Dear Attorney,

I hope this message finds you well. I am writing to seek legal advice regarding a concern about a Performance Mobility Allowance (PMA) that was part of my signed employment contract. Initially, my employer provided the agreed-upon basic salary plus the PMA. However, starting in May of this year, my employer stopped giving the PMA, citing low revenue collection and claims of financial losses. They did not issue any written memorandum announcing the termination of the allowance; instead, they only conveyed this verbally in several meetings.

As a result of these changes in compensation, I recently resigned from my position as Chief Operating Officer. I would like to determine whether I can still pursue payment for the unpaid PMA from May until November. The PMA was explicitly stated in my signed contract, and I believe I have a valid claim for these benefits. I would greatly appreciate your guidance on the steps I should take, the necessary legal grounds, and any other pertinent information on how best to move forward with my claim.

Thank you in advance for your assistance, and I look forward to your expert opinion on this matter.

Respectfully, A Concerned Former Employee

LEGAL ARTICLE: A COMPREHENSIVE GUIDE TO RECOVERING THE PERFORMANCE MOBILITY ALLOWANCE UNDER PHILIPPINE LAW

Introduction
In the Philippine context, employment contracts are governed by various legal and regulatory frameworks designed to protect both the employer and the employee. One of the most common sources of contention arises when certain benefits or allowances, explicitly provided for in a signed employment contract, are unilaterally discontinued or withheld. A Performance Mobility Allowance (PMA) is among those benefits an employer may agree to provide in addition to the basic salary, especially for positions that involve travel, fieldwork, high-level managerial functions, or other conditions that warrant additional pay.

When an employer suddenly stops disbursing the PMA—citing business losses, poor revenue collection, or other circumstances—employees are left uncertain as to whether they can legally compel the employer to pay. This comprehensive guide will discuss the legal basis for claims, relevant case law, procedural remedies, and key considerations to help any concerned employee (or former employee) in evaluating their options under Philippine law.
Nature and Definition of the Performance Mobility Allowance
A Performance Mobility Allowance generally refers to a monetary benefit granted to employees for tasks that require mobility, performance incentives, or additional responsibility beyond the standard scope of work. It may be tied to performance metrics, the need to travel to different locations, or responsibilities outside the usual role of an employee. The nature of a PMA can vary from one company to another, but it is crucial that it be clearly stipulated in an employment contract, company policy, or collective bargaining agreement (CBA), if applicable.

