is it legal to impose interest to money owed?

hi. i'd like to ask our honorable members and moderators for a legal advice regarding my current situation. i'm a small time businesswoman who is just starting up. i was able to closed a deal to a company that sells bags. i had asked a subcontractor to do the bags for my customer,with an agreed price,the subcon made and delivered the bags. we then delivered it to my customer but unfortunately after a month,my customer was not able to pay me as we have agreed. they complain that the bags are of low quality unlike the sample i submitted prior to production. so we have agreed to just pull - out all the bags and no payment will be made. now, the subcontractor is asking me to pay her for the manufacturing of bags,i explained to her that the customer decided to return all the bags because they were not satisfied with the quality. the subcontractor is a relative of my husband so to avoid conflict,i have to decided to pay her with my own money but the amount is too big that i cant pay all of it all at once. now the subcontractor is asking for interest of 5% per month for the balance i have until i'm able to pay the full amount. she treatens to sue me if i dont give her demands. is it legal for her to impose interest per month? we do not have that kind of agreement when we were discussing this project. mababaon po lalo ako sa utang kapag tinubuan nya. please  i need your legal advice. thanks in advance.