Quick answer

Usually, no. If a contractor agreed to complete a defined scope of work for a fixed or lump-sum price, the contractor generally cannot demand more merely because labor, materials, fuel, equipment, or other construction costs increased.

Article 1724 of the Civil Code makes a narrow exception for changes in the plans or specifications. Additional payment may be recovered only when:

the owner authorized the change in writing; and
the parties determined the additional price in writing.

Both requirements ordinarily must exist. A verbal instruction, informal site discussion, unsigned estimate, or the owner’s mere knowledge that extra work was being done may not be enough.

The answer can differ if the agreement is not truly fixed-price, contains an escalation or price-adjustment clause, uses unit prices or provisional allowances, or separately provides compensation for owner-caused delay, unforeseen conditions, taxes, or other specified risks. The actual contract, plans, specifications, change-order provisions, and communications must therefore be examined together.

The governing Philippine rule

Under Article 1724 of the Civil Code, a contractor who undertakes to build a structure or perform other work for a stipulated price, following agreed plans and specifications, cannot withdraw or increase the price because labor or materials became more expensive.

The Supreme Court has consistently treated this rule as applying to fixed lump-sum construction contracts:

In Baylen Corporation v. Court of Appeals, the Court explained that a contractor under a fixed-price, lump-sum arrangement assumes the risk that construction costs may rise before completion.
In Powton Conglomerate, Inc. v. Agcolicol, the Court held that written owner authorization and a written agreement on the additional price are substantive requirements for recovering the cost of changed work.
In Salvador v. Court of Appeals, the Court ruled that the absence of either requirement bars recovery of additional costs.
In Hyundai Engineering and Construction Co., Ltd. v. National Labor Relations Commission, the Court reiterated that neither authorization for the change nor the additional price may ordinarily be established through substitute evidence when Article 1724 requires the writings.
In Chung v. Ulanday Construction, Inc., the Court rejected most unapproved change-order claims, emphasizing that equitable estoppel cannot simply displace the Civil Code’s written requirements.

Calling a demand a “cost adjustment,” “reimbursement,” or “equitable compensation” does not necessarily avoid Article 1724. Courts and arbitral tribunals look at the contract and the real basis of the claim.

When the contractor generally cannot increase the price

A fixed-price contractor ordinarily bears the added cost caused by:

increases in cement, steel, lumber, fuel, equipment, freight, or wages;
inaccurate cost estimates or quantity calculations made when pricing the agreed scope;
ordinary market volatility, inflation, or currency movements;
reduced profit margins or an unexpectedly difficult procurement market;
inefficiency, wastage, rework attributable to the contractor, or underestimated overhead;
work already included in the plans, specifications, bill of quantities, or contractual scope; and
additional work performed without the required written approval and written price agreement.

A contractor also cannot ordinarily abandon the project solely because completing the original scope has become more expensive. Depending on the contract and facts, unjustified suspension or abandonment may expose the contractor to termination, completion costs, liquidated damages, or other proven damages.

When more than the original amount may be payable

A properly documented change in plans or specifications

The clearest exception is a genuine variation in the agreed work. Examples may include an owner-requested additional room, revised structural design, upgraded finishes, relocation of utilities, or additional fixtures not included in the original scope.

Before the contractor proceeds, the parties should sign a change order or similar document identifying:

the exact change in scope;
the revised drawings or specifications;
the additional or reduced price;
the effect on the completion date;
the person authorized to approve the change; and
any resulting adjustment to payment milestones, retention, warranties, or bonds.

Article 1724 requires both written authorization for the change and written determination of the added price. A document addressing only the work but not its price—or only the price but not the owner’s authorization—creates serious collection risk.

A contractual escalation or price-adjustment clause

The Civil Code allows parties to establish lawful contract terms, and valid stipulations bind them. A contract may expressly permit adjustment when a defined event occurs, such as a stated movement in an official price index, a change in taxes, or a specified increase in particular commodities.

