Breach of Employment Contract by Retracting a Job Offer
Philippine legal perspective
1. Why the Issue Matters
Companies sometimes change business plans, merge, lose funding, or discover disqualifying facts about an applicant. When they withdraw an already‑accepted offer, the candidate may have resigned from a former job, relocated, or otherwise relied on the promise. Philippine law balances management prerogative with the worker’s constitutional right to security of tenure and the Civil Code’s protection of good faith in contractual dealings.
2. Key Sources of Law
| Source | What it Contributes |
|---|---|
| 1987 Constitution (Art. III & Art. XIII, Sec. 3) | Declares labor as “a primary social economic force.” Security of tenure and worker protection are state policies. |
| Civil Code of the Philippines | Art. 1159 (obligations arising from contracts … shall have the force of law); Art. 1315‑1326 (consent, offer & acceptance); Art. 19‑21 (abuse of rights & acts contrary to morals); Art. 20 (damages for acts contrary to law). |
| Labor Code (PD 442, as amended) | Defines employer‑employee relationship and prohibits dismissal without just/authorized cause after such relationship begins. |
| Rules Implementing the Labor Code | Spell out procedural due process for termination; not directly triggered until the relationship exists. |
| Job Fair & Anti‑Illegal Recruitment Rules | Criminalize fraudulent job offers. |
| Doctrine of Promissory Estoppel | Adopted by PH courts via Civil Code Arts. 19‑21 and jurisprudence; makes certain promises enforceable even without a perfected contract if reliance is proven. |
3. When Does an Employment Contract Begin?
- Firm Offer Made → Applicant Accepts Acceptance can be oral, written, or implied. Once communicated, meeting of the minds occurs and a contract is “perfected” under Art. 1319.
- Conditions Precedent Many letters say “subject to medical exam / background check / corporate approvals.” Until the condition is satisfied, the offer is purely preparatory. Courts look at wording: “We are pleased to formally offer you the position, contingent upon passing the pre‑employment exam …” → no perfected contract until the condition occurs.
- Start Date / On‑Boarding Even after perfection, the employer‑employee relationship generally starts on the agreed reporting date; however, obligations (e.g., not to revoke without cause) already exist once the contract is perfected.
4. Employer’s Right to Withdraw and Its Limits
| Scenario | Employer Liability? | Reasoning |
|---|---|---|
| Offer revoked before applicant accepts | Usually none (no contract yet). | |
| Offer revoked after unconditional acceptance but before conditions are met | Minimal if conditions fail in good faith; employer must prove bona fide basis (e.g., failed medical, falsified credentials). | |
| Offer revoked after unconditional acceptance and all conditions satisfied | Breach of contract; candidate may recover damages. | |
| Offer revoked for discriminatory or retaliatory reason (e.g., pregnancy, union activities) | Possible civil, labor, and criminal liability under the Anti‑Discrimination & Labor Code provisions. |
5. Remedies Available to the Aggrieved Applicant
- Ordinary Civil Action for Damages (Art. 20 & 1170, Civil Code) Actual damages (relocation costs, lost earnings while unemployed), moral/exemplary damages for bad‑faith withdrawals, plus attorney’s fees.
- Complaint for Illegal Dismissal Allowed only if applicant has already become an “employee” (e.g., started work, or reports show control test satisfied). Remedies: reinstatement, back wages, full separation pay if reinstatement not viable.
- DOLE Single‑Entry Approach (SEnA) A speedy, non‑litigious 30‑day conciliation option.
- NLRC Arbitration If an employer‑employee relationship existed, NLRC jurisdiction attaches.
- Promotion of Promissory Estoppel Even where no formal contract, courts may award reliance damages if the promise was intended to induce reliance and did induce reliance to the offeree’s detriment.
6. Leading Philippine Cases
| Case | G.R. No. / Date | Key Take‑away |
|---|---|---|
| Abbott Laboratories, Inc. v. Alcaraz | G.R. 158693, July 23 2013 | Appointment letter and pre‑employment docs perfected a contract; dismissal after training but before regularization required just cause & due process. |
| Malinis v. Perlastico | G.R. 208886, Jan 28 2015 | Job applicant hired as driver; company withdrew offer citing redundancy even before start date. SC held there was already a binding contract; awarded nominal damages. |
| Cosmotech Philippines, Inc. v. Lepanto Consolidated Mining | G.R. 190851, Apr 18 2012 | Promissory estoppel allowed recovery of mobilization expenses when mining subcontract was cancelled after acceptance. |
| Insular Life v. NLRC (Torio) | G.R. 84484, Nov 15 1989 | Even an “agent agreement” can create employer‑employee ties if control test met; withdrawal without cause illegal. |
7. Elements the Courts Examine
Clarity of the Offer Letter
- Conditional or absolute?
- Reference to external approvals?
Proof of Acceptance
- Signed copy, e‑mail confirmation, or conduct (e.g., applicant resigned in reliance).
Reliance and Damages Suffered
- Resignation letters, forfeited seniority benefits, relocation receipts, visa fees, etc.
Good Faith of Employer
- Existence of genuine business reason vs. arbitrary decision.
Existence of Control (hiring documents + actual control = employer‑employee relationship).
8. Drafting & HR Best Practices
| For Employers | For Candidates |
|---|---|
| Use clear contingency clauses (“This offer is conditional upon …”). | Retain copies of all correspondence and note timelines. |
| Put a deadline for acceptance. | Ask explicitly if any contingencies exist; request them in writing. |
| Perform background & medical checks before issuing the final letter, or label it “conditional.” | Avoid resigning until contingencies are cleared, or negotiate for transition assistance. |
| If business circumstances change, notify promptly and, where possible, offer compensation (e.g., one‑month pay). | Document all costs incurred (e.g., movers, flights). |
| Keep minutes/email trail showing legitimate reason for withdrawal. | Explore amicable settlement (SEnA) before litigation. |
9. Practical Litigation Tips
Jurisdiction:
- NLRC if an employer‑employee relationship is claimed.
- Regular courts if purely contractual/promissory estoppel.
Prescriptive Periods:
- Four (4) years for actions based on quasi‑delict/promissory estoppel.
- Three (3) years for money claims under the Labor Code after an employer‑employee relationship merges.
Burden of Proof:
- Employer must prove it acted for a valid cause when relationship exists.
- Applicant must prove perfection, acceptance, reliance, and damages when none exists.
10. Comparative Notes
| Jurisdiction | General Trend |
|---|---|
| US & UK | “Employment at will” limits damages for rescinded offers unless backed by promissory estoppel or anti‑discrimination laws. |
| Philippines | Stronger worker protection ideology; civil and labor forums willing to grant damages where reliance is proven and bad faith shown. |
11. Conclusion
Retracting a job offer in the Philippines is not a mere business inconvenience—it can create actionable liability once the offer is unconditionally accepted or if the candidate reasonably relied on it. Employers must craft conditional offers carefully and act in good faith, while candidates should secure documentation and understand the conditions attached to their acceptance.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a Philippine labor‑law practitioner for specific cases.