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Florentino v. Supervalue Inc. 2.

Petitioner frequently close stores earlier than mall

Issue: Reduction by closing time for delay of delivery of stocks to her
Courts store
 In 2nd letter the respondent informed upon lease
Doctrine: expiration on March 31 2000 no longer to extend the
lease agreement
A penal clause is an accessory undertaking to assume greater  Upon expiration, Respondent also took possession of
liability in case of breach. equipment and personal belonging of Petitioner from
SM store as well as security deposits of P192000 as
Function: (1) to provide for liquidated damages, and (2) to provided in Lease Agreement upon breach
strengthen the coercive force of the obligation by the threat  Petitioner filed case for Sum of Money and Damages;
of greater responsibility in the event of breach. RTC ruled in favor of Petitioner that forfeiture of
security deposit w/o consent is illegal however CA
General Rule: courts are not at liberty to ignore the freedoms modified decision that the forfeiture of security deposit
of the parties to agree on such terms and conditions was valid on account of petitioner breach in agreement
ISSUE: WON the penalty of forfeiture of security deposit on
Exception: (1) if the principal obligation has been partly or account of breach should be reduced by Court
irregularly complied with; and (2) even if there has been no Ruling: YES
1. Question of whether a penalty is reasonable or
compliance if the penalty is iniquitous or unconscionable
iniquitous can be partly subjective and partly objective.
(ART 1229)
Factors include: type, extent and purpose of the
penalty, the nature of the obligation, the mode of
breach and its consequences, the supervening realities,
the standing and relationship of the parties, and the
 Petitioner is engaged in the retail of empanada;
Respondent is engaged in the leasing of stalls and 2. Forfeiture of the entire amount of the security deposits
stores within SM in the sum of P192,000.00 was excessive and
 Parties entered into a lease Agreement with renewal unconscionable considering that the gravity of the
upon agreement breaches committed by the petitioner is not of such
 Respondent submits 2 letters to Petitioner first letter degree
stating the latters failure to accord to the contract for: 3. It is in the exercise of its sound discretion that this
1. Selling a variety of empanada as such increasing court tempered the penalty to 50%. The respondent is
price without her consent P20 to P22 therefore under the obligation to return the 50% of
P192,000.00 to the petitioner.