I. Introduction

Commissions are a common form of compensation in the Philippines, especially in sales, real estate, insurance, recruitment, distribution, brokerage, and business development work. A commission may be paid in addition to a fixed salary, as the main form of compensation, or as a fee for successfully producing a sale, client, transaction, booking, collection, or other measurable result.

Disputes often arise when a company refuses to pay commissions after the worker has already produced the sale or completed the work that triggered the right to payment. The company may claim that the sale was not “closed,” the client has not fully paid, management did not approve the commission, the worker resigned before release, the account was reassigned, the company changed its policy, or the commission was forfeited.

In the Philippine setting, the proper way to demand unpaid commissions depends on one central issue: What is the legal relationship between the person claiming commissions and the company? The claimant may be an employee, independent contractor, sales agent, broker, consultant, or corporate officer. The correct remedy, forum, and legal theory depend heavily on that classification.

This article discusses the legal basis for demanding unpaid commissions, the documents needed, the proper demand process, available remedies, and practical considerations under Philippine law.

This is general legal information, not legal advice for any specific dispute.

II. What Are Commissions?

A commission is compensation based on performance, usually computed as a percentage of sales, collections, revenue, profits, transaction value, placement fee, or some other agreed metric.

Examples include:

A salesperson earning 5% of every paid sale.
A real estate broker earning a commission upon successful sale or lease.
An insurance agent earning commissions from policies sold.
A recruiter earning a placement commission when a candidate is hired.
A distributor or business development agent earning a fee for referred accounts.
An employee receiving monthly commissions on top of basic salary.
A consultant receiving success fees after closing a contract.

Under Philippine law, commissions are not treated identically in all cases. Their legal character depends on the parties’ agreement and the claimant’s status.

III. The First Question: Are You an Employee or an Independent Agent?

Before making a legal demand, determine whether the claimant is an employee or a non-employee agent/contractor.

This matters because employment-related commission claims are usually brought before labor authorities, while non-employment commission claims are usually civil or commercial disputes.

A. Employee Claimant

A claimant is likely an employee when the company controls not only the result of the work but also the means and methods of doing it. Indicators include:

The company hired the person as staff.
The company pays salary or wages.
The company withholds tax as compensation income.
The company controls working hours, attendance, assignments, quotas, reporting lines, and procedures.
The person is subject to company discipline.
The person uses company systems, tools, official email, and internal sales processes.
The person is included in payroll or receives payslips.
The company may terminate the person according to employment rules.

If the claimant is an employee, unpaid commissions may be treated as wages, wage supplements, incentive pay, or contractual employment benefits, depending on the facts.

B. Independent Agent, Broker, or Contractor

A claimant is likely a non-employee when the relationship is based on an agency, brokerage, distributorship, referral, consultancy, or independent contractor arrangement. Indicators include:

The claimant is paid only per transaction.
There is no fixed salary.
The claimant controls how to find clients or close deals.
The claimant may represent other companies.
The claimant issues invoices or official receipts.
The company does not control daily work methods.
The agreement refers to agency, referral, brokerage, consultancy, or independent contractor status.
The claimant is responsible for taxes and business registration.

If the claimant is not an employee, the claim is usually based on contract, agency, brokerage, unjust enrichment, or damages under civil law.

IV. Legal Bases for Demanding Unpaid Commissions

A. Contractual Obligation

The strongest basis is a written agreement stating that commissions are payable when certain conditions occur.

A commission agreement may appear in:

Employment contract.
Sales incentive plan.
Offer letter.
Commission schedule.
Agency agreement.
Brokerage agreement.
Memorandum of agreement.
Emails or written approvals.
Company policy.
Sales compensation plan.
Board or management approval.
Chat messages confirming commission terms.
Purchase orders, quotations, or client endorsements.
Internal CRM records showing account ownership.

Under Philippine civil law principles, valid contracts have the force of law between the parties and must be complied with in good faith. If the company agreed to pay commissions and the claimant performed the required act, the company may be legally bound to pay.

B. Employment Compensation

For employees, commissions may be part of compensation. If commissions are earned under the employment contract or established company policy, they may be demandable as unpaid compensation.

Commissions may be considered earned when the employee has satisfied the conditions in the company’s commission plan. For example:

The sale was booked.
The client signed the contract.
The company collected payment.
The account was activated.
The target was achieved.
Management approved the deal.
The revenue was recognized.
The employee remained employed until a stated date, if the plan validly requires it.

