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FIRST DIVISION

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.

D E C I S I O N

CHICO-NAZARIO, J.:

The Case

For review under Rule 45 of the Rules of Court, as amended, is the 13 February 2004 Decision¹ and 26 June 2005 Resolution² of the Court of Appeals in CA-G.R. CV No. 68290, reversing and setting aside the 3 August 2000³ Decision and ­­­23 August 2000⁴ Order of the Regional Trial Court of Pasig City, Branch 163,⁵ in Civil Case No. 62726.

The Facts

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.

Petitioners PCPPI and PEPSICO engaged the 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

x x x x

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.

x x x x

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.

x x x x

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 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.

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.

x x x x

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.

x x x x

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 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.

x x x x

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.

x x x x

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 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.) vs. 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 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.

x x x x

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 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.

Panganiban, C.J. (Chairperson), Ynares-Santiago, Austria-Martinez, and Callejo, Sr., JJ., concur.

Footnotes

¹ Penned by Court of Appeals Associate Justice Eloy R. Bello, Jr. with Associate Justices Amelita G. Tolentino and Arsenio J. Magpale concurring; Annex "A" of the Petition; rollo, pp. 111-120.

² Annex "B" of the Petition; rollo, pp. 121-124.

³ CA rollo, pp. 126-135.

⁴ Id. at 134.

⁵ Penned by Hon. Librado S. Correa, Acting Presiding Judge.

⁶ Docketed as Civil Case No. 62726. Records, Vol. I, pp. 1-8.

⁷ In compliance with the terms and conditions set by the DTI, the list of the winning crowns was placed in the safety deposit box of the United Coconut Planter Bank (UCPB) in Makati City. The DTI-approved printed posters advertising the "Number Fever" promotional campaign enjoined the participants to look for the winning three-digit number and security code under the crowns or resealable caps.

⁸ As in the original promo period, in compliance with the terms and conditions set by the DTI, the new list of winning crowns were again placed in the safety deposit bow of the United Coconut Planters Bank (UCPB) in Makati.

⁹ Index of Exhibits, p. 127.

¹⁰ Id.

¹¹ Id.

¹² Numerous holders of crowns and/or resealable caps bearing the winning three-digit number with incorrect security codes filed separate complaints for specific performance and damages.

¹³ Records, Vol. II, pp. 136-138.

¹⁴ Supra note 4.

¹⁵ Supra note 1.

¹⁶ Petitioners PCPPI and PEPSICO’s Memorandum, p. 17.

¹⁷ Rodrigo v. Pepsi Cola Products (Phils.), Inc. and Pepsico, Inc., G.R. No. 149411, 1 October 2001.

¹⁸ Mendoza v. Pepsi-Cola Products Philippines, Inc., G.R. No. 153183, 24 July 2002.

¹⁹ Pepsi Cola Products (Phils.) v. Patan, Jr., G.R. No. 152927, 14 January 2004, 419 SCRA 417.

²⁰ De Mesa v. Pepsi Cola Products Phils., Inc., G.R. Nos. 153063-70, 19 August 2005, 467 SCRA 433.

²¹ Respondents’ Memorandum, p. 11.

²² Id.

²³ Supra note 21.

²⁴ Docketed as CA G.R. CV No. 53860.

²⁵ Rollo of G.R. No. 153183, p. 46.

²⁶ Supra note 23.

²⁷ Tala Realty Services Corp. v. Banco Filipino Savings and Mortgage Bank, 389 Phil. 455, 461-462 (2000).

²⁸ A.C. Freeman, A Treatise on the Law of Judgments by Edward W. Tuttle, Vol. II {1925 ed.], G. 630, 1329.

²⁹ Caltex (Phil.) Inc. v. Palomar, 124 Phil. 763. (1966).

³⁰ CROKE, Spicer v. Spicer (1620) Cro. Jac. 527.

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