Since the PMA is contractual in nature, once it is incorporated into the employee’s compensation package, it acquires the character of an entitlement subject to payment unless any of the following occurs:
- A valid amendment to the existing employment contract was signed by both parties.
- The allowance was strictly conditional (with explicit conditions not met).
- The allowance was based on a temporary arrangement that had an agreed-upon duration.
Relevant Legal Principles Under Philippine Labor Law
- Mutuality of Contracts
  Under the Civil Code of the Philippines, employment contracts must be honored according to their terms so long as they are not contrary to law, morals, good customs, public order, or public policy. The employer cannot unilaterally alter the terms of the contract, particularly those governing compensation and benefits, without the employee’s consent.
- Non-Diminution of Benefits
  The principle of non-diminution of benefits provides that if a benefit has been granted by the employer over a period of time, the employer may not unilaterally withdraw or reduce it. While this principle is typically applied to benefits that have ripened into company practice, it can also apply to contractual allowances. The Supreme Court has often ruled that benefits and allowances that appear in company policy or practice may not be reduced or removed except for valid causes and after due process.
- Immutability of Contractual Obligations
  Article 1159 of the Civil Code states that obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. If the PMA is unequivocally part of the employment agreement, employers cannot simply cease payment. The employer is required to act with good faith and must provide a legitimate reason, as well as comply with procedural requirements, if they propose to modify the terms of the contract.
Effects of an Employer’s Verbal Announcement of Non-Payment
- Verbal vs. Written Notice
  The absence of a written memorandum announcing the discontinuation of the PMA places the employer in a precarious position. Philippine labor jurisprudence encourages documentation for all material changes to employment conditions. A mere verbal directive, without adequate notice or written agreement, generally does not suffice to relieve the employer of the obligation.
- Employee’s Right to Contest
  Employees who have been affected by the unilateral removal of a contractually guaranteed allowance have the right to challenge this action. The removal of benefits without written notice, discussion, or negotiation constitutes a potential breach of contract.
- Constructive Dismissal Concerns
  Though not always applicable, a material reduction in an employee’s pay or benefits—especially if such benefits were a significant part of the compensation package—could amount to constructive dismissal if it forces the employee to resign. If the removal of benefits is unjustified and leaves the employee with significantly diminished pay or a serious alteration of working conditions, the employee may argue that they had no reasonable choice but to resign.
Resignation and Its Impact on Recovering Allowances
- Outstanding Wages and Benefits Survive Resignation
  Under Philippine labor law, any unpaid salary, allowances, or accrued benefits that an employee is entitled to receive up to the date of resignation remain collectible even after the employee has left the company. Resignation does not absolve the employer of the responsibility to pay what is contractually due.
- Timing and Legal Prescriptions
  Money claims under the Labor Code generally prescribe three years from the time the cause of action accrued. Consequently, if an employee wishes to file a claim for unpaid allowances, the filing must occur within this three-year period. For employees classified as “Corporate Officers” under certain jurisprudential standards, the matter might fall under the jurisdiction of regular courts or quasi-judicial bodies like the National Labor Relations Commission (NLRC), depending on the specific circumstances of the appointment.
- Evidence of Unpaid PMA
  Former employees seeking to recover unpaid allowances should collect all relevant documentation. This includes the signed employment contract, payslips, official company communications indicating the allowance, past proofs of payment of the PMA, and any verbal or written statements from company representatives confirming the existence and subsequent discontinuation of the benefit.
Distinction Between Managerial Employees and Rank-and-File Employees
- Managerial Employees
  The classification of the employee as a manager or a corporate officer can occasionally affect the legal remedies available. Managers generally still fall within the jurisdiction of the labor tribunals if their money claims pertain to wages, overtime pay, holiday pay, and other benefits guaranteed to employees. However, when the issue pertains to corporate officers (elected or appointed by a board of directors under the Corporation Code of the Philippines), disputes might be considered intra-corporate controversies handled by a Regional Trial Court designated as a Special Commercial Court.
- Rank-and-File Employees
  Rank-and-file employees have a clearer jurisdictional path for money claims and labor disputes under the Labor Code. They normally file complaints with the NLRC or the Department of Labor and Employment (DOLE).
Legal Remedies and Courses of Action
1. Amicable Settlement / Demand Letter
  The first step for an employee who wishes to recover unpaid allowances is to send a formal demand letter to the employer. It outlines the facts of the case, the relevant contractual provisions, and the total amount owed, together with evidence. This is often a prerequisite to more formal procedures, signaling a serious intent to pursue the claim. Employers, in response, may prefer to avoid litigation and enter an amicable settlement.
2. Filing a Complaint with the NLRC
  If the employer refuses to pay, employees may lodge a labor complaint with the NLRC. The Commission has original and exclusive jurisdiction over labor cases involving monetary claims exceeding five thousand pesos (PHP 5,000.00). The process involves mandatory conciliation-mediation at the Single Entry Approach (SEnA) program before formal adjudication.
3. Civil Action for Breach of Contract
  Depending on the specifics, particularly the nature of the allowance and the employee’s classification, a civil suit for breach of contract can be initiated in regular courts. This is usually a last resort if labor tribunals decline jurisdiction or if the individual is considered a corporate officer, hence falling under intra-corporate disputes.
4. Filing an Intra-Corporate Case
  If the employee is deemed a corporate officer, the dispute could be labeled an intra-corporate controversy under the jurisdiction of the Regional Trial Court acting as a Special Commercial Court. This requires a more nuanced approach, particularly referencing the Corporation Code, relevant Securities and Exchange Commission (SEC) issuances, and Supreme Court decisions on corporate disputes.
Legal Grounds an Employer Might Raise
While many employees focus on their reasons for claiming unpaid allowances, employers often have counterarguments that might potentially defeat or reduce these claims. Common defenses include:
- Business Losses or Financial Distress
  If the employer can concretely demonstrate genuine financial hardship, there may be a legitimate reason to renegotiate or suspend allowances. However, Philippine jurisprudence maintains that any reduction or discontinuation must still adhere to due process, including consultations or negotiations with affected employees. Unilateral changes, without proof of insurmountable losses, are generally disfavored.
- Conditional Nature of Allowances
  The employer might argue that the PMA was contingent on certain performance metrics or revenue goals that were never met. The validity of this defense depends on clear, contractually stated conditions. Absent such language, the allowance is presumed unconditional once provided without interruption.
- Expiration of Agreement
  If the original contract contained a specific period for the allowance, the employer may argue that the period has ended. Again, actual contract terms are critical in verifying the legitimacy of this defense.
Best Practices to Protect One’s Right to the PMA
- Maintain a Paper Trail
  Keep copies of all relevant documents, such as the contract specifying the PMA, pay slips reflecting payment of the allowance, and any company-issued policies indicating the nature and duration of the PMA.
- Promptly Address Changes
  If the PMA was suddenly stopped, employees should immediately bring the matter to the employer’s attention in writing. Early documentation of protests against unilateral changes strengthens the employee’s position in potential legal proceedings.
- Seek Legal Counsel
  Consulting a lawyer early in the dispute resolution process can help clarify the best forum for filing a claim and the strongest legal arguments. This applies especially to managerial employees or corporate officers, where jurisdiction can be more complex.
- Negotiate in Good Faith
  While employees have every right to assert a valid claim, negotiation often preserves working relationships and saves time and resources. Propose a payment plan or a partial settlement if the employer genuinely cites temporary cash flow problems.
Potential Outcomes

