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The Distributor Cancellation Letter is a crucial document used when a company needs to formally end its distribution relationship with another party in the Philippines. It is typically employed when either the principal decides to terminate the distribution arrangement, or when both parties mutually agree to end their business relationship. The document must comply with Philippine commercial law, particularly the Civil Code and Code of Commerce, and should include specific references to the original distribution agreement's termination provisions. This letter serves multiple purposes: it provides official notice of termination, outlines the process for winding down the relationship, addresses the handling of remaining inventory and materials, and specifies any post-termination obligations. Given the importance of business relationships in Philippine culture, the tone and content should be professional and considerate while maintaining legal clarity and protecting the company's interests.

1. Letter Header: Company letterhead, date, and formal business letter formatting

2. Recipient Details: Full name, title, company name, and address of the distributor

3. Reference Line: Subject line referencing the Distribution Agreement being terminated, including its date and reference number

4. Opening Statement: Formal greeting and reference to the distribution agreement currently in force

5. Termination Notice: Clear statement of intention to terminate the agreement, citing the relevant termination clause and effective date

6. Reason for Termination: Brief explanation of the grounds for termination, if applicable and appropriate to include

7. Immediate Actions Required: List of immediate actions the distributor must take, such as ceasing use of trademarks, returning materials, etc.

8. Final Accounting: Reference to any final payments, reconciliations, or financial matters that need to be addressed

9. Closing Statement: Professional closing that includes contact information for handling the transition