Privatization and Management Office v. Mariano A. Nocom

 

Privatization and Management Office v. Mariano A. Nocom

G.R. No. 250477

November 9, 2020

 

FACTS:

                The case pertains to a disagreement between Mariano Nocom and the Privatization and Management Office (PMO) regarding the lease contract's expiration date. The PMO and Mariano engaged in a lease agreement for a Manila building in 1990, which included the PMO's right to renovate the structure. They entered into a revised lease agreement in 1991, which stipulated a term of 20 years, with the option to extend the lease for an additional 20 years. Additionally, a clause stipulated that the monthly rent would increase by 10% every four years. The Commission on Audit, on the other hand, invalidated the lease in 1995 on the grounds that Mariano had neglected to provide a sanctioned construction and rehabilitation plan. Further, rental payments were not accepted by the PMO. Mariano lodged an appeal of the denial and initiated legal proceedings against the PMO seeking specific performance. The PMO and Mariano reached a compromise agreement in 1998, which ratified the amended lease agreement and extended the lease term to account for the period following the PMO's refusal to receive rental payments.

ISSUE:

Whether or not the lease contract between the PMO and Nocom was still in effect.

HELD:

Yes, the court based its decision on the compromise agreement reached between the PMO and Mariano in 1998. The compromise agreement ratified the amended contract of lease and extended the lease period. The court considered this agreement as a valid and binding contract between the parties. The court also took into account the provision in the amended contract of lease that allowed for the possibility of renewal for another 20 years. This provision indicated the intention of the parties to have a long-term lease arrangement. Furthermore, the court noted that the disallowance of the lease by the CoA was due to Mariano’s failure to submit an approved construction/rehabilitation plan. This issue was resolved through the compromise agreement, which effectively reinstated the lease contract.