Jespajo Realty Corporation v. Hon. Court of Appeals

Summary

This case involves a lease contract dispute between Jespajo Realty Corporation and two lessees over rental increases. The lease agreements provided for indefinite periods subject to up-to-date payments and automatic 20% yearly increases. When the lessor demanded P3,500.00 monthly rent (far exceeding the contractual 20% increase), lessees refused and successfully consigned proper rental amounts with the court. The lessor then filed an ejectment case. The Supreme Court ultimately ruled that the lease contracts with indefinite periods subject to the condition of up-to-date payments are valid and binding. The lessor cannot unilaterally impose rental increases beyond the contractually agreed 20% yearly rate. The Court distinguished this case from others involving actual rental arrears and upheld the principle that parties cannot escape obligations under validly executed contracts. The decision reinforces the binding nature of lease contract terms and the effectiveness of consignation to prevent artificial defaults.