Quick answer

Usually, no. If a contractor agreed to build or perform construction work for a fixed or stipulated price based on agreed plans and specifications, the contractor generally cannot unilaterally increase that price merely because labor, fuel, or materials became more expensive.

Under Article 1724 of the Civil Code, additional payment for changed plans or specifications ordinarily requires both:

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

A contractor may nevertheless claim more when the original contract itself allows an adjustment, the parties execute a valid change order or supplemental agreement, or the claim concerns something legally distinct from an ordinary rise in construction costs—such as compensable owner-caused delay. The result always depends on the contract, plans, change-order documents, communications, and the reason for the additional charge.

The basic rule for a fixed-price construction contract

A fixed-price or lump-sum contract allocates much of the ordinary cost risk to the contractor. The contractor prices the work in advance and ordinarily bears foreseeable changes in the cost of completing the agreed scope.

Article 1724 of the Civil Code states that a contractor who undertakes work for a stipulated price, in conformity with plans and specifications agreed upon with the landowner, cannot withdraw or demand a price increase because labor or materials cost more.

The Supreme Court has applied the written requirements strictly. In Powton Conglomerate, Inc. v. Agcolicol, the Court explained that written owner authorization and a written agreement on the additional price are conditions precedent to recovering the cost of additional work. The absence of either requirement may bar recovery—even if the owner knew that revisions were being made or orally requested extra work.

This means a contractor ordinarily cannot support a price increase merely by presenting:

higher supplier quotations or receipts;
an oral instruction from the owner;
proof that the owner saw the extra work being performed;
a contractor-prepared billing that the owner never accepted;
a claim that the original estimate was too low; or
general increases in cement, steel, fuel, wages, or transport costs.

A demand is not automatically valid simply because the additional expenses were real.

When a contractor may lawfully charge more

The contract contains an adjustment mechanism

The first question is always what the signed contract says. Contracts generally have the force of law between the parties under Article 1159 of the Civil Code.

A fixed-price contract may still contain provisions allowing adjustments for identified events, such as:

owner-approved variations;
changes in quantities or scope;
provisional sums or allowances;
concealed or materially different site conditions;
owner-caused suspension or delay;
new taxes, regulations, or permit requirements;
specified price indices or escalation formulas; or
force-majeure costs expressly made compensable by the contract.

An adjustment clause does not normally permit the contractor to choose any new amount. The contractor must follow the clause’s formula, documentation requirements, approval process, and notice deadline.

The owner authorized changed plans or specifications in writing

Article 1724 permits an increase when plans or specifications change, but ordinarily only if the owner authorized the change in writing and both parties determined the additional price in writing.

The safest document is a signed change order stating:

the exact added, deleted, or revised work;
the drawings or specifications affected;
the agreed increase or reduction in price;
any effect on the completion date;
the payment schedule; and
confirmation that the signer is authorized to bind the owner.

An architect’s, engineer’s, foreman’s, or project manager’s instruction does not necessarily bind the owner. The contract must be checked to determine whether that person has authority to approve changes and additional costs.

The parties entered into a separate or supplemental agreement

Article 1724 does not prevent parties from separately agreeing on additional work outside the original fixed scope. In Filinvest Alabang, Inc. v. Century Iron Works, Inc., the Supreme Court recognized that Article 1724 does not prohibit contractual stipulations covering additional work.

The essential question is whether the documents establish a binding agreement—not simply whether additional work was performed. Quotations, purchase orders, signed variation proposals, approved cost breakdowns, and supplemental contracts may be important.

The claim is for owner-caused delay or breach

A claim for delay damages, extended overhead, idle equipment, remobilization, or other loss caused by an owner’s breach is not necessarily the same as a demand to increase the fixed price because materials became more expensive.

Possible grounds may include:

late turnover of the site;
failure to provide owner-supplied plans or materials;
repeated suspensions ordered by the owner;
obstruction by another owner-appointed contractor;
late decisions on required selections; or
nonpayment that caused a contractually justified suspension.

Recovery is not automatic. The contractor must prove the owner’s responsibility, compliance with contractual notice requirements, causation, and the amount claimed. Concurrent contractor delay, defective work, or failure to mitigate loss may reduce or defeat the claim.

The parties validly amended the contract

The owner and contractor may mutually amend their agreement. But the contractor cannot create an amendment by sending a revised invoice or announcing a new price.

The amendment should be signed before the changed work begins. If the original contract requires amendments to be in a particular form, that procedure should be followed.

What ordinary price increases do not justify

Higher market prices alone ordinarily do not override Article 1724. A contractor generally assumes the risk that ordinary construction inputs may become more expensive during performance.

