Quick answer

A contractor may ask for payment beyond the original agreement, but the owner is not automatically legally bound to pay it.

For a construction project with a fixed or stipulated price, the contractor generally cannot increase the price merely because labor, materials, fuel, or other inputs became more expensive. Under Article 1724 of the Civil Code, additional payment for changes to the agreed plans or specifications ordinarily requires:

The owner’s written authorization for the change; and
A written agreement by both parties fixing the additional price.

If either requirement is missing, recovery may be barred. The answer may differ when the original contract uses unit prices, cost-plus pricing, allowances, provisional sums, or an enforceable escalation formula—or when the claimed amount is actually part of the original scope, an unpaid progress billing, or compensation expressly allowed by another contract provision.

The starting point: the contract controls

Philippine law generally treats a valid contract as binding between the parties. Its terms must be performed in good faith. Parties may set their own lawful conditions, including the price, scope, payment schedule, variation procedure, and allocation of construction risks.

Before deciding whether an extra charge is valid, review the complete contract package—not just the page stating the total price. Relevant documents may include:

The owner-contractor agreement;
Approved plans and specifications;
Bill of quantities or scope of work;
Proposal, quotation, and inclusions or exclusions;
General and special conditions;
Addenda and bid clarifications;
Change-order procedure;
Allowance or provisional-sum provisions;
Price-escalation clauses;
Site instructions and meeting minutes; and
Later amendments signed or otherwise validly accepted by the parties.

Articles 1159 and 1306 of the Civil Code of the Philippines establish the binding force of contracts and the parties’ freedom to agree on lawful terms.

Fixed-price contracts: higher costs normally remain the contractor’s risk

Article 1724 applies when a contractor undertakes to build a structure or perform other work for a stipulated price according to plans and specifications agreed with the owner.

In that setting, a contractor ordinarily cannot demand a price increase simply because:

Cement, steel, lumber, fuel, or equipment became more expensive;
Wage rates increased;
The contractor underestimated quantities or labor;
A supplier changed its price;
The contractor’s profit margin became smaller; or
The work proved less economical than expected.

The Supreme Court has repeatedly treated compliance with Article 1724’s written requirements as a condition for recovering additional costs. In Salvador v. Court of Appeals, the Court held that the absence of either the owner’s written authorization for the change or the parties’ written determination of the additional price bars recovery under the provision.

A contractor should therefore not perform disputed extra work first and attempt to settle the price afterward.

When extra payment may be enforceable

1. The owner approved a genuine change in writing, and the price was fixed in writing

This is the clearest case. A proper change order should identify:

The exact addition, deletion, or revision;
The affected drawing, specification, quantity, or work item;
The agreed price or pricing method;
Any adjustment to the completion date;
The effect on warranties and permits; and
The signatures or valid approvals of authorized representatives.

A vague instruction such as “make it better,” “continue first,” or “we will discuss the price later” is dangerous. It may not establish both requirements of Article 1724.

The Supreme Court explained in Powton Conglomerate, Inc. v. Agcolicol that both the authority for the change and the additional price must be put in writing. Oral testimony that the owner requested the work did not replace the required written documents.

2. The contract itself contains an applicable adjustment clause

A contract may expressly permit adjustments for matters such as:

A published price-escalation formula;
Currency movements;
Changes in law or taxes;
Owner-caused suspension or delay;
Unforeseen site conditions;
Allowances or provisional quantities;
Emergency work; or
Specified force-majeure consequences.

Whether payment is due depends on the clause’s precise language and whether the contractor complied with notice, documentation, quotation, approval, and deadline requirements. Force majeure or an unexpected event does not by itself rewrite a fixed price; the contract and applicable law must support the requested adjustment.

3. The contract is not truly lump-sum or fixed-price

Article 1724 may not decide the entire issue when payment is based on:

Actual measured quantities;
Agreed unit rates;
Time and materials;
Cost plus an agreed fee;
Reimbursable expenses; or
Provisional sums subject to final measurement.

