URBANO DE VENECIA AND CRISANTA M. DE VENECIA, PLAINTIFFS-APPELLANTS, VS. AQUILINO DEL ROSARIO AND MARIA DE LA PEÑA ALIAS M. DEL ROSARIO, DEFENDANTS-APPELLEES.

In accordance with the compromise
agreement the Court of First Instance of Pangasinan
rendered the following decision of December 12, 1959:

“The parties in this case
assisted by their respective attorneys, submit to this Court the following
compromise agreement which reads:

“’Now come the parties, assisted
by their respective attorneys, and to this Honorable Court respectfully submit
the following agreement and settlement of this case:

“‘1. That the defendants herein
admit having been indebted to the plaintiffs in the amount of P6,475.26 and
hereby confess judgment thereto in favor of the
plaintiffs;

“‘2. That herein defendants agree
and covenant to effect payment of said obligation on the following terms: “‘(a)
That the sum of P1,000.00 should be paid by the defendants to the plaintiffs on
or about January 20, 1959; “‘(b) That the defendants likewise should pay to the
plaintiffs the sum of P475.26 on or about March 20, 1959; “(c) That the
remaining balance of P5,000.00 shall be paid by the defendants to the plaintiffs
within a period of one (1) year at 12% interest from March 20, 1959 in equal
monthly installments with corresponding interest as
computed.

“‘3. That to secure the faithful
compliance and performance of said obligation defendants herein, by these
presents, cede and convey by way of security, free from any lien the following
real properties which are owned by them, and all and whatever proprietary
rights, interest, or participation which they have therein. (Here follows a
description of the parcels of land.)

“’4. In the event defendants fail
to pay the above-mentioned obligation under the term herein set forth, or in
default of two of the installments, whatever balance remaining shall immediately
become due and payable and herein plaintiffs can secure the immediate execution
of the judgment in the case, and the defendants waive whatever right a mortgagor
may have short of foreclosure proceedings. A penal clause is inserted in this
agreement to the effect that if defendants fail to perform their obligation an
additional 10% shall be charged, in addition to the interest, agreed upon, to
cover damages of plaintiffs.’

“This agreement is hereby
approved and it is hereby ordered that the parties are enjoined to comply with
the terms of the agreement.”

As only the first installments of
P1000.00 and P475.26 were paid, the plaintiffs sought the execution of the
judgment. A writ of execution was issued but it expired unserved. An alias writ of execution was issued the validity
of which was challenged but upheld by this Court in L-18405, September 30, 1963,
wherein We ordered execution to be first directed against the mortgaged lands
before levy on other properties of defendants. Upon remand to the lower court a
second alias writ of execution was issued on December 4, 1963 ordering the
provincial sheriff to levy on the three parcels of land mortgaged to satisfy the
balance in the indebtedness of P5,000.00 “plus the sum of P300 representing the
interest on said sum of P5,000 from March 20, 1959 to September 20, 1959 and the
further sum of P500 representing 10% of the same amount as penalty.” The
plaintiffs, claiming that the writ did not conform with the decision of December
12, 1959, moved ex parte on December 5, 1963 to amend
the writ to read thus: “plus 12% per annum on the sum of P5,000 from March 20,
1959 until the sum is fully paid and the further sum of P500 representing 10$ of
the same amount as penalty.” The court granted, the following day, the amendment
prayed for but not in so far as the interest was to be paid “until the whole sum
is fully paid” declaring that the penalty takes the place of the
interest.

From denials of their two motions
for reconsideration, plaintiffs took this present appeal directly to Us, there
being no dispute as to the facts.

Should We order the amendment of
the writ to allow interest to run until the whole sum Is fully
paid?

Our substantive law on the matter
provides:

“In obligations with a penal
clause, the penalty shall substitute the indemnity for damages and the payment
of interests in case of non-compliance, if there is no stipulation to the
contrary. x x x.”^[1]

As correctly observed by the
defendants, paragraph 2(c) of the decision of December 12, 1959 provides for
payment “within a period of one (1) year at 12% interest from March 20, 1959 in
equal monthly installments with corresponding interest as computed.” Paragraph 4
of the same however further provides that “a penalty clause is inserted in this
agreement to the effect that if defendants fail to perform their obligation, an
additional 10% shall be charged, in addition to the interest, agreed upon, to
cover damages of plaintiffs.” We believe that this part of the decision,
particularly the phrase We underscored above, provides the exception sanctioned
by the Civil Code. For clearly the intent of the parties is to allow recovery of
both the penalty and the interest, the latter to run, as agreed upon, that is,
until full payment of the debt. The cases where the penalty takes the place of
the interest are those where no stipulation to the contrary is provided for.
Such are the instances in the authorities advanced by the defendants but such is
not the case herein.

We cannot accept as tenable the
argument that the amendment sought would also amend the decision of December 12,
1959. The writ issued was to comply with the judgment. If the writ does not
conform to the judgment, We fail to see why We cannot order its amendment so
that the judgment may be properly satisfied.

WHEREFORE, the appealed orders are
reversed and the amendment of the alias writ of execution dated December 4, 1963
is hereby granted to include recovery of 12% interest per annum from March 20,
1959 until the whole debt is fully paid and the further sum of P500.00
representing 10% of the same amount as penalty. No costs.

SO ORDERED.

Concepcion, C.J., Reyes, J. B. L., Barrera,
Dizon, Regala, Makalintal, Zaldivar
and Sanchez, JJ., concur.

^[1] Article 1226, Civil Code of the
Philippines.