The Mentholatum Co. Inc. et al., v. Mangaliman, et al., G.R. No. L-47701, 27 June 1941.

19

MAY

[LAUREL, J.]

FACTS

The Mentholatum Co., Inc., a foreign corporation, and the Philippine-American Drug Co., Inc., the
former’s exclusive distributing agent of the product “Mentholatum” in the Philippine Islands, instituted
an action against Anacleto Mangaliman, Florencio Mangaliman and the Director of the Bureau of
Commerce for infringement of trade mark and unfair competition, praying for the issuance of an order
restraining Anacleto and Florencio Mangaliman from selling their product “Mentholiman,” and directing
them to render an accounting of their sales and profits and to pay damages. Mentholatum, not licensed
to do business in the Philippines, claims that they have not sold personally any of their products in the
Philippines and that products were imported from them by local entities including Philippine-American
Drug under their own account.

ISSUES

(1) Is Mentholatum Co. Inc. “doing business” in the Philippines?

(2) Is Mentholatum Co. Inc. allowed prosecute its action?

HELD

(1) YES.
[The test is] whether the foreign corporation is continuing the body or substance of the business or
enterprise for which it was organized or whether it has substantially retired from it and turned it over to
another. The term implies a continuity of commercial dealings and arrangements, and contemplates, to
that extent, the performance of acts or works or the exercise of some of the functions normally incident
to, and in progressive prosecution of, the purpose and object of its organization.

[Here] the Philippine-American Drug Co., Inc., is the exclusive distributing agent in the Philippine Islands
of the Mentholatum Co., Inc., in the sale and distribution of its product known as the Mentholatum. xxx
It follows that whatever transactions the Philippine-American Drug Co., Inc., had executed in view of the
law, the Mentholatum Co., Inc., did it itself.

(2) NO.

Section 69 of Act No. 1459 provides that “No foreign corporation or corporation formed, organized, or
existing under any laws other than those of the Philippine Islands shall be permitted to… maintain by
itself or assignee any suit for the recovery of any debt, claim, or demand whatever, unless it shall have
the license xxx.”

The Mentholatum Co., Inc., being a foreign corporation doing business in the Philippines without the
license required by section 68 of the Corporation Law, it may not prosecute this action for violation of
trade mark and unfair competition. Neither may the Philippine-American Drug Co., Inc., maintain the
action here for the reason that the distinguishing features of the agent being his representative
character and derivative authority.

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