Any adjustment must be calculated strictly under the clause. A contractor should not assume that general language about “unforeseen circumstances” creates an unlimited right to pass on higher costs. Relevant questions include:

What event triggers adjustment?
Is there a threshold or formula?
Which cost components are covered?
Is written notice required?
Who must certify the calculation?
Is there a deadline for submitting the claim?
Does the clause exclude costs caused by contractor delay?

Contractual notice periods may be much shorter than the legal period for bringing an action. Failure to submit a timely notice, quotation, breakdown, or change-order request can defeat a claim even if the underlying event occurred.

Unit-price, remeasurement, or cost-reimbursable work

Not every stated contract amount is an unchangeable lump sum. The total may legitimately vary when the agreement provides for:

payment based on actual measured quantities at agreed unit rates;
provisional sums or allowances that will be reconciled later;
cost-plus or cost-reimbursable pricing;
owner-selected items whose final prices were not fixed;
separately billable permits, testing, utility connections, or professional services; or
an express adjustment after final measurement.

The contract must be read as a whole. A document labeled “fixed price” may still contain adjustable components, while an “estimated contract price” may not be a guaranteed maximum.

Owner-caused delay, disruption, or breach

A contractor may have a separate claim when the owner breaches the agreement—for example, by failing to provide site access, withholding required information, repeatedly suspending work, or delaying agreed payments. Such a claim is not automatically the same as increasing the fixed price because materials became more expensive.

Recovery depends on the contract, causation, compliance with notice and documentation requirements, and proof of actual loss. The contractor should distinguish:

the price of changed work;
prolongation or extended-overhead costs;
unpaid progress billings;
financing charges or interest;
damages for breach; and
an extension of time.

A delay does not automatically entitle the contractor to every cost incurred during the extended period. Likewise, an extension of time does not necessarily carry an entitlement to additional money.

A later written agreement

The parties may mutually amend or supplement their original arrangement, subject to law and the contract’s formal requirements. A properly authorized written amendment can establish a new price, revised scope, or settlement of disputed costs.

The person signing for the owner must have authority. Approval by an architect, engineer, site representative, project manager, or employee may be insufficient if the contract reserves financial approval to the owner or another named officer. In the Hyundai case, a signed progress report did not establish liability where the signer lacked authority to approve changes and their cost.

What usually does not establish a valid additional-price claim

The following should not be relied upon by themselves:

an oral instruction to “go ahead”;
a chat message that approves the work but says nothing about price;
a contractor’s unilateral quotation or billing;
an architect’s or foreman’s signature when that person lacks authority to bind the owner;
the owner’s silence while the work is performed;
photographs showing that additional work exists;
delivery receipts proving that materials were purchased;
an unsigned revised bill of quantities;
the owner’s occupancy or use of the completed structure; or
a general appeal to fairness or unjust enrichment.

These items may still be relevant evidence of what occurred. They do not necessarily satisfy Article 1724’s specific written requirements. The Supreme Court has cautioned that equity cannot routinely be used to bypass a governing statutory rule.

Prior payments for some change orders also do not automatically validate every other variation. Each disputed item should be matched to its own authorization, agreed price, and supporting records.

What owners should do when asked to pay more

1. Do not approve or reject the demand blindly

Ask for an itemized written claim showing:

the contractual basis for the adjustment;
the original scope allegedly affected;
the requested or approved change;
the date and author of the instruction;
the agreed pricing document;
quantity and unit-cost computations;
invoices and payroll or equipment records, where relevant;
the effect on the schedule; and
prior payments, credits, or deductions.

2. Compare the claim with the complete contract package

Review the signed agreement together with all incorporated documents, including:

plans and technical specifications;
scope of work;
bill of quantities;
proposal and accepted clarifications;
general and special conditions;
change-order and notice provisions;
escalation clauses;
project schedule;
meeting minutes;
approved shop drawings;
progress billings; and
written amendments.

A disputed item may already be included in one document even if it is not obvious from the main contract.

