G.R. No. 96372 May 22, 1995
ANTONIO L. CASTELO, BERNABE B. BANSON, LOURDES A. BANSON, and POMPEYO DEPANTE, petitioners, vs. THE COURT OF APPEALS, 12th Division, and MILAGROS DELA ROSA, respondents.

FACTS

Petitioners and private respondent Milagros Dela Rosa entered into a Deed of Conditional Sale for a parcel of land. The balance of P163,408.00 was due on or before December 31, 1982, with a six-month grace period until June 30, 1983, subject to 12% annual interest and a 1% monthly penalty charge on the diminishing balance. Dela Rosa failed to pay by the grace period’s end. Petitioners filed for specific performance. The RTC ordered rescission, but the Court of Appeals, on certiorari, annulled that decision and rendered a new one ordering Dela Rosa to pay the balance “to pay interest and in default thereof the rescission thereof is the alternative.”
During execution, a dispute arose over the computation of interest and penalty. The sheriff computed interest at 12% per annum only from November 21, 1986. Petitioners contended that under the contract, Dela Rosa owed 12% annual interest plus the 1% monthly penalty from January 1, 1983. The trial court and later the Court of Appeals upheld the sheriff’s computation, ruling that the dispositive portion’s phrase “to pay interest” referred to legal interest from the finality of the CA’s judgment, not the contractual stipulations.

ISSUE

Whether the Court of Appeals, in its November 21, 1986 decision, intended the interest payable by Dela Rosa to be the legal interest from the judgment’s finality or the contractual interest and penalty stipulated in the Deed of Conditional Sale from the date of her default.

RULING

The Supreme Court ruled in favor of the petitioners. It held that the Court of Appeals’ 1986 decision, which ordered the defendant “to comply with her obligation under the conditional sale,” necessarily included the obligation to pay the stipulated interest and penalty charges as part of the contract. The dispositive portion’s directive to “pay interest” must be interpreted in conjunction with the body of the decision, which referenced the contractual stipulations. A judgment ordering a party to comply with a contractual obligation inherently enforces all its material stipulations, including agreed-upon monetary charges for delay. To rule otherwise would unjustly alter the parties’ agreement. The Court clarified that the interest due was the contractual 12% per annum for the grace period (January 1 to June 30, 1983) and 24% per annum (12% interest plus 12% penalty) thereafter until full payment, not merely legal interest from the judgment’s finality. The case was remanded for proper computation consistent with the contract.