The exact trigger depends on the contract or policy.

C. Agency

Under the law on agency, an agent may be entitled to compensation if the agent performed services on behalf of the principal and compensation was agreed upon, expressly or impliedly.

An agent who procures a buyer, customer, tenant, or transaction may claim commission if the agent was the procuring cause of the transaction, subject to the agreement and surrounding circumstances.

D. Brokerage

In brokerage arrangements, a broker generally earns commission by successfully bringing parties together and producing a transaction, depending on the terms of the brokerage agreement.

The company may not avoid payment merely by completing the transaction directly with the client after the broker has already introduced or substantially caused the deal, if the broker’s efforts were the effective cause of the sale or transaction.

E. Unjust Enrichment

Even without a perfectly drafted contract, a claimant may argue unjust enrichment when:

The company benefited from the claimant’s efforts.
The claimant expected compensation.
The company knew or accepted the benefit.
It would be unjust for the company to retain the benefit without paying.

This is often raised when the company denies a formal agreement but accepted the sale, client, referral, collection, or transaction produced by the claimant.

F. Quantum Meruit

Quantum meruit means payment for the reasonable value of services rendered. This may apply when services were performed and accepted, but the amount or terms of compensation are disputed.

For example, if a company asked a person to source buyers and later closed a sale through those buyers, but the exact commission rate was not finalized, the claimant may demand reasonable compensation based on industry practice, prior dealings, or evidence of the parties’ understanding.

G. Company Policy or Past Practice

A company may be bound by its own commission policies or consistent past practice.

For employees, repeated payment of commissions under known rules may create an enforceable benefit, especially if the company cannot show a valid reservation of discretion or lawful modification.

For independent agents, past dealings may help prove the agreed rate, payment trigger, and manner of computation.

V. When Is a Commission Considered Earned?

The right to commission depends on the parties’ agreement. The most common commission triggers are:

A. Upon Booking of Sale

The commission is earned once the sale is booked or recorded, even if payment from the client will occur later.

B. Upon Signing of Contract

The commission is earned once the client signs the sales contract, service agreement, lease, purchase order, subscription, or similar document.

C. Upon Collection

Many companies provide that commission is payable only after the company collects from the client. This is common because it protects the company from paying commissions on unpaid or canceled transactions.

D. Upon Full Payment

Some plans require full payment before commission is released. This may be valid if clearly agreed upon.

E. Upon Partial Collection

Some agreements allow commissions to be paid pro rata as the company receives installments.

F. Upon Revenue Recognition

Some companies compute commissions based on recognized revenue, particularly in software, advertising, subscriptions, and long-term service contracts.

G. Upon Completion or Delivery

For project-based sales, commissions may be payable after delivery, completion, implementation, acceptance, or turnover.

H. Upon Management Approval

Some commission plans require approval. However, approval clauses should not be used arbitrarily, fraudulently, or in bad faith to defeat an already earned commission.

I. Upon Continued Employment

Some employers impose conditions such as: “Employee must be actively employed at the time of payout.” Whether this is enforceable depends on the wording, fairness, timing, and whether the commission had already been earned before resignation or termination.

A company may have a stronger position if the condition is clearly written, consistently applied, and known to the employee. The claimant may have a stronger position if the commission had already vested or the company used the condition in bad faith to avoid payment.

VI. Common Company Defenses

A company refusing to pay commissions may raise several defenses.

A. No Written Agreement

The company may say there is no written contract. This is not always fatal. Commission agreements may be proven by emails, messages, policy documents, payslips, prior payments, invoices, CRM records, or testimony.

B. Conditions Were Not Met

The company may claim the sale was not completed, the customer did not pay, the account canceled, or the claimant failed to satisfy the commission policy.

C. Discretionary Incentive Only

The company may argue that the commission was discretionary, not guaranteed. The claimant should examine whether the plan truly gives full discretion or whether it provides objective formulas and conditions.

D. Account Was Reassigned

The company may say the account belonged to another employee or team. Evidence of lead generation, client communications, account ownership, and internal assignment records becomes important.

E. Claimant Resigned Before Payout

The company may rely on a policy requiring active employment at payout date. The claimant may counter that the commission was already earned before resignation or that the condition is invalidly applied.