3. Respond in writing

State which items are accepted, rejected, or still under evaluation. Avoid vague replies that could later be presented as approval. If work must proceed urgently, use a written interim instruction that clearly states whether price and time remain subject to a later signed agreement.

4. Do not sign an inaccurate acknowledgment

A certification, completion document, reconciliation, or statement of account may affect the parties’ rights. Add a clear written reservation if an amount remains disputed, and obtain advice before signing a waiver, release, quitclaim, or final account.

5. Continue paying undisputed amounts when appropriate

Withholding every payment because one variation is contested can create a separate breach. Follow the contract’s certification, retention, setoff, and payment provisions, and document the basis for any deduction.

What contractors should do before performing extra work

1. Confirm whether the requested task is outside the original scope

Identify the specific drawing, specification, quantity, or contractual provision that changes. “This was not in my estimate” is different from “this was not in the contract.”

2. Obtain written authorization from the correct person

Check the contract’s delegation and approval provisions. If the instruction comes from a site representative, request confirmation from the owner or officer authorized to issue change orders.

3. Agree on price in writing

State whether the price is a lump sum, unit-rate adjustment, time-and-materials amount, or provisional amount. Include taxes, overhead, profit, mobilization, and credits for omitted work where applicable.

4. Address time consequences

A change order should say whether the completion date moves and by how many days. Do not assume that approval of extra money also approves an extension.

5. Give every required notice on time

Follow the contract’s deadline and method for notice. Send the notice to the named address or authorized recipient and retain proof of delivery. Continuing work “under protest” does not necessarily cure a failure to comply with a required change-order procedure.

Evidence both sides should preserve

Keep original or reliable electronic copies of:

the signed contract and every incorporated document;
approved plans, revisions, and as-built drawings;
change orders, variation orders, and written quotations;
emails, letters, text messages, and project-platform records;
site instructions and requests for information;
dated meeting minutes and daily site reports;
photographs and videos with identifiable dates and locations;
progress reports and accomplishment measurements;
delivery receipts, invoices, payroll records, and equipment logs;
payment certificates, official receipts, bank records, and withholding-tax documents;
construction schedules and delay analyses;
notices of delay, suspension, defects, or nonpayment;
certificates of completion, acceptance, and occupancy; and
records showing the authority of each person who approved work or price.

Export important chat conversations and project-platform data before accounts are closed or devices are replaced. Preserve the complete thread, not isolated screenshots lacking context.

Common mistakes

Treating a budget estimate as though it were necessarily a fixed-price agreement.
Assuming every unexpected condition automatically entitles the contractor to more money.
Proceeding with extra work while saying, “We will settle the price later.”
Accepting verbal authorization from someone who cannot bind the owner.
Signing a change order that describes the work but leaves the price blank.
Failing to record deductions for omitted or substituted work.
Confusing approval of a time extension with approval of added cost.
Using an unsigned spreadsheet as the only proof of a negotiated price.
Refusing all payment instead of separating disputed and undisputed billings.
Waiting until project completion to raise claims subject to short contractual notice periods.
Assuming occupancy, silence, or general fairness will overcome Article 1724.
Ignoring the contract’s arbitration or dispute-resolution clause.

How to handle an active dispute

Start by preparing a variation-by-variation table showing the claimed amount, original scope, alleged instruction, written approval, agreed price, work performed, and amount already paid. This often reveals whether the disagreement concerns entitlement, valuation, authority, or proof.

Send a formal written demand or response that:

identifies the contract and project;
states the relevant provisions;
lists each disputed item separately;
attaches the supporting documents;
states the amount admitted or denied;
requests a meeting or contractual dispute procedure; and
reserves rights without making threats or unsupported accusations.

Follow any negotiation, mediation, dispute-adjudication, or arbitration steps required by the contract.

Construction disputes may fall within the Construction Industry Arbitration Commission’s authority. Under Executive Order No. 1008, the CIAC has original and exclusive jurisdiction over disputes arising from or connected with construction contracts in the Philippines when the parties have agreed to voluntary arbitration. This can cover public or private projects and disputes arising before or after completion, abandonment, or breach. A written arbitration agreement may be contained in the contract or another written submission; its effect and scope should be reviewed carefully.

