Dear Atty. Gab

Musta Atty. Gab!

I’m Julius Salazar, a small-time contractor based here in Manila. I’m writing to you because I’m in a really difficult situation with a recent project and I’m hoping you can shed some light on my legal options. Around six months ago, I entered into a written contract with a client, Mr. Armando De Leon, to build a two-room extension for his house in a subdivision in Parañaque City. The agreed contract price was PHP 950,000.00, with a projected completion time of four months.

During the construction, Mr. De Leon started requesting several significant changes and additional works that were not part of our original agreement. For instance, he wanted a larger lanai than planned, asked for premium imported tiles instead of the local ones specified, and midway through, decided he wanted an extra powder room built under the new staircase. I tried my best to accommodate these requests because I wanted to maintain a good relationship. We discussed the additional costs verbally, and he seemed to agree, but we never put these new changes into a formal written addendum, which I now regret.

Because of these numerous alterations and add-ons, the project completion was delayed by about two and a half months. I finally finished everything, including the punch list items he pointed out. Mr. De Leon and his family have been using the house extension for over a month now. However, he is now refusing to pay the final balance of PHP 250,000.00 from the original contract. He’s also disputing the costs for the additional works, which amount to roughly PHP 180,000.00. He’s blaming me for the delay and even vaguely threatening to claim penalties, despite the fact that the delays were primarily due to his constant changes. I’m really stressed and confused about my rights. Can he just refuse to pay after all the work I’ve done and after he requested all those extras? What can I do?

Thank you for your time, Atty.

Sincerely,
Julius Salazar

Dear Julius,

Thank you for reaching out and sharing your situation. It’s indeed a frustrating position to be in when you’ve rendered services and invested resources, only to face difficulties in getting fair compensation. Many contractors encounter similar challenges, especially when project scopes change along the way.

Based on your account, there are key legal principles that support your claim for payment. In construction contracts, both parties have obligations: you, as the contractor, to complete the work, and the owner, Mr. De Leon, to pay for it. If delays are caused by the owner’s requests for additional work or changes to the original plan, the contractor is generally not held liable for such delays. Furthermore, Philippine law protects individuals from unjust enrichment, meaning Mr. De Leon should not be allowed to benefit from your labor and materials, including the additional works he requested and is now using, without paying the reasonable value for them. This is where the principle of quantum meruit (as much as one deserves) often applies.

Navigating Your Rights When Project Changes Cause Delays and Payment Disputes

Your situation with Mr. De Leon touches upon fundamental aspects of contract law, particularly concerning construction agreements. A construction contract is, by its nature, built on reciprocal obligations. This means you have the duty to construct the house extension according to the agreed specifications, and Mr. De Leon has the corresponding duty to pay you the agreed price upon its completion or substantial performance.

When a client, like Mr. De Leon, requests changes or additional works not covered by the original agreement, it essentially modifies the initial terms. While it’s best practice to document these changes in writing, including adjustments to cost and timelines, the absence of a formal written addendum for every change does not automatically invalidate your claim for compensation for these additional works, especially if you can prove they were requested and subsequently performed, and that Mr. De Leon is now enjoying the benefits.

Regarding the delay in project completion, it’s crucial to establish the cause. If, as you’ve described, the delays were a direct consequence of the numerous changes and additional works Mr. De Leon instructed you to prioritize, then the responsibility for such delays may shift. The law recognizes that a party cannot be blamed for delay if the other party’s actions prevented timely performance. As the Supreme Court has often noted in similar contexts, when delays are attributable to the client’s own modifications and instructions, the contractor cannot be faulted. This principle is echoed in our Civil Code:

“In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.” (Article 1169, New Civil Code of the Philippines)

This means if Mr. De Leon’s requests for changes hindered your ability to meet the original deadline, he cannot typically penalize you for that specific delay.

Moreover, the principle of unjust enrichment is central to your claim. This principle is enshrined in our laws to prevent one party from benefiting at another’s expense without just or legal ground. Mr. De Leon is currently using and benefiting from the completed extension, including the additional features he requested. To allow him to do so without paying the fair and reasonable value for your work and materials would constitute unjust enrichment.

“Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.” (Article 22, New Civil Code of the Philippines)

This leads us to the doctrine of quantum meruit. This Latin phrase means “as much as he deserves.” It allows a party (like you, the contractor) to recover the reasonable value of services rendered and materials furnished, even in the absence of a precise agreement on the price for those specific extras, or if the original contract was not perfectly followed due to client-induced changes. The aim is to ensure fairness and prevent the client from being unjustly enriched by your efforts.

Jurisprudence affirms that under the principle of quantum meruit, a contractor is allowed to recover the reasonable value of the services rendered to prevent unjust enrichment. This means that payment should be made for the work performed, equivalent to what the contractor reasonably deserves, especially when the owner has benefited from such work.

Since you have completed the construction, including the additional works, and Mr. De Leon is now occupying and using the extension, your claim for the unpaid balance and the cost of the extras is substantially strengthened. The law generally favors payment for work done and accepted.

Philippine law also recognizes that if an obligation has been substantially performed in good faith, the obligor (in this case, the contractor) may recover as though there had been strict and complete fulfillment, less any damages suffered by the obligee (the owner). (See Article 1234, New Civil Code of the Philippines)

Given that the extension is complete and in use, your performance is, at the very least, substantial. Any minor defects, if truly existing and not yet rectified, might warrant a deduction, but not typically the withholding of the entire balance or payment for accepted additional works.

Practical Advice for Your Situation

• Gather All Documentation: Compile all records related to the project. This includes the original contract, any plans, receipts for materials, payroll for labor, and crucially, any correspondence (emails, text messages, notes from conversations) that show Mr. De Leon’s requests for changes, his approval of them (even verbal, if you noted it), and his acknowledgment of the work done. Photographs or videos of the completed work, especially the additions, are also very helpful.
• Itemize Additional Works: Create a detailed list of all additional works and changes performed, along with their corresponding costs (materials and labor). If you have any proof of his agreement to these, even if informal, include it.
• Send a Formal Demand Letter: Have a lawyer prepare and send a formal demand letter to Mr. De Leon. This letter should clearly state the outstanding balance from the original contract, detail the costs for the additional works, explain that delays were due to his requests, and demand full payment within a specified period. This is often a necessary step before pursuing legal action.
• Highlight His Use of the Property: Emphasize in your communications and any potential legal claim that he and his family are already occupying and benefiting from the completed extension, including the extras. This strengthens the argument against unjust enrichment.
• Be Open to Negotiation or Mediation: While you have strong grounds, litigation can be costly and time-consuming. Indicate your willingness to discuss the matter reasonably or consider mediation to reach an amicable settlement. Sometimes, a neutral third party can help resolve such disputes.
• Document Rectification of Defects: If there were indeed minor punch list items he raised, ensure you have proof that these were addressed and completed to reasonable standards.
• Consult a Lawyer for Specific Strategy: Your situation has several factual nuances. Consulting with a lawyer who specializes in construction disputes or civil litigation will provide you with tailored advice on how best to proceed, whether it’s through further negotiation, mediation, or filing a collection suit in court.
• Future Projects: For future projects, always insist on written change orders or contract addenda for any deviation from the original plan, clearly stating the scope, additional cost, and impact on the timeline, signed by both parties. This ounce of prevention is worth a pound of cure.

I understand this is a challenging time for you, Julius. Remember that the law provides mechanisms to protect individuals from being taken advantage of in contractual relationships. By systematically presenting your case and understanding your rights, you can work towards a fair resolution.

Hope this helps!

Sincerely,
Atty. Gabriel Ablola

For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.