F. Client Has Not Paid

If the agreement requires collection, the company may refuse payment until collection. The claimant should request proof of non-payment. If the company already collected, the claimant should demand computation and release.

G. Chargebacks or Cancellations

Some commission plans allow reversal if the sale is canceled, refunded, or unpaid. The claimant should check whether the chargeback rule was clearly agreed upon.

H. No Authority to Promise Commission

The company may say the manager who promised commission had no authority. The claimant may rely on apparent authority, ratification, past practice, or the company’s acceptance of the benefit.

I. Company Losses or Cash Flow Problems

Financial difficulty is generally not a legal excuse to avoid payment of a valid obligation.

J. Poor Performance or Misconduct

A company may try to offset or deny commissions because of alleged poor performance. Unless the commission plan allows forfeiture or the company has a valid legal basis for damages or setoff, earned commissions may still be demandable.

VII. Evidence Needed Before Making a Demand

A strong demand begins with organized evidence. The claimant should gather:

Employment contract, agency agreement, consultancy agreement, or offer letter.
Commission plan, incentive policy, sales manual, or compensation schedule.
Emails confirming commission rates or approvals.
Chat messages with managers, officers, clients, or accounting staff.
Purchase orders, signed contracts, invoices, official receipts, sales orders, booking confirmations, or collection records.
Proof that the claimant sourced, introduced, negotiated, closed, managed, or substantially caused the transaction.
CRM screenshots, pipeline records, lead assignment records, account ownership records, or internal dashboards.
Payslips showing prior commission payments.
Tax forms showing how payments were treated.
Invoices or billing statements issued by the claimant.
Bank records showing prior commission releases.
Client correspondence.
Company announcements or policy documents.
Resignation or termination documents, if relevant.
Computation of unpaid commissions.
Timeline of events.
Names of witnesses.
Proof that the company benefited from the transaction.
Proof of collection from the client, if available.
Any written refusal, delay, or explanation from the company.

The demand should be factual, documented, and precise. Avoid exaggeration, threats, or unsupported accusations.

VIII. How to Compute the Demand

The demand should include a clear computation. A vague demand is easier to ignore.

A basic computation may follow this format:

Commission Due = Commissionable Base × Commission Rate

Example:

Contract value: ₱2,000,000
Commission rate: 5%
Commission due: ₱100,000

If VAT, withholding tax, or other deductions apply, the computation should state whether the amount demanded is gross or net.

For employment commissions, the company may withhold taxes as compensation income.

For independent contractors, agents, or consultants, tax treatment may depend on whether the claimant issues an invoice or official receipt and whether the company withholds expanded withholding tax.

The demand should avoid tax evasion language. It should ask for proper payment and lawful withholding, if applicable.

IX. Step-by-Step Process for Demanding Unpaid Commissions

Step 1: Review the Agreement and Payment Trigger

Identify:

The commission rate.
The commissionable base.
The event that triggers payment.
The payout date.
Conditions for eligibility.
Any forfeiture, clawback, or chargeback rule.
Whether the plan requires collection.
Whether active employment is required.
Whether management approval is needed.
Whether disputes must go through arbitration, mediation, or internal review.

Step 2: Prepare a Chronology

Create a timeline showing:

When the relationship began.
When the commission arrangement was agreed.
When the lead or client was sourced.
When the sale or transaction was negotiated.
When the client signed or paid.
When commission became due.
When the claimant followed up.
What reasons the company gave for non-payment.

Step 3: Prepare a Written Computation

List each transaction separately:

Client/Account	Transaction Date	Contract/Invoice Value	Rate	Amount Due	Status
Client A	Jan. 15	₱1,000,000	5%	₱50,000	Collected
Client B	Feb. 10	₱500,000	3%	₱15,000	Paid
Client C	Mar. 3	₱2,000,000	4%	₱80,000	Contract signed

Attach supporting documents.

Step 4: Send an Internal Written Request

Before escalating, send a professional written request to HR, Finance, Sales Operations, Legal, or the authorized officer.

The first request should ask for:

Confirmation of commission status.
Copy of computation.
Expected payment date.
Reason for any deduction, delay, or denial.
Supporting documents if the company claims non-collection or cancellation.

