Short answer. Yes. Civil Code Article 1725 lets you, as the owner, withdraw from the construction at will even after work has begun. It is not free, though — you must indemnify the contractor for expenses already incurred, the work already done, whatever usefulness you have gained from it, and damages.
What the law says
The owner may withdraw at will from the construction of the work, although it may have been commenced, indemnifying the contractor for all the latter's expenses, work, and the usefulness which the owner may obtain therefrom, and damages.
Civil Code, Article 1725 — Owner's Right to Withdraw. Read the full provision →
You do not need a reason
Article 1725 gives the owner a right the contractor does not have: to “withdraw at will from the construction of the work, although it may have been commenced.” You do not have to show the contractor breached anything or performed badly. A change of plans, a shift in budget, or simply losing confidence in the project is enough — the right to stop belongs to you as owner and does not depend on fault on either side.
Four things you owe the contractor for stopping
Withdrawing is not the same as walking away without consequence. The same article requires you to indemnify the contractor for “all the latter's expenses, work, and the usefulness which the owner may obtain therefrom, and damages.” That covers what the contractor has already spent, the value of labor already performed, any benefit you have gained from work done so far, and damages beyond those — which can include what the contractor would have earned had the project run its course.
What has already been built stays reckoned into the price
Because the indemnity includes “the usefulness which the owner may obtain,” partly finished construction is not simply discarded from the calculation. If the foundation is poured, or a portion of the structure stands and adds value to your property, that benefit is factored into what you owe, on top of the contractor's out-of-pocket costs. Cancelling early does not erase the value already created — it just changes who keeps it and what it costs to keep.
Settle the numbers before you announce the decision
Because withdrawal carries a real financial obligation rather than being cost-free, it is worth working out, or at least estimating, what you would owe under each of these heads before you tell the contractor the project is off. Disputes over construction contracts tend to center on exactly these figures — expenses, work performed, usefulness gained, and damages — so documentation of what has actually been spent and built protects both sides once the withdrawal happens.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- National Power Corp. vs. Court of Appeals, et al, G.R. No. 107631, February 26, 1996 — read the decision on LawPhil →