If there is no applicable arbitration agreement, the proper court or other forum depends on the parties, relief requested, amount, location, and any procedural prerequisites. Do not file in a forum solely because it appears cheaper or faster without first checking jurisdiction.

Actions based on a written contract generally must be brought within ten years from accrual under Article 1144 of the Civil Code, while actions based on an oral contract generally have a six-year period under Article 1145. Different causes of action can have different periods, and contractual notices may expire far earlier. Under Article 1155, prescription may be interrupted by filing an action, a written extrajudicial demand by the creditor, or the debtor’s written acknowledgment of the debt. Accrual and interruption are fact-sensitive, so these general periods should not be used to postpone advice.

When legal help is urgent

Consult a Philippine construction lawyer promptly when:

the contractor threatens to suspend or abandon ongoing work;
the owner threatens termination, takeover, bond calls, or engagement of a replacement contractor;
a change must be implemented immediately for structural or public safety;
a payment, variation, or delay notice deadline is approaching;
either side is being asked to sign a final account, waiver, release, or settlement;
the claim involves major prolongation costs, liquidated damages, defects, or completion expenses;
the contract contains an arbitration clause;
evidence may be deleted, altered, concealed, or overwritten;
the project involves government procurement or public funds; or
the legal prescriptive period may be near expiry.

If there is an immediate structural, electrical, fire, or occupational-safety risk, prioritize securing the site and contacting the appropriate licensed professionals and public authorities. The price dispute should not delay necessary safety measures.

FAQ

Can a contractor charge more because material prices suddenly increased?

Not ordinarily under a genuine fixed-price contract. The contractor generally assumes that risk unless an enforceable escalation or adjustment clause covers the increase, or the parties later sign a valid amendment.

Is a verbal change order valid?

A verbal instruction may explain why work occurred, but Article 1724 ordinarily requires written owner authorization and a written agreement on the additional price before the contractor can recover additional costs for changed plans or specifications.

Is a text message or email “in writing”?

Electronic communications can be evidence of a writing, but adequacy depends on their content, authenticity, the sender’s authority, the contract’s required approval method, and applicable electronic-transactions rules. The communication should clearly authorize the particular change and establish the additional price. A casual or ambiguous message is risky.

What if the owner requested the extra work and now refuses to pay?

The contractor should identify the written authorization and written price agreement for each item. If either is missing, recovery may be barred by Article 1724 despite proof that the work benefited the owner. Any distinct contractual or breach claim requires careful review rather than an assumption that fairness alone guarantees payment.

What if the owner already paid some unapproved variations?

Payment or express acknowledgment may affect those particular items, as illustrated in Chung, but it does not necessarily validate all other claims. The documents and conduct relating to each variation matter.

Can the contractor stop work until an increase is approved?

Not automatically. Suspension may itself breach the contract unless a contractual or legal ground permits it and required notices are given. Article 1724 generally prevents withdrawal merely because labor or material costs increased.

Can the owner insist on extra work without paying more?

A fixed price covers the agreed scope—not every task the owner later wants. A genuine addition or alteration should be documented and priced through the contractual change-order process. The owner should not use the “fixed price” label to expand the scope unilaterally.

Does force majeure automatically allow repricing?

No. A force-majeure event may affect liability for delay or nonperformance under Article 1174 of the Civil Code and the contract, but it does not by itself rewrite the agreed price. The contract must be checked for notice, extension, suspension, termination, and cost-allocation provisions.

Does the contract price include defects and corrective work?

A contractor normally cannot charge the owner to correct work that failed to comply with the agreed plans, specifications, workmanship standards, or warranties. Whether an item is corrective work or an owner-requested upgrade is often a factual and technical issue.

Official legal references

This article provides general Philippine legal information, not legal advice for a particular project or dispute. Contract wording, project records, party authority, and procedural history can change the result. Official sources and current legal position were checked as of July 27, 2026.