Step 5: Send a Formal Demand Letter

If the company ignores or denies the request, send a formal demand letter. The letter should:

Identify the claimant.
Identify the relationship with the company.
State the commission agreement.
State the transactions involved.
State the amount due.
Attach or reference supporting documents.
Demand payment within a definite period.
Request written explanation if the company disputes the claim.
Reserve rights to file appropriate action.

A typical deadline is 5, 7, 10, or 15 days from receipt, depending on urgency and context.

Step 6: Send Through a Traceable Method

Use methods that prove receipt:

Personal delivery with receiving copy.
Registered mail.
Courier with tracking.
Email with read receipt or delivery confirmation.
Email to official company addresses.
Service through counsel.

Keep proof of sending and receipt.

Step 7: Attempt Settlement

Many commission disputes settle after a clear demand. Settlement may involve:

Full payment.
Installment payment.
Net-of-tax release.
Partial compromise.
Waiver of other claims.
Quitclaim and release.

Be careful with quitclaims. A quitclaim may bar future claims if voluntarily and validly signed for reasonable consideration.

Step 8: File the Proper Case If Needed

The correct forum depends on the claimant’s status and the nature of the claim.

X. Where to File a Claim for Unpaid Commissions

A. If the Claimant Is an Employee

Employee claims for unpaid commissions are usually filed with labor authorities.

Possible forums include:

Department of Labor and Employment mechanisms, especially for labor standards concerns.
National Labor Relations Commission, especially when the claim is connected with employer-employee relations, illegal dismissal, money claims, damages, or attorney’s fees.

The correct route depends on the amount, issues involved, whether there is an illegal dismissal claim, and whether the matter involves labor standards or broader employment disputes.

Claims may include:

Unpaid commissions.
Unpaid wages.
13th month pay implications, if applicable.
Final pay.
Service incentive leave pay, if applicable.
Damages.
Attorney’s fees.
Illegal dismissal claims, if connected.

B. If the Claimant Is an Independent Contractor, Agent, or Broker

The claim is generally a civil action, not a labor case, unless the claimant can prove employment.

Possible venues include:

Regular courts.
Small claims court, if the claim falls within small claims rules.
Arbitration, if the agreement has an arbitration clause.
Mediation, if contractually required or court-directed.
Specialized regulatory process, if the industry has one.

For example, real estate brokerage disputes may involve special rules if the claimant is a licensed real estate professional and the transaction falls under real estate service regulations.

C. If There Is an Arbitration Clause

Some agreements require arbitration. The demand letter should check whether the contract requires:

Negotiation.
Mediation.
Arbitration.
Venue in a specific city.
Governing law.
Notice procedure.

Ignoring an arbitration clause may delay the claim.

D. If the Amount Is Small

For smaller commission claims based on contract or debt, small claims procedure may be available, subject to the current jurisdictional threshold and rules. Small claims cases are designed to be faster and simpler, usually without lawyers appearing for parties during hearing.

This may be useful for independent agents, consultants, suppliers, or brokers with liquidated money claims.

XI. Demand Letter: Essential Contents

A demand letter for unpaid commissions should include the following:

A. Heading

Use a clear subject line:

Subject: Formal Demand for Payment of Unpaid Commissions

B. Parties

Identify the claimant and the company:

Full name.
Address.
Position or role.
Period of engagement.
Company name.
Company address.
Department or officer involved.

C. Basis of Claim

State the source of the right:

Employment contract.
Commission plan.
Agency agreement.
Written approval.
Company policy.
Emails.
Past practice.
Client referrals.
Sales closed.

D. Facts

Briefly explain:

What work was performed.
What transaction was generated.
When the company benefited.
When the commission became due.
How much remains unpaid.
What follow-ups were made.

E. Computation

Include a table or itemized calculation.

F. Demand

State a clear demand:

“Accordingly, demand is hereby made upon the Company to pay the amount of ₱____ representing unpaid commissions within ___ days from receipt of this letter.”

G. Payment Instructions

Include bank details only if appropriate and safe. Otherwise, state that payment arrangements may be coordinated in writing.

H. Reservation of Rights

Use professional language:

“Please treat this letter as a final demand. Should the Company fail to pay or provide a valid written explanation within the period stated, I shall be constrained to pursue the appropriate legal remedies, without prejudice to claims for damages, attorney’s fees, costs, and other reliefs available under law.”

