Employer Liability for Withdrawal of a Verbal Compensation Offer in the Philippines (A comprehensive doctrinal and practical guide)

Executive Summary

In Philippine law, an employer who retracts a verbal pay-package offer may or may not incur liability, depending on (1) whether the applicant had already accepted the offer, (2) whether any conditions precedent remained unsatisfied, and (3) whether the withdrawal was tainted by bad faith, discrimination, or abuse of rights. The governing architecture comes from the Civil Code (on contract formation and damages), the Labor Code and its jurisprudence (on security of tenure and illegal dismissal), plus a cluster of special statutes that outlaw discriminatory refusals to hire. Where the applicant has accepted an unqualified verbal offer and satisfied all pre-employment requirements, Philippine courts—including the Supreme Court in Abbott Laboratories v. Alcaraz (2014)—treat a subsequent withdrawal as an illegal dismissal and award full labor-law remedies even if the employee never actually reported for Day 1 of work.

I. Legal Framework

Source of Law	Key Provisions	Relevance
Civil Code of the Philippines	Arts. 1315-1326 (offer and acceptance); Art. 1324 (options without consideration); Art. 19-21 (abuse of rights); Arts. 1170 & 1186 (breach); Arts. 2219-2229 (damages); Art. 1403 (2) (Statute of Frauds)	Governs whether a verbal offer becomes a perfected employment contract, and what civil damages flow from withdrawal.
Labor Code (as renumbered by R.A. 10151)	Art. 294 [formerly 279] (security of tenure); Art. 297-299 (just/authorized causes); Art. 301 [former 286] (notice); Art. 306 [former 291] (3-year money-claim limit)	Supplies illegal-dismissal doctrine, monetary awards, and prescriptive periods once a contract exists.
Special Labor Statutes	R.A. 10911 (Anti-Age Discrimination); R.A. 7277 as amended (PWD Act); R.A. 9710 & R.A. 6725 (gender equality); R.A. 11510 (TESDW Act)	Outlaw withdrawals rooted in protected-class bias, with fines and/or damages.
Constitution (1987)	Art. III §1 (due process); Art. XIII §3 (just and humane conditions); Art. II §18 (full protection to labor)	Broadly colors all employment relations.

II. Anatomy of a Verbal Compensation Offer

Nature – A promise of salary, allowances or benefits communicated orally—whether across the table, by telephone, or via voice message.
Legal sufficiency – Under Art. 1315, no form is prescribed; verbal employment contracts are valid unless (a) they fall under the Statute of Frauds and remain wholly executory for more than one year, or (b) a special law (e.g., for OFWs) requires writing.
Proving the offer – Testimony, call recordings, chat logs, meeting minutes, and electronic evidence admissible under R.A. 8792 and the Rules on Electronic Evidence.

III. Stages of Contract Formation

Stage	Legal Effect	Employer’s Right to Withdraw
Negotiation (offer not yet accepted)	No contract (Art. 1319)	Freely revocable unless the offer is an option supported by consideration (Art. 1324) or withdrawal is discriminatory/bad-faith (Arts. 19-21, special laws).
Perfection (offer accepted and all conditions precedent satisfied)	Binding contract (Art. 1318) even if work has yet to start	Withdrawal = anticipatory breach and—per Abbott v. Alcaraz—an illegal dismissal absent a just or authorized cause plus due process.
Consummation (employee already working)	Full employment relationship	Withdrawal is termination; governed by Arts. 297-299 on dismissal.

Key jurisprudence: • Abbott Laboratories, Inc. v. Alcaraz, G.R. No. 192571 (22 Apr 2014) – A marketing manager who had signed and accepted an offer but had not yet reported was held illegally dismissed when the company rescinded the offer; NLRC jurisdiction was affirmed. • PDI v. NLRC (1998); Hi-Precision Steel v. Angelia (2017) – Reiterate that once an applicant complies with pre-employment requirements, an employer may not renege without legal cause.