Full Payment of Unpaid Allowances
If the employee’s evidence is strong and the employer’s defenses are weak, the labor tribunals or courts can order the employer to pay the full amount of the unpaid PMA.
Partial Settlement or Compromise
The employer and employee might reach a settlement that provides a certain percentage of the claimed allowance. This often happens during mandatory mediation conferences.
Denial of Claim
If the allowance was proven to be conditional, the employer had justifiable reasons, or the employee’s claim was filed beyond the prescriptive period, a labor tribunal or court may deny the claim.

Relevant Jurisprudence

Non-Diminution Principle:
In various Supreme Court cases, the Courts have consistently ruled that benefits extended to employees cannot be unilaterally withdrawn if they have already become a regular feature of compensation or are contractually guaranteed.
Corporate Officers vs. Regular Employees:
Decisions distinguish between employees under labor law and corporate officers under corporate law. The classification significantly affects the forum and the applicable rules. In some cases, the Supreme Court has ruled that claims by corporate officers may be considered intra-corporate disputes if they involve the existence or validity of their positions and compensation.
Proof of Financial Distress:
The Supreme Court has emphasized that an employer must substantiate claims of financial difficulty before being allowed to reduce or discontinue benefits. Haphazard claims or uncorroborated assertions of hardship are not sufficient to justify a unilateral cessation of allowances.

Practical Tips for the Employee Considering Resignation

Finalize Your Clearance and Exit Documents
Be sure to document all outstanding claims before signing off on any clearance paperwork. If the clearance form includes a waiver of future claims, you may lose your right to recover the unpaid PMA.
Consult the Company’s Handbook or Policies
In some organizations, the manner in which benefits are discontinued or modified is clearly laid out in an employee handbook or policy manual. Familiarize yourself with these guidelines, as they may provide additional grounds for your claim.
Consider Filing a Complaint Shortly After Separation
Delays in filing can weaken the case, especially if critical documentation or witness testimony becomes unavailable. The sooner you act, the better your chances for a favorable outcome.

