather, it was a
discretionary power to be exercised within
the confines of the law. Moreover, previous
approvals of sales promotional permit
applications made by the BFAD did not
create a vested right on the part of the
tobacco companies to have all applications
approved.19
The DOH likewise ruled that the intent and
purpose of RA 9211 was to completely ban
11
tobacco advertisements, promotions, and
sponsorships, as promotion is inherent in
both advertising and sponsorship. As such, if
RA 9211 completely prohibited
advertisements and sponsorships, then it is
clear that promotion, which is necessarily
included in both activities, is likewise
prohibited, explaining further that the
provisions of RA 9211 should not be
interpreted in a way as would render them
ridiculous or meaningless.20
Lastly, the DOH cited the Philippines’
obligation to observe the provisions of the
Framework Convention on Tobacco Control
(FCTC), an international treaty, which has
been duly ratified and adopted by the
country on June 6, 2005.21
Aggrieved, PMPMI elevated the matter to
the CA via petition for certiorari and
mandamus,22 docketed as CA G.R. SP No.
109493, ascribing grave abuse of discretion
upon the DOH in refusing to grant its sales
promotional permit applications,
maintaining, inter alia, that RA 9211 still
allows promotion activities notwithstanding
the phase-out of advertising and
sponsorship activities after July 1, 2008.
The CA Ruling
In a Decision23 dated August 26, 2011, the
CA granted the petition and nullified the
Consolidated Decision of the DOH upon a
finding that the provisions of RA 9211 were
clear when it distinguished promotion from
advertising and sponsorship, so much so
that while the latter two (2) activities were
completely banned as of July 1, 2008, the
same does not hold true with regard to
promotion, which was only restricted. The
CA held that the DOH cannot exercise carte
blanche authority to deny PMPMI’s
promotional permit applications, adding
that “[w]hen the law is clear and free from
any doubt or ambiguity, there is no room for
construction or interpretation, only for
application.”24
Furthermore, it ruled that the DOH is bereft
of any authority to enforce the provisions of
RA 9211, in view of the creation of the Inter-
Agency Committee–Tobacco (IAC-Tobacco)
under Section 29 of the said law, which shall
have the “exclusive power and function to
administer and implement the provisions of
[RA 9211] x x x.”25 Thus, even though
PMPMI originally applied for sales
promotional permits under Article 116 in
relation to Article 109 of RA 7394, from
which the DOH derives its authority to
regulate tobacco sales promotions, the said
provision has already been repealed by
Section 39 of RA 9211,26 which states:
Section 39. Repealing Clause. – DOH
Administrative Orders No. 10[,] s. 1993 and
No. 24[,] s. 2003 are hereby repealed.
Article 94 of Republic Act No. 7394, as
amended, otherwise known as the
Consumer Act of the Philippines, is hereby
amended.
All other laws, decrees, ordinances,
administrative orders, rules and regulations,
or any part thereof, which are inconsistent
with this Act are likewise repealed or
amended accordingly.
Hence, the CA ruled that the DOH
wrongfully arrogated unto itself the
12
authority given to the IAC-Tobacco to
administer and implement the provisions of
RA 9211, which includes regulation of
tobacco promotions.27
Dissatisfied, the DOH, through the Office of
the Solicitor General (OSG), moved for the
reconsideration28 of the said Decision,
which the CA denied in a Resolution29
dated August 3, 2012, hence, this petition.
The Issues Before the Court
The essential issues to be resolved are: (a)
whether or not the CA erred in finding that
the authority of the DOH, through the BFAD,
to regulate tobacco sales promotions under
Article 116 in relation to Article 109 of RA
7394 had already been impliedly repealed
by RA 9211, which created the IAC-Tobacco
and granted upon it the exclusive authority
to administer and implement the provisions
thereof; and (b) whether or not the CA erred
in ascribing grave abuse of discretion upon
the DOH when the latter held that RA 9211
has also completely prohibited tobacco
promotions as of July 1, 2008.
The Court’s Ruling
The petition is bereft of merit.
At the core of the present controversy are
the pertinent provisions of RA 7394, i.e.,
Article 116 in relation to Article 109, to wit:
Article 116. Permit to Conduct Promotion. –
No person shall conduct any sales
campaigns, including beauty contest,
national in character, sponsored and
promoted by manufacturing enterprises
without first securing a permit from the
concerned department at least thirty (30)
calendar days prior to the commencement
thereof. Unless an objection or denial is
received within fifteen (15) days from filing
of the application, the same shall be
deemed approved and the promotion
campaign or activity may be conducted:
Provided, That any sales promotion
campaign using medical prescriptions or any
part thereof or attachment thereto for
raffles or a promise of reward shall not be
allowed, nor a permit be issued therefor.
