Short answer. If you and the debtor agreed on an interest rate, that rate applies once the debtor is in delay. If there was no such agreement, Article 2209 sets the legal interest at six per cent per annum as the indemnity for the delay, absent any stipulation to the contrary.
What the law says
If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per annum.
Civil Code, Article 2209 — Interest on Money Obligations. Read the full provision →
Delay in paying money has its own rule
Article 2209 addresses a specific situation: if the obligation consists in the payment of a sum of money, and the debtor incurs in delay. Once that delay exists, the article treats interest as the indemnity for damages owed because of the delay itself. You do not need to separately prove how much you actually lost from the late payment — the statute fixes interest as the measure of that harm.
Agreed interest comes first
The article respects what the parties themselves arranged: the indemnity is the payment of the interest agreed upon, where there is no stipulation to the contrary. If you and the debtor set an interest rate for late payment when the obligation was created, that agreed rate is what governs once delay sets in — the statute does not override it.
Six percent, when nothing was agreed
Where the parties never stipulated an interest rate, Article 2209 supplies a default: the legal interest, which is six per cent per annum. This is what applies to a plain debt with no interest clause at all once the debtor falls into delay — not zero, and not whatever rate one side might prefer, but the fixed statutory rate of six percent a year.
What has to be true before this applies
Article 2209 turns on the debtor being in delay — legal delay, not simply a payment date the creditor wishes had been met sooner. The article itself does not spell out when delay begins; it only fixes what is owed once delay exists. Anyone trying to work out what a late-paying debtor owes should first be clear that delay has actually set in, since that is the condition the six percent, or the agreed rate, is pegged to.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Lara’s Gifts & Decors, Inc. vs. Midtown Industrial Sales, Inc, G.R. No. 225433, August 28, 2019 — read the decision on LawPhil →
- S.C. Megaworld Construction and Development Corporation vs. Engr. Luis U. Parada, represented by Engr. Leonardo A. Parada of Genlite Industries, G.R. No. 183804, September 11, 2013 — read the decision on LawPhil →
- Republic of the Philippines, represented by the Department fo Public Works and Highways, G.R. No. 211666, February 25, 2015 — read the decision on LawPhil →
- Ece Realty & Development, Inc. vs. Haydyn Hernandez, G.R. No. 212689, August 6, 2014 — read the decision on LawPhil →