MANILA, Philippines -- Pepsi's advertisements, splashed for weeks all over Philippine newspapers, radio and TV, were hardly subtle: "Today, you could be a millionaire!"
From her tin-roofed shack in one of Manila's more squalid slums, Victoria Angelo couldn't resist. The unemployed mother of five and her husband, Juanito, who pedals people in a three-wheeled cab for about $4 a day, began drinking Pepsi with every meal and snack. Each morning, the family prayed for a specially marked bottle cap.
And then, a miracle!
On May 25 last year, the nightly television news announced that anyone holding a bottle cap marked 349 had won up to 1 million pesos, about $40,000, tax-free.
Examining her collection of caps, Victoria Angelo screamed, "We are a millionaire!"
Her voice ringing with excitement, she recalled that she turned to her family: "I tell my children you can finish school and go to college. I tell my husband he can buy a [passenger jeep]. I tell myself we can buy a real house. Can you imagine? It is a dream come true!"
But her dream has become a nightmare for New York-based PepsiCo Inc. In a marketing mistake that surely must rank among the world's worst, Pepsi had announced the wrong number. Instead of a single 1-million-peso winner, up to 800,000 bottle caps marked 349 had been printed. And tens of thousands of Filipinos soon began demanding billions of dollars that Pepsi refuses to pay.
The dispute has sparked a cola war, Philippine-style. In ways the government never could, the anti-Pepsi fever has brought together Communist rebels and army generals, well-dressed Manila matrons and barefoot rural peasants. All hold 349 caps.
Pepsi records show that at least 32 delivery trucks have been stoned, burned or overturned. Armed men have thrown Molotov cocktails and homemade bombs at Pepsi plants and offices.
In the worst incident, police say a fragmentation grenade tossed at a parked Pepsi truck in a Manila suburb Feb. 13 bounced off and killed a schoolteacher and a 5-year-old girl and wounded six other people.
Pepsi executives here have received so many death threats they use round-the-clock bodyguards and vary office hours and travel. Other heavily armed guards ride shotgun on Pepsi trucks. The company has withdrawn all but two expatriates, leaving an official in charge who has experience in Beirut, Lebanon.
And suing Pepsi has become the choice of a new generation. Criminal and civil claims filed against Pepsi across the Philippines far outnumber those against the late President Ferdinand E. Marcos and his wife, Imelda, who are accused of looting up to $10 billion during their reign.
At last count, more than 22,000 people have filed 689 civil suits seeking damages from Pepsi, plus more than 5,200 criminal complaints for fraud and deception, the company says. Only a handful of trials have begun, but the nation's appeals court upheld arrest orders against 10 local Pepsi executives this month. The company has appealed that ruling, and no arrests have been made.
Kenneth Ross, spokesman for Pepsi-Cola International, which owns 19 percent of the local bottling company, said the company's position was clear.
"We will not be held hostage to extortion and terrorism," he said in a telephone interview from Purchase, N.Y.
But unlike Pepsi's cool crisis management in the United States after false reports spread that syringes were found in Pepsi cans, company officials here panicked. When mobs rioted after the bottle-cap error was announced, frightened executives decided at a pre-dawn meeting to offer $20 in pesos to anyone with a 349 cap.
"They made two mistakes," said one official, who -- like all local Pepsi employees interviewed -- asked not to be identified. "You should never make a decision at 3 a.m. And they thought it was a few thousand people at most."
To their horror, at least 486,170 cap-holders already have flooded in. Pepsi, which had budgeted only $2 million for prizes, had to pay $10 million more for what it calls a "goodwill gesture." It also agreed to pay $6,000 to the government's consumer protection bureau, the maximum penalty under the law.
"We have done everything that we think is reasonable to amicably conclude this issue," said Mr. Ross, who has refused repeatedly to explain how the bottle-cap mistake occurred. "At this point, we do not intend to lay out additional money."
But Pepsi is clearly worried. A telling sign: In this basketball-crazed culture, the company changed the name of its professional team from the Pepsi-Cola Hotshots to the 7-Up Uncolas.
More important, Pepsi President Christopher Sinclair flew to Manila in early April for an unannounced meeting with Philippine President Fidel V. Ramos. A Ramos aide said that Mr. Sinclair pleaded for help.
Pepsi has had trouble before in the Philippines. This is the world's 12th-largest carbonated soft-drink market, and competition is fierce. In the late 1970s, at the height of the corrupt Marcos regime, Pepsi led the huge market -- but at huge cost. Pepsi ultimately lost almost $90 million in what Mr. Ross calls "accounting irregularities and overstated profits."
Coca-Cola has controlled most of the market since. Then came Pepsi's "Number Fever." After the promotion was launched in February 1992, sales of Pepsi and its other brands zoomed almost 40 percent.