G.R. No. L-41117 December 29, 1986
Integrated Construction Services, Inc., and Engineering Construction, Inc., petitioners, vs. The Honorable Lorenzo Relova, as Judge of the Court of First Instance of Manila, and Metropolitan Waterworks & Sewerage System, respondents.

FACTS

Petitioners sued respondent Metropolitan Waterworks and Sewerage System (MWSS) for breach of contract. The dispute was submitted to arbitration, resulting in a final and executory award ordering MWSS to pay petitioners a net sum of P13,188,950.20 with interest. Subsequently, the parties entered into a subsequent agreement embodied in a letter-agreement dated October 2, 1972. This agreement granted MWSS specified discounts from the judgment award, conditional upon MWSS paying the reduced amount within a stipulated period, initially extended to October 31, 1972. MWSS failed to pay within this period, remitting payment only on December 22, 1972, and deducting the agreed discounts despite its late payment.
Three years later, after the final release of a related trust fund, petitioners filed a motion for execution to recover the balance of the original award, arguing MWSS had forfeited the discounts by its delayed payment. MWSS opposed, claiming payment and estoppel. The respondent judge denied the motion for execution, ruling that the parties had novated the original award through their subsequent letter-agreement.

ISSUE

Whether the respondent judge committed a grave abuse of discretion in denying the motion for execution, thereby unlawfully neglecting a ministerial duty to enforce a final judgment.

RULING

The Supreme Court granted the petition, set aside the assailed orders, and issued a writ of mandamus. The legal logic centers on the nature of the subsequent agreement as a conditional novation. While the agreement indeed novated the original award by altering the payable amount and period, its effectiveness was expressly made conditional upon MWSS’s payment within the stipulated 15-day period. The 14th whereas clause of the underlying MWSS board resolution explicitly stated the discounts were accepted by petitioners “provided that” payment was made within that period. This created a suspensive condition.
MWSS’s failure to pay within the agreed period meant the condition for the novation never occurred. Consequently, the novation did not become effective, and petitioners were remitted to their original rights under the final and executory arbitration award. The Court rejected MWSS’s defenses. The declaration of martial law and its placement under the management of the Secretary of National Defense was not an unforeseen supervening event that excused delay, as MWSS was already aware of this when it forwarded the agreement. The claim that the period was merely intended to pressure officials was untenable, as the agreement’s terms clearly established it as a binding condition. Petitioners were not estopped, as they never acknowledged full payment and refused to issue a quitclaim. Therefore, the award remained enforceable by a mere motion for execution within the five-year period. The judge’s refusal to issue execution constituted a refusal to perform a mandatory duty.