(The case of San Miguel Foods, Inc. vs. Spouses Ramon and Ma. Nelia Fabie, and Fresh Link, Inc., G.R. No. 234849, April 3, 2024)
Photo from Canva free photo
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
In civil cases, the basic rule is that the party making allegations has the burden of proving them by a preponderance of evidence. In this regard, preponderance of evidence is the weight, credit, and value of the aggregate evidence on either side and is usually considered to be synonymous with the term ‘greater weight of the evidence’ or ‘greater weight of the credible evidence.
Doctrine:
Preponderance of evidence is a phrase which means probability of the truth. It is evidence which is more convincing to the court as worthier of belief than that which is offered in opposition thereto.
Facts of the Case:
The current case arises from a complaint filed by Fresh Link, Inc. (Fresh Link), owned by Ramon and Nelia Fabie, against San Miguel Foods, Inc. (SMFI) for Breach of Contract and Damages.
According to Nelia Fabie’s testimony, on October 27, 1992, Fresh Link entered into a Complementary Distributorship Agreement with SMFI, making Fresh Link the exclusive distributor of SMFI products in certain areas for six months. Fresh Link was responsible for paying for the products it purchased from SMFI for distribution. Initially, the Fabies offered their house and lot as collateral, which was later replaced by postdated checks and a credit line worth PHP 800,000. The agreement has been renewed annually with the same terms and conditions.
On May 15, 1998, the contract was extended for another year, starting from May 1, 1998, through a Memorandum of Agreement. SMFI had to maintain exclusivity for Fresh Link in selling specified products within designated areas, and ensure Fresh Link’s rights were protected. Fresh Link’s territory included Makati, with some exceptions, and the Guadalupe Wet Market.
In April 1999, the parties renewed their agreement until March 31, 2000. Fresh Link also had a Credit Line Agreement with SMFI until the same date. Despite signing the agreement, Fresh Link claimed they didn’t receive a copy. They asked SMFI for it to obtain a letter of credit from BPI, but SMFI allegedly didn’t respond.
On June 2 and 3, 1999, Fresh Link complained to SMFI about withheld discounts or rebates, the sale of Magnolia chicken in their territory at lower prices than their invoice price, and the lack of a copy of the renewed Agreement. The next day, June 4, 1999, SMFI stopped delivering products on credit to Fresh Link. This led Fresh Link to file the current complaint for breach of contract and damages against SMFI.
Issue:
Should the complaint against SMFI prosper?
Ruling of the Court:
No. The complaint for breach of contract and damages filed by Spouses Fabi and Fresh Link against SMFI should not proper. The respondents failed to prove by preponderance of evidence that SMFI unilaterally terminated the Agreement with Fresh Link.
The complaint by the respondents for breach of contract revolves around SMFI’s alleged unilateral termination of the Agreement by stopping deliveries to Fresh Link on June 4, 1999. During the lower court proceedings, respondents also highlighted other breaches by SMFI, including underpricing and undersupplying products, and allowing other distributors in Fresh Link’s area. These additional breaches were cited to support the claim that SMFI terminated the Agreement in response to complaints about these issues, as per Article VII of the Agreement.
ARTICLE VII
TERMINATION
SECTION 7.1 Notwithstanding the provision of Article II, Section l [hereof], the COMPANY reserves the right to terminate this Agreement for any violation of this Agreement or for any cause at any time by giving the COMPLEMENTARY DISTRIBUTOR at least thirty (30) days advance notice in writing before the intended date of termination.
Initially, this Court is hesitant to invalidate the clause quoted from the Agreement. Although the clause seems to lack a specific requirement for a legal cause (“for any cause”) before SMFI can terminate it, it’s fundamental that the law is assumed to be part of every contract. However, this clause doesn’t grant SMFI unrestricted authority to terminate the contract. There are specific conditions: first, there must be a legal cause for termination, and second, SMFI must notify Fresh Link in writing at least 30 days before the intended termination date.
In civil cases, the basic rule is that the party making allegations has the burden of proving them by a preponderance of evidence. In this regard, preponderance of evidence is the weight, credit, and value of the aggregate evidence on either side and is usually considered to be synonymous with the term ‘greater weight of the evidence’ or ‘greater weight of the credible evidence.’ Preponderance of evidence is a phrase which, in the last analysis, means probability of the truth. It is evidence which is more convincing to the court as worthier of belief than that which is offered in opposition thereto.
In this case, the Court finds that respondents have not proven, with sufficient evidence, that SMFI unilaterally terminated the Agreement with Fresh Link. The lower courts based their findings primarily on Nelia Fabie’s testimony and complaints sent by respondents to SMFI. However, Fabie’s assertion about SMFI’s termination lacks substantial corroborating evidence. Without additional compelling proof, her claim cannot be considered definitive.
Source:
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding taxation and taxpayer’s remedies, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
All rights reserved.