I. Attachments

List attachments:

Agreement.
Sales documents.
Email approvals.
Computation.
Proof of collection.
Prior demands.

XII. Sample Demand Letter for an Employee

FORMAL DEMAND FOR PAYMENT OF UNPAID COMMISSIONS

Date: _________

To: [Company Name] [Company Address] Attention: [HR / Finance / Legal / Authorized Officer]

Subject: Formal Demand for Payment of Unpaid Commissions

Dear [Name/Officer]:

I am writing to formally demand payment of my unpaid commissions arising from sales/accounts that I handled during my employment with [Company Name] as [Position].

Under my employment terms, sales incentive plan, and/or the company’s established commission arrangement, I am entitled to commissions for qualified sales/accounts generated, handled, closed, and/or collected through my efforts. The following commissions have become due and demandable:

Client/Account	Transaction/Invoice	Date	Commission Basis	Amount Due
[Client A]	[Details]	[Date]	[Rate/Base]	₱[Amount]
[Client B]	[Details]	[Date]	[Rate/Base]	₱[Amount]
Total				₱[Total]

Despite prior follow-ups, the above commissions remain unpaid. Copies of relevant documents, communications, and computation are attached for reference.

Accordingly, demand is hereby made upon [Company Name] to pay the total amount of ₱[Amount] representing unpaid commissions, subject only to lawful deductions and withholding taxes, within [number] days from receipt of this letter.

Should the company dispute any portion of this demand, kindly provide a written explanation together with the company’s complete computation and supporting documents within the same period.

Please treat this letter as a formal demand. Failure to settle this matter within the period stated shall leave me constrained to pursue the appropriate remedies before the proper labor forum, without prejudice to claims for damages, attorney’s fees, costs, and other reliefs available under law.

Sincerely,

[Name] [Address] [Email / Contact Number]

Attachments:

[Employment contract / commission plan]
[Sales documents]
[Email approvals]
[Computation]
[Prior follow-ups]

XIII. Sample Demand Letter for an Independent Agent, Broker, or Contractor

FORMAL DEMAND FOR PAYMENT OF UNPAID COMMISSION

Date: _________

To: [Company Name] [Company Address] Attention: [Authorized Officer / Legal Department]

Subject: Formal Demand for Payment of Unpaid Commission

Dear [Name/Officer]:

I write to formally demand payment of my unpaid commission arising from the transaction involving [Client/Account/Buyer/Project].

Pursuant to our agreement, understanding, course of dealing, and/or your company’s acceptance of my services, I am entitled to a commission of [rate/amount] for [introducing/procuring/referring/negotiating/closing] the transaction with [Client Name]. Through my efforts, the company obtained the benefit of the said transaction, as shown by the attached documents and communications.

The commission due is computed as follows:

Transaction value: ₱__________
Commission rate: ___%
Commission due: ₱__________
Less payments received, if any: ₱__________
Balance due: ₱__________

Despite prior demands and follow-ups, the above amount remains unpaid.

Accordingly, demand is hereby made upon [Company Name] to pay the amount of ₱__________ within [number] days from receipt of this letter.

Should the company dispute this demand, kindly provide a written explanation and supporting documents within the same period, including any basis for non-payment, deduction, cancellation, non-collection, or denial of the commission.

Please treat this as a final formal demand. Failure to pay or provide a valid written explanation within the stated period shall compel me to pursue the appropriate civil, contractual, and other legal remedies, without prejudice to claims for damages, attorney’s fees, costs of suit, interest, and other reliefs available under law.

Sincerely,

[Name] [Address] [Email / Contact Number]

Attachments:

[Agreement / email confirmation]
[Client referral or introduction proof]
[Transaction documents]
[Computation]
[Prior follow-ups]

XIV. Special Issues in Unpaid Commission Claims

A. Resignation Before Commission Release

A common dispute arises when the employee resigns after closing sales but before payout. The company may claim that the employee forfeited commissions because they were no longer employed on payout date.

The answer depends on:

The wording of the commission plan.
Whether the commission was already earned.
Whether continued employment is a condition for earning or merely for administrative release.
Whether the policy was known to the employee.
Whether the company applied the rule consistently.
Whether the company acted in bad faith.

A claimant should argue that commissions already earned before resignation cannot be withheld without a valid contractual or legal basis.