Article 1250 of the Civil Code addresses extraordinary inflation or deflation, but it is not a routine remedy for increased construction costs. The Supreme Court requires a change in purchasing power that is unusual, beyond common currency fluctuations, and not reasonably foreseeable or within the parties’ contemplation. In Singson v. Caltex (Philippines), Inc., the Court emphasized the exceptional nature of this standard.

Ordinary inflation, supplier price changes, exchange-rate movements, and even severe commercial hardship do not automatically permit a contractor to rewrite a fixed price. A contractor invoking extraordinary inflation or another exceptional doctrine would need strong evidence and, ordinarily, a legal determination—not a unilateral surcharge.

Does force majeure automatically allow a higher price?

No. A typhoon, pandemic measure, supply disruption, strike, or other unexpected event does not automatically entitle a contractor to additional payment.

Under Article 1174 of the Civil Code, a fortuitous event may excuse liability in appropriate circumstances unless the law, the parties’ stipulation, or the nature of the obligation provides otherwise. That rule does not itself establish a right to charge the owner more.

The contract may instead provide only:

an extension of time;
temporary suspension;
termination after a prolonged event;
reimbursement of specified costs; or
no additional compensation at all.

The event, its effect on performance, foreseeability, contractual risk allocation, and timely notice must all be examined.

“Extra work” is not always outside the fixed price

A contractor may label an item “extra,” but the label is not decisive. The item may already be included in:

the signed plans;
technical specifications;
bill of quantities;
scope-of-work description;
approved proposal;
building-code compliance obligations;
testing and commissioning requirements; or
work reasonably necessary to deliver the agreed finished result.

Conversely, work may genuinely be additional when it changes the project’s size, design, quality, quantity, use, or agreed specifications.

To determine which is correct, compare the disputed item against the complete contract set—not only the one-page quotation.

What an owner should do after receiving a demand

Do not ignore the demand, but do not pay or sign an acknowledgment before checking the documents.

Ask for a detailed written claim. Require the contractual basis, description of each variation, dates of instruction, quantities, computation, receipts, and the names of the people who allegedly approved the work.
Review the complete contract. Check the scope, exclusions, drawings, specifications, allowances, hierarchy of documents, escalation clause, change-order procedure, notice requirements, dispute clause, and authority of project representatives.
Separate undisputed and disputed amounts. A dispute over extras does not necessarily justify withholding amounts properly due for accepted original work. Follow any certification, retention, and payment provisions in the contract.
Respond in writing. State which items are accepted, rejected, or still being evaluated. Avoid statements that could unintentionally admit liability.
Inspect and measure the work. Use an independent architect, engineer, or quantity surveyor if the scope or quantities are contested.
Propose a documented resolution. If compromise is commercially sensible, identify the agreed amount, revised completion date, payment terms, and whether the settlement fully resolves the listed claims.
Follow the dispute-resolution clause. The contract may require negotiation, an architect’s determination, mediation, or arbitration before court action.

What a contractor should do before performing variations

The contractor should stop and document the proposed change before proceeding, unless immediate work is genuinely necessary to prevent danger or damage.

A proper change proposal should include:

the owner’s requested change;
revised drawings or specifications;
itemized labor and material costs;
taxes, overhead, and markup allowed by the contract;
credits for omitted work;
effect on the critical path and completion date;
validity period of the quotation; and
signature blocks for authorized representatives.

Obtain the owner’s written authorization and written agreement on price. If the owner refuses to sign but directs the contractor to continue, the contractor should promptly issue a written notice, reserve its rights, and obtain legal advice before incurring substantial cost. Continuing based only on an oral promise creates serious recovery risk under Article 1724.

Evidence both sides should preserve

Keep original or reliably backed-up copies of:

the signed contract and all annexes;
bids, quotations, and cost breakdowns;
plans, specifications, and every revision;
signed change orders and supplemental agreements;
construction schedules and updates;
site instructions and requests for information;
emails, letters, text messages, and messaging-app conversations;
meeting minutes and daily site reports;
dated photographs and videos;
delivery receipts, invoices, payroll, and equipment logs;
progress billings, payment certificates, and official receipts;
notices of delay, suspension, force majeure, or default;
punch lists, inspection reports, and acceptance documents; and
records showing who had authority to approve changes.

Preserve native electronic files and full message threads where possible. A screenshot without sender details, date, context, or accompanying documents may be less useful than the original record.

Common mistakes

Starting extra work before price approval

This is the central risk Article 1724 is designed to prevent. Approval of the design change alone may not be enough; the additional price must also be determined in writing by both parties.

Treating silence as approval

Failure to object immediately does not necessarily amount to written authorization or agreement on price.

Assuming an architect can approve costs

An architect may have authority to supervise technical work but not authority to amend the owner’s financial obligations. Read the agency and approval provisions carefully.

