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.
INTEGRATED CONSTRUCTION V. RELOVA
No. L-41117 / December 29, 1986 / Paras, J.
FACTS:
MWSS (formerly NAWASA) Integrated Const Services Inc + Engrng Const Creditors of Petitioners in Joint Venture
Inc = Petitioners
Judge Relova
 July 17, 1970 - Petitioners sued the respondent Metropolitan Waterworks and Sewerage System (MWSS), formerly NAWASA, in the Court
of First Instance of Manila for breach of contract.
 Meanwhile, parties submitted the case to Arbitration.
 The Arbitration Board rendered its decision:
o MWSS is ordered to pay petitioners about P15.5M less P2.3M to be set aside as trust fund to pay creditors of joint venture in
connection with the project, or a net award of P13,188,950.20 with interest thereon from filing of complaint until fully paid.

 Subsequently, however, petitioners agreed to give MWSS some discounts in consideration of an early payment of the award.
 Thus, MWSS adopted Board Resolution embodying the terms and conditions of their agreement (discounts). MWSS sent letter to
petitioners, quoting Board Resolution w/c grants MWSS some discounts from amount payable (e.g. reductions in interests, net principal
award), provided that MWSS would pay judgment within 15 d therefrom or up to October 17, 1972.
 Petitioners signed their "Conforme" to the letter, and extended period to pay the judgment less the discounts.
 MWSS, however, paid only on December 22, 1972, the amount stated in the decision but less the reductions provided in letter.

 Three years after, after the last balance of trust fund had been released to satisfy creditors' claims, the petitioners filed Motion for
Execution in said civil case against MWSS for the balance due under the CFI award.
 Respondent MWSS opposed execution, setting defenses of payment and estoppel.
 CFI/Judge Relova: denied Motion for Execution on ground that parties had novated the award by their subsequent agreement.
 Petitioners elevated case with SC thru petition for mandamus as a special civil action and/or, in the alternative, an appeal from orders of
the CFI.

ISSUE: WON the subsequent letter-agreement between Petitioners and MWSS novated the judgment award. –NO,
(ELAM: since the subsequent agreement contemplated a suspensive conditional obligation for Petitioners to grant discount to MWSS only
when the latter paid w/in the 15 d period as stipulated in the agreement. Since MWSS did not pay w.in 15 d, the obligation of Petitioners to
grant discount to MWSS did not arise; ergo, obligation for MWSS to pay reduced amount did not arise >> ergo, no novation. )

RULING:
MWSS averred: There was novation.
Court ruled (with Petitioners): There was NO novation
 While the tenor of the subsequent letter-agreement in a sense novates the judgment award there being a shortening of the period
within which to pay (Kabangkalan Sugar Co. vs. Pacheco, 55 Phil. 555), the suspensive and conditional nature of the said agreement
(making the novation conditional) is expressly acknowledged, and stipulated in the 14th whereas clause of MWSS' Resolution which
states:
o WHEREAS, all foregoing benefits and advantages secured by the MWSS out of said conferences were accepted by the Joint Venture
provided that the remaining net amount payable to the Joint Venture will be paid by MWSS within fifteen (15) days after official
release of this resolution and a written CONFORME to be signed by the Joint Venture. (ELAM: Where is the suspensive conditional
oblign? – Only when MWSS pays w.in 15 d that discounts are granted??)
 MWSS' failure to pay within the stipulated period removed the very cause and reason for the agreement, rendering some ineffective.
Petitioners, therefore, were remitted to their original rights under the judgment award.
 As stated, it is apparent from terms of agreement that the 15-day period was intended to be a suspensive condition.
 Accordingly, the award is still subject to execution by mere motion, which may be availed of as a matter of right any time within (5)
years from entry of final judgment in accordance with Section 5, Rule 39 of the Rules of Court.

MWSS averred: The delay in effecting payment was caused by an unforeseen circumstance the declaration of martial law, thus, placing
MWSS under the management of the Secretary of National Defense, which impelled MWSS to refer the matter of payment to the Auditor
General and/or the Secretary of National Defense; and that the 15-day period was merely intended to pressure MWSS officials to process
the voucher.
Court ruled (with Petitioners): The placing of MWSS under the control and management of the Secretary of National Defense thru Letter of
Instruction No. 2, dated September 22, 1972 was not an unforeseen supervening factor because when MWSS forwarded the letter-agreement
to the petitioners on October 2, 1972, the MWSS was already aware of LOI No. 2 .

MWSS averred: Petitioners are now in estoppel.

Court ruled (with Petitioners): As to whether or not petitioners are now in estoppel to question the subsequent agreement, suffice it to state
that petitioners never acknowledged full payment; on the contrary, petitioners refused MWSS' request for a conforme or quitclaim.

Court added: MWSS' contention that the stipulated period was intended to pressure MWSS officials to process the voucher is untenable.