In these arrangements, the final amount may legitimately exceed the initial estimate without being an unauthorized price increase. The contractor must still prove the quantities, costs, approvals, and computation required by the contract.

4. The amount represents unpaid original work, not an “extra”

A contractor may be entitled to payment when the disputed billing covers work already included in the original scope and properly completed. That is different from increasing the contract price.

The parties should compare the billing line by line against the plans, specifications, bill of quantities, exclusions, accomplishment reports, and prior payments. Labels such as “variation” or “extra work” are not conclusive.

5. The owner prevented or delayed required performance

Article 1721 of the Civil Code may entitle a contractor to reasonable compensation when an act of the owner is required and the owner delays or fails to perform it. It also addresses certain situations in which completion becomes impossible because of owner-furnished defective materials or the owner’s orders.

Recovery remains fact-dependent. The contractor must establish the owner’s responsibility, the contractual notice requirements, actual delay or expense, and the connection between the owner’s act and the amount claimed.

6. The owner later gave a legally sufficient acknowledgment or ratification

A later written acknowledgment, acceptance, or payment of a particular change order can be important. However, mere silence, awareness that work was occurring, or tolerance is not a safe substitute for Article 1724’s requirements.

In Chung v. Ulanday Construction, Inc., the Supreme Court rejected reliance on mere tolerance where written owner approval was required, while recognizing liability for particular change orders that the owner had ratified and acknowledged as due. Whether later conduct amounts to a binding acknowledgment depends on the documents and facts.

Is an architect’s or project manager’s instruction enough?

Not necessarily.

An architect, engineer, construction manager, foreman, or owner’s employee may certify accomplishment or issue technical directions without having authority to change the price. The contract should identify who may approve:

Design changes;
Additional work;
Cost adjustments; and
Extensions of time.

An instruction from the project architect did not, by itself, replace the owners’ required written approval in Chung. Contractors should confirm the representative’s actual authority and obtain the owner’s written price approval before proceeding.

Owners should also tell all project representatives in writing that they may not authorize extra-cost work unless the contract expressly gives them that power.

What if the owner verbally requested the additional work?

A verbal request creates substantial enforcement risk for both sides. For fixed-price construction governed by Article 1724, proof that the owner orally requested the work may still be insufficient because the law specifically calls for written authorization and a written determination of the additional price.

The prudent response is to issue a written change proposal before starting. It should state:

What the owner requested;
Why it is outside the original scope;
The additional price and its basis;
Any time extension;
The period for accepting the proposal; and
That work will not begin without the required approval, unless immediate action is necessary for safety or property protection.

Email and other electronic records may be relevant writings, but their sufficiency depends on content, authenticity, authority, and the parties’ contract. A message approving the work but not the price may still leave one of Article 1724’s requirements unsatisfied.

Can the owner simply refuse every additional charge?

No. Refusal is not automatically justified merely because the final amount exceeds the original figure.

The owner may still owe money if, for example:

A valid written change order exists;
The contract expressly permits the adjustment;
The project uses measured quantities or reimbursable pricing;
The amount is an unpaid balance for original work;
The owner signed a later acknowledgment of the debt; or
Another legal or contractual basis for compensation is proved.

Conversely, the owner may dispute an extra charge where the work was already included, the contractor corrected its own defective work, the required approval was absent, the price was never agreed, or the claimed amount is unsupported.

Defective work and corrective work are usually not compensable extras

A contractor generally cannot convert the cost of correcting its own defective, noncompliant, or incomplete work into an owner-funded variation.

Before paying, determine whether the claimed work:

Corrects a departure from the approved plans;
Replaces inferior or nonconforming materials;
Repairs damage caused by the contractor or subcontractors;
Completes an omitted original item; or
Results from the contractor’s construction method rather than an owner-directed change.

Owners should document defects with dated photographs, inspection reports, test results, punch lists, notices to correct, and professional assessments. Contractors should document why the condition was not caused by their work and why it falls outside the agreed scope.