(Emphasis supplied)
Article 109. Implementing Agency. – The
Department of Trade and Industry shall
enforce the provisions of this Chapter and
its implementing rules and regulations:
Provided, That with respect to food, drugs,
cosmetics, devices, and hazardous
substances, it shall be enforced by the
Department of Health. (Emphasis and
underscoring supplied)
The DOH derives its authority to rule upon
applications for sales promotion permits
from the above-cited provisions. On the
other hand, Section 29 of RA 9211 creating
the IAC-Tobacco provides:
Section 29. Implementing Agency. – An
Inter-Agency Committee-Tobacco (IAC-
Tobacco), which shall have the exclusive
power and function to administer and
implement the provisions of this Act, is
hereby created. The IAC-Tobacco shall be
chaired by the Secretary of the Department
of Trade and Industry (DTI) with the
Secretary of the Department of Health
13
(DOH) as Vice Chairperson. The IAC-Tobacco
shall have the following as members:
Secretary of the Department of Agriculture
(DA);
Secretary of the Department of Justice
(DOJ);
Secretary of the Department of Finance
(DOF);
Secretary of the Department of
Environment and Natural Resources (DENR);
Secretary of the Department of Science and
Technology (DOST);
Secretary of the Department of Education
(DepEd);
Administrator of the National Tobacco
Administration (NTA);
A representative from the Tobacco Industry
to be nominated by the legitimate and
recognized associations of the industry; and
A representative from a nongovernment
organization (NGO) involved in public health
promotion nominated by DOH in
consultation with the concerned NGOs[.]
The Department Secretaries may designate
their Undersecretaries as their authorized
representative to the IAC. (Emphasis and
underscoring supplied)
It is the CA’s pronouncement that the
creation of the IAC-Tobacco effectively and
impliedly repealed30 the above-quoted
provisions of RA 7394, thereby removing the
authority of the DOH to rule upon
applications for sales promotional permits
filed by tobacco companies such as those
filed by PMPMI subject of this case.
On the other hand, while the DOH and the
BFAD concede that the creation of the IAC-
Tobacco expressly grants upon the IAC-
Tobacco the exclusive power and function to
administer and implement its provisions,
they nevertheless maintain that RA 9211 did
not remove their authority under RA 7394
to regulate tobacco sales promotions.31
They point out that this much can be
deduced from the lack of provisions in RA
9211 and its implementing rules laying
down the procedure for the processing of
applications for tobacco sales promotions
permit.32 As such, the DOH, through the
BFAD, retains the authority to rule on
PMPMI’s promotional permit applications.
The Court agrees with the CA.
After a meticulous examination of the
above-quoted pertinent provisions of RA
7394 and RA 9211, the Court finds that the
latter law impliedly repealed the relevant
provisions of the former with respect to the
authority of the DOH to regulate tobacco
sales promotions.
At this point, the Court notes that both laws
separately treat “promotion” as one of the
activities related to tobacco: RA 7394
defines “sales promotion” under Article 4
(bm), while RA 9211 speaks of “promotion”
or “tobacco promotion” under Section 4 (l).
“Sales promotion” is defined in Article 4
(bm) of RA 7394, to wit:
Article 4. Definition of Terms. – For purposes
of this Act, the term:
xxxx
bm) “Sales Promotion” means techniques
intended for broad consumer participation
which contain promises of gain such as
14
prizes, in cash or in kind, as reward for the
purchase of a product, security, service or
winning in contest, game, tournament and
other similar competitions which involve
determination of winner/s and which utilize
mass media or other widespread media of
information. It also means techniques purely
intended to increase the sales, patronage
and/or goodwill of a product. (Emphases
and underscoring supplied)
Identifying its Gear Up Promo and Golden
Stick Promo to be activities that fall under
sales promotion as contemplated in the said
provision, PMPMI filed its permit
applications under Article 116 of RA 7394
before the BFAD.
Meanwhile, Section 4 (l) of RA 9211 defines
“promotion” as follows:
Section 4. Definition of Terms. – As used in
this Act:
xxxx
l. “Promotion” – refers to an event or
activity organized by or on behalf of a
tobacco manufacturer, distributor or retailer
with the aim of promoting a brand of
tobacco product, which event or activity
would not occur but for the support given to
it by or on behalf of the tobacco
manufacturer, distributor or retailer. It may
also refer to the display of a tobacco
product or manufacturer’s name,
trademark, logo, etc. on non-tobacco
products. This includes the paid use of
tobacco products bearing the brand names,
trademarks, logos, etc. in movies, television
and other forms of entertainment. For the
purpose of this Act, promotion shall be
understood as tobacco promotion[.]
(Emphases and underscoring supplied)
As adverted to elsewhere, the IAC-Tobacco
shall have the exclusive power and function
to administer and implement the provisions
of RA 9211, which includes the conduct of
regulating promotion.
The Court has judiciously scrutinized the
above definitions and finds that there is no
substantial difference between the activities
that would fall under the purview of “sales
promotion” in RA 7394, as well as those
under “promotion” in RA 9211, as would
warrant a delineation in the authority to
regulate its conduct. In fact, the techniques,
activities, and methods mentioned in the
definition of “sales promotion” can be
subsumed under the more comprehensive
and broad scope of “promotion.”
In order to fully understand the depth and
scope of these marketing activities, the
Court finds it necessary to go beyond the
ambit of the definitions provided in our
laws.