B. Termination Before Payout

If the company terminates the employee before payout, the issue becomes more sensitive. A company should not be allowed to avoid commissions by terminating a worker after the worker generated the commissionable transaction. If the termination is illegal or done in bad faith, unpaid commissions may be claimed together with other labor claims.

C. Verbal Commission Agreements

Verbal agreements can be enforceable, but they are harder to prove. Evidence may include:

Past payments.
Witness testimony.
Emails discussing rates.
Messages confirming entitlement.
Company spreadsheets.
Client records.
Internal approvals.
Admissions by officers.

D. Company Changes the Commission Plan

A company may revise commission plans prospectively, subject to contract, labor law, and good faith. However, a company should not retroactively remove or reduce commissions that were already earned under an existing plan.

E. Split Commissions

Some deals involve multiple employees, teams, agents, or referrers. The claimant should show:

The agreed split.
Their specific role.
Account ownership.
Approval from management.
Past treatment of similar accounts.
Internal assignment documents.

F. Commission on Renewals

Renewal commissions depend on agreement. The claimant should check whether the plan covers:

Initial sales only.
Renewal contracts.
Upsells.
Cross-sells.
Recurring revenue.
Expansion revenue.
Collections after separation.

G. Commission on Collections After Resignation

If the commission plan says commissions are payable upon collection, and collection occurs after resignation, the claimant should examine whether the right to commission vested upon sale or only upon collection. If the claimant already performed all required work and the company later collected, the claimant may have an argument for payment unless a valid forfeiture clause applies.

H. Deductions from Commissions

Companies may deduct taxes and valid authorized deductions. Disputed deductions may include:

Refunds.
Cancellations.
Bad debts.
Discounts.
Shared account allocations.
Administrative charges.
Penalties.
Advances.
Overpayments.
Damages.

The claimant should demand a written explanation and computation.

I. Interest

A claimant may demand legal interest where appropriate, especially after extrajudicial demand or judicial filing. The specific rate and period depend on the nature of the obligation, applicable law, and court or tribunal ruling.

J. Attorney’s Fees

Attorney’s fees may be claimed when the claimant is compelled to litigate or incur expenses to protect their rights, subject to legal standards and the discretion of the proper forum.

XV. Tax Considerations

Commission payments may have tax consequences.

A. Employees

If commissions are paid to an employee, they are generally treated as compensation income. The employer may be required to withhold tax and report the payment properly.

B. Independent Contractors, Agents, and Consultants

If commissions are paid to a non-employee, they may be treated as business or professional income. The company may withhold tax under applicable withholding rules. The claimant may need to issue an invoice or official receipt, depending on registration and tax status.

C. Gross vs. Net Demand

A demand letter should clarify whether the amount claimed is:

Gross commission before tax.
Net commission after withholding.
Subject to lawful withholding taxes.

A safe formulation is:

“₱____, subject only to lawful and properly documented withholding taxes.”

D. Avoid Informal Payment Arrangements

The demand should not request under-the-table payment. Payments should be documented to avoid later disputes and tax exposure.

XVI. Prescription: Time Limits for Filing Claims

Claims must be brought within the applicable prescriptive period. The period depends on the nature of the claim.

Employment money claims commonly have a shorter prescriptive period than ordinary written contract claims. Civil claims based on written contracts, oral contracts, quasi-contracts, or injury to rights may have different prescriptive periods.

Because prescription can defeat an otherwise valid claim, a claimant should act promptly. Repeated informal follow-ups are not always enough to preserve rights. A written demand and timely filing before the proper forum are important.

XVII. Practical Strategy Before Filing a Case

A. Make the Claim Easy to Verify

Companies are more likely to respond when the demand includes:

Exact amount.
Transaction list.
Supporting documents.
Clear legal basis.
Reasonable deadline.
Professional tone.

B. Avoid Emotional or Defamatory Language

Do not accuse the company of fraud, theft, estafa, or illegal conduct unless there is a solid basis and legal advice. Strong but professional language is more effective.

C. Do Not Threaten Criminal Action Lightly

Most commission disputes are civil or labor matters. Threatening criminal charges without basis may weaken credibility or expose the claimant to counterclaims.

D. Preserve Evidence

Do not delete emails, chats, files, payslips, CRM screenshots, or client records. Preserve metadata where possible.