A practical response to an unexpected demand

For the owner

Do not approve or reject the demand casually. Ask for a formal, itemized claim.
Request the contractual basis. Require the contractor to identify the clause, drawing, specification, exclusion, or change order relied upon.
Ask for proof of authorization. Determine who requested and approved the change and whether that person had authority.
Verify the computation. Review quantities, unit rates, invoices, payroll records, delivery receipts, and applicable markups.
Separate original work from genuine additions. Do not allow incomplete base work to be rebilled as an extra.
Inspect and measure the work. Consider using an independent architect, engineer, or quantity surveyor.
Respond in writing. State which items are accepted, rejected, or still under evaluation, and why.
Pay undisputed amounts according to the contract. Avoid withholding unrelated, properly due progress billings without a contractual basis.
Do not sign a waiver or final account without checking it. A “quitclaim,” “final billing,” or “full settlement” document can affect later claims.

For the contractor

Stop and check the contract before doing additional work.
Send written notice promptly. Follow any contractual notice period and prescribed form.
Describe the scope difference precisely. Refer to drawing numbers, specifications, quantities, or owner instructions.
Submit the price and time effect before execution.
Obtain approval from the person authorized by the contract.
Keep extra work separately measurable. Maintain daily reports, labor and equipment logs, invoices, delivery records, and photographs.
Reserve rights clearly when appropriate. Do not rely on informal assurances that payment will be settled later.
Continue undisputed obligations when safely and contractually required. Wrongful suspension or abandonment may create a separate breach.

Evidence both parties should preserve

Keep original and backed-up copies of:

The signed contract and all attachments;
Every version of the plans and specifications;
Proposals, quotations, and bid clarifications;
Change-order requests and approvals;
Emails, text messages, and project-platform records;
Site instructions and request-for-information records;
Meeting minutes;
Daily construction logs;
Dated photographs and videos;
Delivery receipts, invoices, payroll and equipment logs;
Progress billings and accomplishment certifications;
Proof of payments;
Inspection, testing, and punch-list records;
Notices of delay, suspension, defects, or nonpayment; and
Evidence showing each representative’s authority.

Preserve electronic files in their original format where possible. Screenshots are useful, but the underlying message thread, attachments, sender details, and timestamps may provide stronger context.

Common mistakes

Treating a quotation as a complete contract when plans or exclusions remain unclear;
Starting extra work based only on a conversation at the site;
Getting written approval for the work but not for the additional price;
Accepting approval from someone who lacks authority to bind the owner;
Assuming the architect’s certification automatically obligates the owner to pay;
Calling an item “additional” without comparing it with the original scope;
Mixing defect correction with legitimate variation work;
Ignoring contractual notice and claim deadlines;
Signing backdated or blank change orders;
Paying a lump-sum extra without quantities or supporting records;
Withholding all progress payments because one variation is disputed; and
Waiting until project completion to document months of verbal instructions.

Where a construction-payment dispute may be filed

Start with the dispute-resolution clause. It may require negotiation, a professional’s initial determination, mediation, arbitration, or another precondition before a formal claim.

The Construction Industry Arbitration Commission may have jurisdiction over construction disputes when the parties agreed in writing to arbitration. Under Section 4 of Executive Order No. 1008, CIAC covers disputes connected with Philippine construction contracts, including private and government contracts, when the required agreement to arbitrate exists.

The CIAC rules state that an arbitration clause in a construction contract or a written submission of the dispute to arbitration may submit the controversy to CIAC. The official CIAP website provides the current CIAC filing guidance and request-for-arbitration forms.

If there is no applicable arbitration agreement and the parties do not later agree to arbitrate, the proper remedy may be an ordinary court action, subject to jurisdictional and procedural rules. Prescription, contractual claim deadlines, preconditions, and the date the cause of action accrued must be checked promptly. As general Civil Code rules, actions on written contracts ordinarily prescribe in 10 years, while actions on oral contracts ordinarily prescribe in six years—but the correct period and starting date depend on the actual claim.

Special rule for government infrastructure contracts

Public projects are governed not only by the Civil Code and the contract but also by government procurement law and its implementing rules.

