How to Legally Claim Unpaid Commissions and Service Fees

The Philippine legal system treats these two categories differently, channeling them through distinct agencies and sets of laws. Here is a comprehensive guide to navigating the process of claiming what is rightfully yours.


I. Determining the Legal Relationship

Before filing a case, you must identify which "track" your claim falls under.

1. The Employee Track (Labor Law)

If you are an employee, your commissions are considered "wages" under the Labor Code of the Philippines. The four-fold test determines this relationship:

  • The selection and engagement of the employee.
  • The payment of wages.
  • The power of dismissal.
  • The Power of Control: This is the most important. Does the company dictate how you do your work, not just the result?

2. The Contractor Track (Civil Law)

If you are a freelancer, consultant, or agent working under a "Service Agreement" where you control your own methods, your claim is governed by the Civil Code under the law on Obligations and Contracts.


II. The Process for Employees (DOLE & NLRC)

If an employer-employee relationship exists, the process is administrative and generally faster.

Step 1: The Formal Demand Letter

Send a written demand via registered mail with a return card. This serves as formal notice and evidence that you attempted to settle the matter amicably.

Step 2: SENA (Single Entry Approach)

All labor disputes must first go through SENA at the nearest Department of Labor and Employment (DOLE) office. This is a 30-day mandatory conciliation-mediation process where a SEAD (Single Entry Assistance Desk) officer helps both parties reach a settlement.

Step 3: Filing a Position Paper (NLRC)

If SENA fails, you will receive a "Referral to Compulsory Arbitration." You then file a formal complaint with the National Labor Relations Commission (NLRC). Both parties will submit "Position Papers" outlining their arguments and evidence. A Labor Arbiter will then render a decision.


III. The Process for Independent Contractors (Small Claims)

If you are a contractor or freelancer, the Labor Arbiter has no jurisdiction over you. You must go to the regular courts.

1. Small Claims Court (The Efficient Route)

If your claim does not exceed PHP 1,000,000.00 (exclusive of interest and costs), you can file a case in the Small Claims Court (Metropolitan or Municipal Trial Courts).

  • No Lawyers Allowed: You represent yourself.
  • Speed: Decisions are often reached in a single hearing.
  • Finality: The decision is final and unappealable.

2. Regular Civil Action

If the amount exceeds PHP 1M, you must file a "Sum of Money" case in the Regional Trial Court. This requires a lawyer and involves a more protracted legal process.


IV. Essential Evidence to Gather

Regardless of your status, the burden of proof often shifts. However, you must establish the existence of the debt with:

  • The Contract: Employment contracts, Service Level Agreements (SLAs), or even signed "Offer Letters."
  • Proof of Performance: Acceptance of deliverables, signed sales invoices, or "Notice of Sales" that prove the commission was earned.
  • Communication Trails: Emails, Viber/WhatsApp messages, or Slack logs where the principal acknowledges the debt or the work performed.
  • Computation Table: A clear breakdown of how the amount was derived.

V. Prescription Periods (The Deadline)

You cannot wait forever to claim your money. Under Philippine law, you must act within these timeframes:

  • Money Claims from Employer-Employee Relationships: Must be filed within three (3) years from the time the cause of action accrued (Labor Code, Art. 306).
  • Written Contracts: You have ten (10) years to file a case based on a written contract (Civil Code, Art. 1144).
  • Oral Contracts: You have six (6) years to file a case based on a verbal agreement (Civil Code, Art. 1145).

VI. Key Legal Doctrines to Remember

The Rule on Commissions as Wages In the landmark case of Songco vs. NLRC, the Supreme Court clarified that commissions are part of an employee's "wage" if they are earned for services rendered. This means they must be included in the computation of 13th-month pay and separation pay if they are part of the basic remuneration.

Attorney’s Fees In labor cases involving the unlawful withholding of wages, the court may award Attorney's Fees equivalent to 10% of the total amount recovered (Art. 111, Labor Code).


Summary Table: Which Path to Take?

Feature Employee (Labor) Contractor (Civil)
Governing Law Labor Code Civil Code
Primary Venue DOLE / NLRC Small Claims / Regional Trial Court
Cost Minimal (Pro-worker) Filing fees based on amount claimed
Representation Lawyer or Union Rep Self (Small Claims) or Lawyer (RTC)
Speed Moderate (SENA is fast) Fast (Small Claims) to Slow (RTC)

Disclaimer: This content is not legal advice and may involve AI assistance. Information may be inaccurate.