Step-by-Step Guide to Filing a Labor Complaint with the NLRC
Prepare a Written Complaint
Include a summary of the facts, details of your employment, nature of the PMA, evidence of the unilateral cessation of payments, and the exact amounts claimed.
Submit to SEnA
Before a formal labor complaint is docketed, the Single Entry Approach (SEnA) requires parties to undergo a conciliation-mediation process to try to resolve the dispute amicably.
Attend Mandatory Conferences
If mediation fails, the case proceeds to the Arbitration Branch of the NLRC. You will receive a Notice of Conference, during which you must present evidence and comply with legal procedures.
Submit Position Papers
Both parties (employee and employer) will file position papers outlining their arguments, legal bases, and documentary evidence. Rebuttal and reply submissions may follow.
Judgment and Remedies
Once the case is submitted for resolution, the Labor Arbiter will issue a Decision. Parties may appeal to the NLRC Commission en banc, and subsequently to the Court of Appeals, and finally to the Supreme Court if necessary.
Alternative: Filing a Civil Case
In the event that the NLRC finds that your position as Chief Operating Officer makes you a corporate officer, you might be advised to file a civil case (or an intra-corporate case if applicable) for breach of contract or unpaid compensation before the proper court. The procedure there involves the regular rules on civil actions, including the filing of a Complaint, service of Summons, the presentation of evidence, and trial.
Points to Consider in Your Specific Scenario

Signed Contract
You have a written contract specifying the PMA. This is a strong piece of evidence demonstrating your right to receive the benefit.
Verbal Cessation
The employer’s abrupt, verbal-only discontinuation of the PMA suggests an absence of due process. In many labor disputes, the lack of proper notice or consultation is a significant factor in the employee’s favor.
Resignation
Resignation does not negate the employer’s legal obligation to pay accrued benefits. As long as you can prove the employer owes you for May through November, you should be entitled to recover that amount subject to the employer’s defenses.
Financial Loss Argument
The employer’s claim of financial distress must be proved with clear evidence such as audited financial statements and other credible documents. If they fail to present convincing proof, the cessation of your allowance may be deemed unjustified.

Conclusion and Recommendations
Given the legal principles of mutuality of contracts, non-diminution of benefits, and the need for written documentation when altering compensation, employees who have lost their contractually guaranteed allowances may have a solid case for recovery. The right to collect accrued compensation survives resignation and remains actionable for a period of three years from the date the allowance should have been paid. The exact forum—whether the NLRC, a civil court, or a specialized commercial court—depends on the classification of the employee and the nature of the dispute.

In all cases, the best practices involve preserving documentary evidence of entitlement, attempting amicable settlement where possible, and, when necessary, pursuing legal action in the appropriate forum. Employers bear the burden of proving that any cessation or reduction of benefits is justified, adequately documented, and made in good faith.

For employees, prompt action is recommended to avoid complications such as the prescriptive period lapsing or the loss of key witnesses and evidence. Seek the assistance of legal counsel at the earliest possible time to clarify issues of law and procedure, to ensure you take the correct legal path, and to present the strongest possible case.

Ultimately, protecting one’s right to promised allowances, like a Performance Mobility Allowance, is both a matter of legal proficiency and strategic approach. With thorough documentation, timely pursuit of claims, and conscientious adherence to the prescribed legal processes, affected employees have a viable route to recovering what they are rightfully due under Philippine law.

Disclaimer: This legal article is provided for informational purposes only and does not constitute formal legal advice. No attorney-client relationship is formed by reading or relying on this content. For specific guidance on your situation, please consult a qualified legal professional.