G.R. No. 78380 March 15, 1990
METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner, vs. THE HON. ROSALIO A. DE LEON, as Judge of the Regional Trial Court of Manila, Branch II, OSCAR V. ATAYDE, as Deputy Sheriff of the same court, INTEGRATED CONSTRUCTION SERVICES, INC. and ENGINEERING CONSTRUCTION INC., respondents.

FACTS

This case originated from an arbitration award confirmed by the trial court on September 9, 1972, ordering petitioner MWSS to pay private respondents a net award of P13,188,950.20 with 6% interest per annum from the filing of the complaint. Subsequently, on October 2, 1972, the parties entered into a letter-agreement modifying the award. MWSS was granted concessions, including payment of only a straight 6% interest “without computing the period of time involved,” provided it paid the full modified amount by October 31, 1972. MWSS failed to pay by this deadline and only made a partial payment on December 22, 1972, leaving a balance of P1,261,510.88.
Private respondents later moved for execution of the original award’s unsatisfied balance. The trial court initially denied execution, ruling the award had been novated. The Supreme Court, in a prior mandamus proceeding (G.R. No. L-41117), set aside that denial and directed the trial court to issue a writ of execution for the balance due under the award. Upon remand, the respondent judge issued a writ for execution. MWSS argued the executable amount should only be the principal balance of P1,261,510.88, while respondents contended it should include accrued interest. The judge clarified his order, directing execution for the balance plus 6% annual interest from December 23, 1972. MWSS filed this certiorari petition, alleging grave abuse of discretion.

ISSUE

Whether the respondent judge committed grave abuse of discretion in ordering the execution of the balance due under the award with 6% interest per annum from December 23, 1972.

RULING

The Supreme Court dismissed the petition, ruling that the respondent judge did not commit grave abuse of discretion. The legal logic is anchored on the conditional nature of the 1972 letter-agreement and the principles of equity. The agreement, which granted MWSS a concession on interest computation, was expressly conditioned upon full payment by October 31, 1972. MWSS breached this condition by paying late and leaving a balance. Consequently, the concession on interest was forfeited, and the original terms of the final and executory arbitration award, which included running interest, were revived and remained enforceable.
The Court emphasized that allowing MWSS to benefit from the interest concession despite its default would be grossly inequitable. It would unjustly reward the judgment debtor for its delay and bad faith in satisfying its obligation. The award had been final since 1972, and MWSS’s prolonged failure to pay the balance justified the accrual of interest as originally decreed. Therefore, the order for execution, including interest from the date following the partial payment, was a correct and lawful enforcement of the final judgment, not an act in excess of jurisdiction or with grave abuse of discretion. The temporary restraining order was lifted.