E. Be Careful with Company Confidential Information

A claimant may use relevant evidence, but should avoid unlawful disclosure of trade secrets, client data, confidential pricing, or personal information beyond what is necessary.

F. Check Non-Compete, Non-Solicitation, and Confidentiality Clauses

Commission disputes may be complicated by restrictive covenants. A claimant should avoid giving the company a separate basis for counterclaims.

G. Consider Settlement Value

Litigation takes time and resources. A reasonable settlement may be practical, especially when the amount is modest or proof is uncertain.

XVIII. Possible Claims and Remedies

Depending on the facts, a claimant may seek:

Payment of unpaid commissions.
Legal interest.
Damages.
Attorney’s fees.
Costs of suit.
Final pay, if employee.
Other unpaid benefits, if employee.
Reinstatement or separation pay, if illegal dismissal is involved.
Contractual penalties, if provided.
Accounting of sales and collections.
Production of documents, where procedurally available.
Recognition of entitlement to future commissions, if applicable.

XIX. Red Flags That Strengthen the Claim

The claimant’s position is stronger when:

There is a written commission agreement.
The commission formula is clear.
The company previously paid similar commissions.
The transaction was completed or collected.
The claimant clearly caused or handled the sale.
Management acknowledged the commission.
The company gave shifting reasons for non-payment.
The company used the claimant’s work but cut them out of payout.
The company changed the policy after the commission was earned.
The company terminated or forced resignation shortly before payout.
The company refuses to provide computation.
The company admits the amount but delays payment.

XX. Red Flags That Weaken the Claim

The claim may be weaker when:

There is no written agreement.
The commission terms are vague.
The claimant cannot prove involvement in the transaction.
The client did not actually pay.
The agreement clearly requires collection and no collection occurred.
The plan clearly makes the incentive discretionary.
The claimant violated material conditions.
The transaction was canceled or refunded.
The claimant was not licensed where a license is legally required.
The claim was filed too late.
The claimant signed a valid quitclaim covering commissions.
The claimant accepted full final pay without reservation, depending on the circumstances.

XXI. Final Pay and Commissions

For employees, commissions may arise in the context of final pay. Final pay may include unpaid salary, proportionate 13th month pay, tax refunds, unused leave conversions if applicable, and other earned benefits. If commissions are part of earned compensation, they should be addressed in final pay computation.

An employee should request:

Final pay computation.
Commission computation.
Basis for exclusions.
Tax withholding documents.
Certificate of employment.
Release schedule.

If the final pay release includes a quitclaim, the employee should read it carefully before signing.

XXII. Quitclaims and Releases

Companies often require claimants to sign a quitclaim before releasing payment. A quitclaim may state that the claimant waives all claims against the company.

A quitclaim is more likely to be upheld when:

It is voluntarily signed.
The claimant understood the document.
The consideration is reasonable.
There is no fraud, coercion, or intimidation.
The amount paid is not unconscionably low.
The waiver is clear.

A claimant should avoid signing a broad quitclaim if unpaid commissions are still disputed, unless the settlement amount fairly covers the claim.

A safer approach is to write reservations such as:

“Received under protest and without prejudice to my claim for unpaid commissions,”

but companies may refuse altered quitclaims. Legal advice is recommended before signing.

XXIII. Demand Letter Tone

A good demand letter should be:

Firm.
Factual.
Organized.
Professional.
Specific.
Evidence-based.
Free from insults.
Free from unnecessary threats.
Clear about the amount and deadline.
Clear about reservation of rights.

The goal is to show that the claimant is prepared, reasonable, and ready to pursue remedies.

XXIV. Suggested Demand Package

A claimant should prepare a demand package containing:

Cover demand letter.
Summary of claim.
Table of unpaid commissions.
Copy of agreement or policy.
Supporting sales documents.
Proof of claimant’s role.
Proof of client payment or transaction completion.
Prior correspondence.
Requested payment instructions.
Deadline for response.

This makes it harder for the company to dismiss the claim as unsupported.

XXV. Common Mistakes to Avoid

Demanding without computation.
Relying only on verbal statements.
Sending angry messages to multiple company employees.
Posting the dispute online.
Threatening criminal cases without basis.
Failing to preserve evidence.
Waiting too long.
Signing a quitclaim too early.
Filing in the wrong forum.
Ignoring arbitration clauses.
Confusing gross and net amounts.
Forgetting tax implications.
Demanding commissions on uncollected accounts when the plan clearly requires collection.
Failing to prove that the claimant caused the sale.
Not distinguishing between employee and independent contractor status.