Outside RA 7394, “sales promotion” refers
to activities which make use of “media and
non-media marketing communication for a
pre-determined, limited time to increase
consumer demand, stimulate market
demand or improve product availability,”33
“to provide added value or incentives to
consumers, wholesalers, retailers, or other
organizational customers to stimulate
immediate sales” and “product interest,
trial, or purchase.” 34 Examples of devices
used in “sales promotion” are contests,
15
coupons, freebies, point-of-purchase
displays, premiums, raffle prizes, product
samples, sweepstakes, and rebates.35
On the other hand, “promotion” is a term
frequently used in marketing which pertains
to “raising customer awareness of a product
or brand, generating sales, and creating
brand loyalty”36 which utilize the following
subcategories: personal selling, advertising,
sales promotion, direct marketing, and
publicity.37 The three basic objectives of
promotion are: (1) to present information to
consumers as well as others; (2) to increase
demand; and (3) to differentiate a
product.38 “Promotion” can be done
through various methods, e.g., internet
advertisements, special events,
endorsements, incentives in the purchase of
a product like discounts (i.e., coupons), free
items, or contests.39
Consequently, if “sales promotion” is
considered as one of the subcategories of
“promotion,” it is clear, therefore, that
“promotion” necessarily incorporates the
activities that fall under “sales promotion.”
Considering that the common and
fundamental purpose of these marketing
strategies is to raise customer awareness in
order to increase consumer demand or
sales, drawing a demarcation line between
“promotion” and “sales promotion” as two
distinct and separate activities would be
unnecessarily stretching their meanings and,
accordingly, sow more confusion. Moreover,
the techniques, methods, and devices
through which “sales promotion” are usually
accomplished can likewise be considered as
activities relating to “promotion,” like raffle
contests, which necessarily require prizes
and drawing of winners, discounts, and
freebies.
Concomitantly, while the Court
acknowledges the attempt of the
Department of Justice (DOJ), through its DOJ
Opinion No. 29, series of 2004,40 (DOJ
Opinion) to reconcile and harmonize the
apparently conflicting provisions of RA 7394
and RA 9211 in this respect, to the Court’s
mind, it is more logical to conclude that
“sales promotion” and “promotion” are
actually one and the same. The DOJ, in fact,
referred41 to “product promotion” in RA
9211 as “promotion per se” which,
therefore, can be taken to mean an all-
encompassing activity or marketing strategy
which may reasonably and logically include
“sales promotion.” Besides, the DOJ Opinion
is merely persuasive and not necessarily
controlling.42
Furthermore, the declared policy of RA 9211
where “promotion” is defined includes the
institution of “a balanced policy whereby
the use, sale and advertisements of tobacco
products shall be regulated in order to
promote a healthful environment and
protect the citizens from the hazards of
tobacco smoke x x x.”43 Hence, if the IAC-
Tobacco was created and expressly given
the exclusive authority to implement the
provisions of RA 9211 in accordance with
the foregoing State policy, it signifies that it
shall also take charge of the regulation of
the use, sale, distribution, and
advertisements of tobacco products, as well
as all forms of “promotion” which
essentially includes “sales promotion.”
Therefore, with this regulatory power
conferred upon the IAC-Tobacco by RA
16
9211, the DOH and the BFAD have been
effectively and impliedly divested of any
authority to act upon applications for
tobacco sales promotional permit, including
PMPMI’s.
Finally, it must be stressed that RA 9211 is a
special legislation which exclusively deals
with the subject of tobacco products and
related activities. On the other hand, RA
7394 is broader and more general in scope,
and treats of the general welfare and
interests of consumers vis-à-vis proper
conduct for business and industry. As such,
lex specialis derogat generali. General
legislation must give way to special
legislation on the same subject, and
generally is so interpreted as to embrace
only cases in which the special provisions
are not applicable. In other words, where
two statutes are of equal theoretical
application to a particular case, the one
specially designed therefore should
prevail.44
In fine, the Court agrees with the CA that it
is the IAC-Tobacco and not the DOH which
has the primary jurisdiction to regulate sales
promotion activities as explained in the
foregoing discussion. As such, the DOH’s
ruling, including its construction of RA 9211
(i.e., that it completely banned tobacco
advertisements, promotions, and
sponsorships, as promotion is inherent in
both advertising and sponsorship), are
declared null and void, which, as a necessary
consequence, precludes the Court from
further delving on the same. As it stands,
the present applications filed by PMPMI are
thus remanded to the IAC-Tobacco for its
appropriate action. Notably, in the proper
exercise of its rule-making authority,
nothing precludes the IAC-Tobacco from
designating any of its pilot agencies (which,
for instance, may even be the DOH45) to
perform its multifarious functions under RA
9211.

WHEREFORE, the petition is DENIED. The

Decision dated August 26, 2011 and the
Resolution dated August 3, 2012 of the
Court of Appeals in CA-G.R. SP No. 109493
are hereby AFFIRMED with the
MODIFICATION in that the present permit
applications filed by respondent Philip
Morris Philippines Manufacturing, Inc. for its
tobacco sales promotions are hereby
REMANDED to the Inter-Agency Committee-
Tobacco for appropriate action.

SO ORDERED.

17