Title
L.C. Big Mak Burger, Inc. vs. McDonald's Corp.
Case
G.R. No. 233073
Decision Date
Feb 14, 2018
McDonald's sued L.C. Big Mak Burger for trademark infringement over "Big Mak." Despite a 2004 Supreme Court ruling favoring McDonald's, the petitioner changed to "Super Mak," avoiding contempt charges due to good faith compliance.
trademark infringement
unfair competition
court battle

Case Summary (G.R. No. 233073)

Factual Background

McDonald’s Corporation commenced Civil Case No. 90-1507 against L.C. Big Mak Burger, Inc. for trademark infringement and unfair competition. The Infringement Court issued an injunction on August 16, 1990 directing petitioner to refrain from using the name “Big Mak” or any mark likely to confuse the public with respondent’s BIG MAC mark, from selling articles purporting to be respondent’s, and from using any mark likely to induce belief of affiliation within the National Capital Judicial Region. After trial the Infringement Court rendered judgment on September 5, 1994 making the preliminary injunction permanent and awarding actual damages P400,000, exemplary damages P100,000, and attorneys’ fees P100,000.

Appellate Proceedings in the Infringement Case

The Court of Appeals reversed the September 5, 1994 decision in a November 26, 1999 ruling. This Court, however, granted a subsequent petition in G.R. No. 143993 and on August 18, 2004 set aside the CA decision and reinstated the Infringement Court’s September 5, 1994 Decision finding L.C. Big Mak Burger, Inc. liable for trademark infringement and unfair competition. A Writ of Execution issued on November 14, 2005 to implement that judgment.

Contempt Petition and Allegations

On May 5, 2008, McDonald’s Corporation filed a Petition for Contempt against L.C. Big Mak Burger, Inc. and Francis Dy in his capacity as its president, docketed as Spec. Pro. No. 08-370 before RTC Makati Branch 59. Respondent alleged that despite service of the Writ of Execution, petitioner continued to use the words “Big Mak” in its stalls and products in and outside Metro Manila and refused to fully pay the damages awarded.

Petitioner's Answer and Defenses

Petitioner denied refusal to settle and asserted that it offered payment via checks to the sheriff which respondent refused to accept. Petitioner maintained that the injunction proscribed use of the mark “Big Mak” but not the corporate name L.C. Big Mak Burger, Inc., and that it had ceased using the mark and had changed some stalls and products to “Super Mak.” Petitioner relied on photographs and on a January 3, 1994 decision of the Securities and Exchange Commission in SEC-AC No. 426 which had dismissed respondent’s complaint for change of corporate name, concluding that petitioner’s corporate name was not confusingly similar to respondent’s BIG MAC mark.

RTC Branch 59 Decision

The Contempt Court, presided by Judge Winlove M. Dumayas, rendered a Decision dated April 7, 2014 dismissing the petition for lack of merit. The court awarded to petitioner P500,000 for damage to business reputation, P500,000 moral damages to Francis Dy, exemplary damages P100,000, attorney’s fees P100,000, and costs against respondent. The Contempt Court found petitioner’s defenses compelling and its compliance efforts credible.

Court of Appeals Decision and Resolution

On appeal the Court of Appeals reversed the Contempt Court in a Decision dated February 2, 2017, finding L.C. Big Mak Burger, Inc. guilty of indirect contempt. The CA imposed a fine of P30,000 and enjoined petitioner to comply faithfully with the Supreme Court’s ruling in G.R. No. 143993 as implemented. The CA denied petitioner’s motion for reconsideration in a Resolution dated July 26, 2017.

Issue Presented to the Supreme Court

The sole issue presented for resolution was whether petitioner was guilty of indirect contempt under Rule 71, Sec. 3, Rules of Court for alleged disobedience of the writ of execution and related contemptuous conduct.

Legal Standard for Indirect Contempt

The Court reiterated Section 3, Rule 71 which enumerates acts punishable as indirect contempt, including disobedience of or resistance to a lawful writ, process, order, or judgment of a court, and any abuse of or unlawful interference with court processes. The Court emphasized settled doctrine that contempt requires a willful disregard or disobedience of public authority and that the gravamen of contempt is the alleged contemnor’s intent; good faith negates the requisite willfulness. The Court cited prior authority including Castillejos Consumers Association, Inc. v. Dominguez, Saint Louis University, Inc. v. Olairez, and Executive Secretary and Lomibao v. Gordon on the need to consider intent and good faith.

Supreme Court’s Findings on Compliance with the Injunction

The Supreme Court found that the record contains testimonial and documentary evidence showing that petitioner had implemented changes to its business, using “Super Mak” and its corporate name L.C. Big Mak Burger, Inc. rather than the proscribed mark “Big Mak.” The Court held that the Court of Appeals misread Francis Dy’s judicial affidavit and that the fact photographs were taken in 2009 did not establish that compliance began only in 2009; the affidavit and trial evidence showed compliance had taken place and that wrappers and bags already reflected the corporate name during the infringement trial.

Analysis of Corporate Name Use and Infringement

The Court concluded that the injunction proscribed use of the mark “Big Mak,” not the corporate name per se, and that petitioner’s use of its corporate name in stalls and products was not, by itself, contemptuous. The Court accepted the Contempt Court’s finding that petitioner desisted from

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