G.R. No. 47701 - Mentholatum Co., Inc. vs. Mangaliman

On October 1, 1935, The Mentholatum Co., Inc. (a Kansas corporation) and the Philippine-American Drug Co., Inc. (its exclusive Philippine distributor) filed Civil Case No. 48855 in the Court of First Instance of Manila against Anacleto Mangaliman, Florencio Mangaliman, and the Director of the Bureau of Commerce for trademark infringement and unfair competition.
Plaintiffs alleged that the Mangaliman brothers marketed a salve called “Mentholiman” in packaging identical in size, color, and shape to the registered trademark “Mentholatum,” causing loss of sales, goodwill, and reputation.

Initial dismissal on March 9, 1936, for plaintiffs’ counsel’s absence; case reinstated April 4, 1936.
On October 29, 1937, the trial court granted:

A perpetual injunction restraining use of “Mentholiman” and unfair competition.
An accounting of profits from March 1, 1934, and damages equal to those profits.
A ₱50 fine for contempt and costs.
Dismissal of the Mangalimans’ counterclaim.

Docketed as CA-G.R. No. 46067; on June 29, 1940, reversed the trial court.
Held that Mentholatum Co., through its Philippine agent, was “transacting business” in the Philippines and, lacking the license required by Section 69 of the Corporation Law (Act No. 1459), could not maintain the suit.

Petitioners moved for certiorari to review the Court of Appeals’ reversal.
The Supreme Court considered the scope of “transacting business” under Section 69 and the independent standing of the local distributor.

Does the Mentholatum Co.’s use of the Philippine-American Drug Co. as exclusive distributor amount to “transacting business” in the Philippines?
Is the question of transacting business an issue of law or of fact?

Is the license requirement under Section 69 relevant to a trademark infringement/unfair competition action?
Can the Philippine-American Drug Co., Inc. maintain the action independently if the Mentholatum Co., Inc. is unlicensed?