Short answer. Only in three situations: when the contract stipulated interest, when the thing delivered produces fruits or income, or when the buyer is in default — and in that third case interest runs from the judicial or extrajudicial demand for payment, not from the delivery date.
What the law says
The vendee shall owe interest for the period between the delivery of the thing and the payment of the price, in the following three cases:
Civil Code, Article 1589 — When the Vendee Owes Interest. Read the full provision →
Delivery alone does not start the clock
Sellers often assume that the moment they hand over the thing, interest begins accruing on whatever remains unpaid. Article 1589 says the opposite. Interest for the gap between delivery and payment is owed in three listed cases and no others. Outside them, a buyer who has taken delivery and simply not paid owes the price — but not interest on it — until one of the three triggers occurs. That is why a seller who quietly waits, hoping the amount grows, usually ends up recovering less than expected. The law rewards the seller who acts, not the one who accumulates grievance.
Stipulation and fruits
The cleanest trigger is the first: should it have been so stipulated. If the deed or the invoice terms provide for interest on late payment, that governs, and it is the reason interest clauses belong in every sale on credit. The second is more subtle. If the thing sold and delivered produces fruits or income — a leased building earning rent, farmland yielding harvests, equipment generating revenue — the buyer is already enjoying the benefit of the thing while holding on to the money. The Code balances that by making interest run. It applies by force of the article, whether or not anyone wrote it into the contract.
Default runs from demand
The third case is the one most disputes turn on. Where the buyer is in default, interest runs from the time of judicial or extrajudicial demand for the payment of the price. Extrajudicial demand means a demand outside court — a formal demand letter is the standard form. Judicial demand means the filing of the suit. Either way the date is provable, which is precisely the point. Send the demand in writing, keep proof of how and when it was received, and keep a copy. A seller who made only verbal demands and later sues will often find interest reckoned from the filing of the complaint instead, losing months or years of it.
Rate, limits and what this does not decide
Article 1589 fixes when interest is owed, not how much. Where the parties stipulated a rate, that rate applies subject to the courts' power to reduce interest that is unconscionable. Where no rate was agreed, the applicable legal rate governs, and that rate has changed over time under the rules issued by the monetary authorities — so the correct figure depends on the period involved. The article also does not touch damages, penalties or attorney's fees, which have their own bases, nor does it decide when ownership or risk passed. Anyone computing a claim should have counsel confirm the rate and reckoning date before demanding a number in writing.
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.
- Jose Marques, et al. vs. Far East Bank and Trust Company, et al. / Far East Ban and Trust Company, et al. vs. Jose Marques, et al, G.R. No. 171379 / G.R. No. 171419, January 10, 2011 — read the decision on LawPhil →
- Violeta Espino vs. Normandy P. Amora, et al, G.R. No. 172816, March 3, 2008 — read the decision on LawPhil →
- Phil. Phosphate Fertilizer Corp. vs. Kamalig Resources Inc, G.R. No. 165608, December 13, 2007 — read the decision on LawPhil →
- Gregorio Fule vs. Court of Appeals, et al, G.R. No. 112212, March 2, 1998 — read the decision on LawPhil →