XXVI. Checklist Before Filing a Case

Before filing, confirm the following:

Is the claimant an employee or independent contractor?
Is there a written commission agreement?
What is the commission trigger?
Has the trigger occurred?
Is the commission amount liquidated or still subject to accounting?
Has the company collected from the client?
Is there an active employment condition?
Was the claimant still employed when the commission was earned?
Did the claimant sign a waiver or quitclaim?
Has a formal written demand been sent?
Is there proof of receipt?
What is the proper forum?
Is the claim within the prescriptive period?
Are taxes and deductions accounted for?
Is there enough evidence to prove the claim?

XXVII. Legal Theory by Scenario

Scenario 1: Employee Closed Sales, Company Refuses to Pay

Possible theory: unpaid compensation, money claim arising from employment, breach of commission plan, illegal deduction or withholding.

Likely forum: labor authorities, depending on issues and amount.

Key evidence: employment contract, commission plan, sales records, collection proof, payslips, emails.

Scenario 2: Employee Resigned Before Payout

Possible theory: earned commissions vested before resignation; employer cannot forfeit earned compensation without valid basis.

Likely forum: labor authorities.

Key evidence: date sale was earned, resignation date, payout policy, prior practice.

Scenario 3: Independent Agent Referred Client, Company Closed Directly

Possible theory: agency commission, procuring cause, breach of agreement, unjust enrichment.

Likely forum: civil court, small claims, or arbitration, depending on amount and contract.

Key evidence: referral proof, client communications, company acceptance, transaction documents.

Scenario 4: Broker Introduced Buyer, Seller Avoided Commission

Possible theory: brokerage commission, procuring cause, bad faith, damages.

Likely forum: civil court or agreed dispute forum.

Key evidence: authority to sell, messages, introduction records, sale documents.

Scenario 5: Company Says Client Has Not Paid

Possible theory: commission not yet due if collection is a condition; demand for accounting and payment upon collection.

Likely action: request proof of non-collection and monitor payment status.

Key evidence: contract terms, invoices, receipts, client payment confirmation.

Scenario 6: Company Changed Commission Rate After Sale

Possible theory: retroactive reduction invalid if commission already earned; breach of contract or bad faith.

Likely forum: labor or civil, depending on relationship.

Key evidence: old plan, new plan, effective dates, sales dates.

XXVIII. Model Short Initial Follow-Up Email

Subject: Request for Status and Computation of Unpaid Commissions

Dear [Name],

I would like to request the status and computation of my unpaid commissions for the following accounts:

[Account/Client]
[Account/Client]
[Account/Client]

Based on my records, the total commission due is ₱[amount], computed under the applicable commission arrangement. Kindly confirm the payment schedule or provide the company’s computation and basis for any discrepancy.

For ease of review, I am attaching the relevant documents and my computation.

Thank you.

Sincerely, [Name]

XXIX. Model Stronger Final Demand Paragraph

Despite repeated follow-ups, the company has failed to release the commissions due or provide a valid written basis for withholding them. The transactions have been completed and/or collected, and my entitlement is supported by the applicable commission arrangement, company practice, and the attached records. Accordingly, final demand is hereby made for payment of ₱[amount] within [number] days from receipt of this letter. Failure to settle within said period shall constrain me to pursue the appropriate legal remedies before the proper forum, without prejudice to claims for interest, damages, attorney’s fees, costs, and other reliefs available under law.

XXX. Conclusion

Demanding unpaid commissions from a company in the Philippines requires more than simply asking for payment. The claimant must identify the legal relationship, prove the commission agreement, show that the commission was earned, compute the amount, preserve evidence, send a clear written demand, and file in the correct forum if the company refuses to pay.

For employees, unpaid commissions are often treated as employment-related money claims. For independent agents, brokers, consultants, and contractors, the claim is usually contractual, agency-based, or civil in nature. In either case, the strongest claims are supported by written agreements, clear computations, transaction records, proof of the claimant’s role, and evidence that the company benefited from the work.

A well-prepared demand letter often leads to payment or settlement. If not, it becomes an important foundation for labor, civil, arbitration, or small claims proceedings.