GR 172384; (September 2007) (Digest)
G.R. No. 172384; September 12, 2007
ERMINDA F. FLORENTINO, Petitioner, vs. SUPERVALUE, INC., Respondent.
FACTS
Petitioner Erminda Florentino, operating as “Empanada Royale,” entered into three separate four-month Contracts of Lease with respondent Supervalue, Inc. for stalls in SM malls. The contracts were renewed and extended until March 31, 2000. Before expiration, respondent sent letters charging petitioner with contractual violations, including unauthorized closure of stalls, selling a new product variant (“mini-embutido”), and increasing prices without consent. Respondent consequently informed petitioner it would not renew the leases. Upon contract expiry, respondent took possession of the SM Megamall stall and confiscated petitioner’s equipment and belongings inside. Petitioner demanded the return of her seized properties and the security deposits totaling ₱192,000.00, but respondent refused.
ISSUE
The primary issue is whether respondent Supervalue, Inc. is obligated to return the full amount of the security deposits to petitioner Florentino upon the termination of the lease contracts.
RULING
The Supreme Court modified the Court of Appeals’ decision, ruling that respondent may forfeit only fifty percent (50%) of the security deposits and must return the remaining half to petitioner. The legal logic is anchored on the nature of a security deposit under Article 1766 of the Civil Code, which is an accessory obligation to guarantee the lessee’s performance. Its forfeiture is not automatic but requires proof of actual damages suffered by the lessor due to the lessee’s breaches. The Court found petitioner liable for certain violations, including unauthorized selling of “mini-embutido” and early closures, which justified partial forfeiture. However, respondent failed to substantiate with evidence that the alleged damages equaled the entire deposit amount. Consequently, full forfeiture was deemed unwarranted. The principle against unjust enrichment dictates that a lessor cannot retain sums exceeding proven losses. The award of attorney’s fees was also denied, as respondent’s refusal to return the deposit was not entirely baseless, thus not compelling petitioner to litigate unjustifiably. The order for the return of seized personal properties was maintained.