Dormitorio v FernandezDoctrine:A final executory judgment of a trial court may be novated by subsequent agreement of the parties.

Facts:The Municipality of Victorias is the owner of several parcels of lands in Victorias, Negros Occidental. In 1948, it sold lot No.1 Block 16 with an area of 230 sq. m. at 1 peso per sq. meter to Serafin Lazalita. Payment for said lot was completed in 1958.

Lazalita had been in full and peaceful possession of the said land for eight continuos years and he introduced permanent and invaluable improvements thereon such as fruite trees, a house of strong materials, etc.

In 1955, Agustin and Leoncia Dormitorio also purchased a land from the Municipality of Victorias. They bought Lot No. 2, Block 16 having an area of 343 sq. meters at 1 peso per sq. meter. They, however, have not taken actual possession of the land.

In 1958- Dormitorios filed a suit for ejectment against Lazalita. The Municipal Mayor and Council tried to settle the matter between the parties. A private surveyor was hired and it was found out that the lot sold by the Municipality to Lazalita was converted to the Municipal Road known as Jover Street and the lot presently occupied by him is supposed to be Lot. No. 2 bought by the Dormitorios.

1961- CFI rendered judgment in favor of the Dormitorios, ordering Lazalita to vacate the land and to pay a monthly rental to the former at a rate of 20 pesos a month.

Lazalita, with the Dormitorios, then filed a case against the Municipality of Victorias because the value of the improvement he made on the land have far exceeded the purchase price.

The Municipality of Victorias, is willing to amicably settle the case, by giving the plaintiff another lot, if they could open their newly proposed subdivision, or pay back Lazalita the amount necessary and just for him to acquire another lot for his residence and for the expenses of transferring his present residential house thereto.

1965- The parties agreed and submitted an "Agreed Stipulation of Facts" before the court. Accordingly, judgment was rendered based on the same.

Thereafter, the Dormitorios filed a writ of execution for the enforcement of the earlier judgment by the Court ordering Lazalita to pay 20 pesos monthly rental and to vacate said property. The petition was granted. However, Judge Fernandez set aside said writ of execution on the ground that it was obtained by means of fraud, misrepresentation and concealment of the true facts of the case by making it appear that the case was still enforceable (even if it had already been novated by a subsequent agreement by the parties). It found out that the said order was granted based on a decision of the Court on Sept. 5, 1961 (prior to the Agreed Stipulation of Facts submitted by both parties on Feb. 12, 1965)

I: WON the judgment of the court had been novated and thus can no longer be enforced?

H: Yes. The agreement filed by the parties created between them new rights and obligation which naturally superseded the prior judgment. It is proper to show that there is animus novandi between the parties for novation to properly take effect.

In the case at bar, the presence of animus novandi is undeniable.

Secondly, the decision resulting from a compromise had the effect of res judicata. The parties therefore are bound by it. The judge therefore committed no error in setting aside the order of execution as the same had only set maters right.