IV. Specific Liability Scenarios

Scenario	Typical Result	Available Remedies
Withdrawal before acceptance	No contract ⇒ no labor liability; possible civil damages under Art. 19-21 if abuse of rights or under special discrimination statutes.	Actual, moral, exemplary damages; filing in regular courts within 4 years.
Withdrawal after acceptance, before start date	Contract perfected ⇒ illegal dismissal if no just/authorized cause.	Reinstatement (rare), or separation pay in lieu; back-wages from date of wrongful withdrawal to actual reinstatement or finality; moral/exemplary damages; 10% attorney’s fees.
Conditional offers (e.g., subject to medical clearance)	Employer may validly withdraw if condition fails in good faith.	None, unless condition was a pretext for discrimination.
Discriminatory withdrawal (age, sex, PWD, LGBTQ+, religion, union activity)	Liability under both the Labor Code and special statutes; criminal fines possible.	Damages + administrative penalties (DOLE or Commission on Human Rights).
Withdrawal supported by consideration (paid option period)	Employer is bound until option expires; early withdrawal breaches option contract.	Damages measured by option value + reliance.

V. Jurisdiction and Procedure

NLRC or Labor Arbiter – Handles illegal-dismissal complaints, even if employee never rendered a day of service (Abbott doctrine).
Ordinary courts – Civil actions premised solely on culpa in contrahendo, option-contract breach, or discrimination outside employer-employee context.
Prescriptive periods –
- Illegal dismissal: 4 years (Art. 1146, Civil Code).
- Pure money claims: 3 years from cause of action (Art. 306, Labor Code).
- Discrimination: 1–3 years depending on statute (e.g., R.A. 10911 §6).

VI. Measuring Damages

Back-wages – All salary and benefits from date of illegal withdrawal to actual reinstatement or finality of judgment (Art. 294).
Separation pay – One-month pay per year of service (pro-rated) when reinstatement is no longer feasible.
Moral damages – Requires proof of bad faith or fraudulent motive (Art. 2219).
Exemplary damages – Awarded when withdrawal is wanton or oppressive (Art. 2232).
Nominal damages – Commonly ₱30,000-₱50,000 where only due-process rights were violated.
Attorney’s fees – 10 % of monetary award (Art. 2208 [11]).

VII. Evidentiary Tips

Preserve voice mails, call logs, or video-conference recordings.
Promptly send a confirmatory e-mail summarizing the verbal terms (“Salary: ₱50,000/month, start date 01 Aug 2025 – Kindly confirm.”).
Obtain copies of pre-employment medical results, NBI clearances, or signed acceptance pages.
For employers, issue written conditional offers clearly stating that employment is “subject to medical/background clearance and management approval” to avoid implied perfection.

VIII. Interaction with Anti-Discrimination Laws

A withdrawal motivated by a protected trait is actionable even before perfection of the contract. The aggrieved applicant may simultaneously:

File an administrative complaint with the DOLE Regional Office (e.g., under R.A. 10911 §10 for age discrimination).
Sue for civil damages (Arts. 19-21).
Seek criminal prosecution where a statute so provides (e.g., up to ₱500,000 fine for age discrimination).

IX. Comparative Doctrines

Philippine courts borrow, but do not formally adopt, the common-law doctrines of promissory estoppel and negligent misrepresentation. Instead, they subsume the same policy aims under abuse-of-rights (Art. 19) and equitable estoppel (§2, Rule 131, Rules of Court). Hence, an employer who induces an applicant to resign from a prior job in reliance on an oral offer can be liable for “shock damages” even if no Labor Code breach exists.

X. Practical Compliance Checklist

For Employers

Document every offer — put the entire pay package in a written letter or e-mail.
Make it conditional — “…subject to medical, reference, and head-office approval.”
Define an expiry date for the offer.
Train hiring managers on anti-discrimination rules.
Retain recruitment records for at least three (3) years.

For Applicants/Employees

Demand a written offer or e-mail memorializing the verbal terms.
Accept in writing and keep evidence of acceptance.
Complete pre-employment requirements promptly.
If withdrawal occurs, send a formal demand letter citing Abbott v. Alcaraz and request reinstatement or damages.
File with the NLRC within four (4) years; attach all electronic proofs.

Conclusion

Philippine law does not treat a verbal compensation offer lightly once it has been accepted and all conditions met. From the moment of perfection, the employer’s discretion ends and legal accountability begins. A hasty or bad-faith retraction exposes the company to the full arsenal of illegal-dismissal awards, civil damages, and statutory penalties. Conversely, employers retain latitude to cancel unaccepted or conditional offers—provided they act transparently, non-discriminatorily, and in strict good faith. Documenting offers and decisions, observing statutory due process, and respecting the dignity of workers at every stage remain the surest shields against liability.