in xsl:stylesheet the foreign characters aren't displaying correctly

The system generated email that are automatically sent displaying well in any web-based mail systems (yahoo, msn, etc...). The foreign characters (vowels with accents and the ñ) aren't displaying correctly. The foreign caracters do display correctly in OUTLOOK however.

póliza is coming as póliza

this is the code
<?xml version="1.0"?>
<!DOCTYPE xsl:stylesheet <!ENTITY nbsp "*">]>
<xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform" version="1.0">
<xsl:output method="html" version="4.0" encoding="ISO-8859-1"/>