Using vague descriptions

“Additional works,” “upgrades,” or “site adjustments” do not clearly establish what changed or how the amount was computed.

Confusing allowances with fixed inclusions

A contract may use allowances, provisional quantities, or owner-selected finishes even though the overall project is described as fixed price. Each item must be classified under the actual contract.

Missing notice deadlines

Construction contracts often require written notice within a specified number of days after a variation, delay, or disruptive event. There is no single universal notice period for every private project. The signed contract controls, and failure to comply may affect the claim.

Signing a waiver without checking unresolved claims

Final-payment documents may contain releases, quitclaims, or certifications that no further amount is due. Both parties should identify reserved claims expressly before signing.

Time limits and dispute forums

Do not wait until the project is finished to raise a disputed variation. Contractual notice periods may be much shorter than the statutory period for filing a case.

As a general Civil Code rule, an action based on a written contract must ordinarily be brought within 10 years from accrual, while an action based on an oral contract must ordinarily be brought within six years. The correct starting date, interruptions of prescription, special laws, arbitration provisions, and the nature of the claim can change the analysis.

Construction contracts frequently contain arbitration agreements. Under Executive Order No. 1008, the Construction Industry Arbitration Commission has original and exclusive jurisdiction over covered construction disputes when the parties have agreed to voluntary arbitration. Its coverage may include disputes involving payment, variations, delays, contract interpretation, defects, and breaches in private or government construction.

Before filing in court, check whether the contract contains an arbitration clause. Filing in the wrong forum can cause substantial delay and expense.

Government construction contracts follow additional rules

Public infrastructure projects are subject to procurement statutes, implementing rules, bidding documents, appropriation controls, and formal approval procedures in addition to general contract law.

Under the current Implementing Rules and Regulations of Republic Act No. 12009, awarded contract prices are generally treated as fixed. The rules provide limited mechanisms for price adjustment, including certain changes caused by later government acts and extraordinary increases in specified infrastructure components, subject to prescribed conditions and approvals. A contractor on a government project should not rely solely on the private-contract analysis above or perform an unfunded variation based only on an informal instruction.

When legal help is urgent

Consult a Philippine construction lawyer promptly when:

the contractor threatens to abandon the project or remove installed work;
the owner threatens termination, bond calls, or takeover;
a large variation is being demanded without a signed change order;
work must continue while responsibility for cost remains disputed;
delay damages or liquidated damages are accumulating;
the project has serious defects or safety issues;
a final waiver or settlement is ready for signature;
an arbitration demand or court pleading has been received;
the contractual notice deadline is near; or
the claim may soon prescribe.

An early document review is often more useful than trying to reconstruct approvals after the work has been concealed, completed, or demolished.

FAQ

Can a contractor increase the price because cement or steel became more expensive?

Generally, no—not under a true fixed-price contract merely because input costs increased. An express escalation clause, valid written change order, or another legally sufficient ground would be needed.

Is the owner liable if the owner orally requested the extra work?

Not necessarily. Article 1724 ordinarily requires written authorization for the change and a written agreement fixing the additional price. An oral request alone creates a major barrier to recovery.

Is a text message enough to be “in writing”?

Electronic communications can be legally significant, but sufficiency depends on their content, authenticity, the identity and authority of the sender, the Electronic Commerce Act, and any contractual signature or approval requirements. A message saying “go ahead” may authorize work without proving agreement on the additional price.

Can the contractor stop work if the owner refuses the increase?

Not automatically. An unjustified stoppage may itself be a breach. The contractor should review the suspension, payment, variation, and termination clauses and obtain advice before stopping work.

Can the owner simply refuse every additional charge because the contract says “fixed price”?

No. The owner may remain liable for properly approved variations, separately contracted additions, or compensable breaches. “Fixed price” does not give the owner unlimited power to expand the scope without paying for authorized additional work.

Does payment of an earlier change order mean all later extras are approved?

No. Each disputed variation must be supported by its own contractual and factual basis. Prior approval or payment does not ordinarily waive the written requirements for unrelated later work.

What if the additional work was necessary to comply with building regulations?

Necessity alone does not determine who must pay. The answer depends on whether compliance was already part of the contractor’s original scope, whether the plans were defective or incomplete, who assumed design responsibility, and whether a valid variation was approved.

Can the contractor recover a “reasonable value” under unjust enrichment?

That argument is highly fact-dependent and should not be assumed to bypass Article 1724. Where Article 1724 governs additional work under a stipulated-price construction contract, the Supreme Court has treated its written requirements as conditions precedent to recovery.

Official sources

This article provides general legal information, not legal advice. Construction disputes depend heavily on the complete contract and project records. Sources and current rules were checked as of July 27, 2026.