Taiwan's President Ma Ying-jeou on Wednesday froze the hiring of Philippine workers to express "strong dissatisfaction" over Manila's handling of the killing of a Taiwanese fisherman, his spokeswoman said.
The 65-year-old fisherman was shot dead by Filipino coastguards last week after they said his boat had strayed into Philippine waters.
"President Ma expressed his strong dissatisfaction over the Philippines' lack of sincerity and its shifting attitude," Lee Chia-fei told reporters, adding that Ma had decided to recall Taipei's envoy to Manila.
Antonio Basilio, the Philippines' de facto ambassador, had also been asked to return to Manila to "help properly handle" the case, she said.
Lee reiterated Ma's demands that Manila issue a "formal apology," compensate the victim's family, apprehend the killer and start fishing talks between the two sides soon.
"If the Philippine government cannot satisfy our side's four demands by 6:00 pm (1000 GMT) today, our government will adopt a second wave of sanctions," Lee said.
Taipei made the decision despite an apology by Basilio after a closed-door meeting with Foreign Minister David Lin on Tuesday.
The Philippines will send special envoy Amadeo Perez to repeat his "deep regret and apology from the people of the Philippines" to the people of Taiwan and the fisherman's family, according to Basilio.
However, Taiwan's Premier Jiang Yi-huah said it was unacceptable that the apology comes from the "people of the Philippines" rather than the government as it was the coastguard that shot the fisherman.
Perez is chairman of the Manila Economic and Cultural Office (MECO) that represents the Philippines' interest in Taiwan.
The incident sparked outrage in Taiwan and comes at a time of heightened tensions around the region over rival claims to the nearby South China Sea.
Taiwan has threatened to conduct a naval exercise in waters near the Philippines.