Under the current IRR of Republic Act No. 12009, a variation may take the form of a Change Order or Extra Work Order and requires the approvals prescribed by the rules. Cumulative positive variation orders beyond 10% of the original contract price generally require another procurement project when the work is separable. In exceptional cases where completion of the original scope is urgently necessary, authorized positive variations may exceed 10% but cannot exceed 20%, subject to the required recommendation and approval. The rules also restrict commencement of work on variations exceeding the stated approval thresholds.

Government contractors should examine the applicable procurement regime, bidding documents, funding authority, administrative-remedy requirements, and date of procurement. They should not rely on an informal instruction from a project engineer as assurance of payment. The controlling details appear in the GPPB’s IRR of Republic Act No. 12009.

When legal help is urgent

Consult a Philippine construction lawyer promptly if:

The contractor threatens to abandon or suspend the project;
The owner threatens termination, bond calls, or takeover;
A large variation was performed without complete written approval;
The work presents structural, electrical, fire, or public-safety risks;
Evidence is being removed, altered, or destroyed;
A notice-to-cure, termination notice, demand letter, or arbitration request has arrived;
The contract has a short notice, claim, or dispute deadline;
The parties disagree over who had authority to approve changes;
A final waiver, quitclaim, or settlement is being requested;
The project is government-funded; or
The claim may be approaching a prescriptive deadline.

Do not remove installed work, lock out the other party, seize materials, or stop essential safety measures without legal advice. Those actions can create new contractual, property, or safety liabilities.

Frequently asked questions

Can a contractor raise the price because construction materials became more expensive?

Generally, not under a fixed-price contract merely because costs increased. An enforceable escalation clause, valid written variation, or another applicable contractual basis may change the result.

Is the owner liable if they verbally requested the extra work?

Not necessarily. For a stipulated-price project covered by Article 1724, the law ordinarily requires written owner authorization and a written agreement on the additional price. A verbal request alone is risky and may be insufficient.

Is a text message or email a written approval?

It may be relevant, but adequacy depends on what it says, who sent it, that person’s authority, authenticity, and the contract’s required approval procedure. Approval of the work without agreement on price may not satisfy Article 1724.

Can an architect approve extra payment for the owner?

Only if the architect has the necessary authority under the contract or another legally sufficient authorization. Technical supervision or certification does not automatically include authority to increase the contract price.

Must the owner pay for extra work they used or benefited from?

Benefit or acceptance may be relevant to some claims, but it does not automatically overcome Article 1724’s written requirements. Mere silence or tolerance should not be treated as reliable approval.

Can the contractor charge for correcting defects?

Ordinarily, a contractor should not receive extra payment for bringing its own defective or nonconforming work into compliance. The result may differ if the condition was caused by an owner-directed change, defective owner-supplied material, or another risk allocated to the owner.

Can the owner refuse to pay the entire progress billing because one extra is disputed?

That depends on the contract and any valid setoff or withholding right. The safer approach is to identify and address undisputed and disputed items separately.

Does a contractor’s license complaint resolve the payment dispute?

Licensing or administrative proceedings and a contractual money claim serve different purposes. A regulatory complaint does not necessarily determine who owes the disputed contract amount.

Is there one fixed deadline for every claim?

No. Contractual notice periods, arbitration requirements, statutory prescription, and accrual dates vary. Review them immediately rather than assuming that the general 10-year period for a written contract always controls.

Bottom line

For a fixed-price Philippine construction contract, a contractor usually cannot compel the owner to absorb higher labor or material costs. Payment for a change in the agreed plans or specifications ordinarily requires both the owner’s written authorization and the parties’ written agreement on the additional price. Different results are possible under unit-price, reimbursable, escalation, delay-compensation, allowance, or properly approved variation provisions.

The decisive questions are: Was the work outside the original scope? Who authorized it? Was that authority in writing? Was the additional price agreed in writing? And did the parties follow the contract’s notice and approval procedure?

This article provides general Philippine legal information, not advice for a specific project or dispute. Contract wording, project records, authority, procurement rules, and procedural deadlines can change the result. Sources were checked as of July 27, 2026.