1. It is crown rot. But it isn't caused by bacteria initially... In your case, it was most likely caused by overwatering and improper gas exchange.
Which brings me to...
2. Your plant is extremely over potted. If I'm not mistaken, the root mass was most likely half the size of the pot the plant was placed in. Orchids are grown differently from other terrestrial potted plants commonly sold in nurseries or garden centers. Instead of giving an orchid's roots plenty of room to grow,
it is the exact opposite; only place the orchid in a pot where the size of the pot will fit the size of the root mass.
If the pot is way too big, the potting media will retain too much moisture and start suffocating the roots. This can kill the roots, which in turn may start making the plant drop its leaves.
3. When watering, don't allow water to get trapped inside the crown.
People selling Phals usually present the orchid grown upright.
That is the incorrect growth orientation for most Phals! This upright growing method is not only
wrong for a large number of Phals, it also potentially causes problems by allowing water to easily get trapped in the crown of a Phal, when
in nature, water travels away from the crown of a Phal when it rains, because a Phal grows either pendulously or perpendicularly off of their perches (these perches are usually trees, sometimes rocks), not vertically.
How do you know I'm telling you the truth about Phals not growing upright?
Please click on these links to see:
Phalaenopsis equestris | Flickr - Photo Sharing!
The only Phal that I know of that can be found growing upright is Phal (Doritis) pulcherrima.
http://a402.idata.over-blog.com/3/75...cherrima_2.jpg
And yes, if you've clicked on the link for Phalaenopsis (Doritis) pulcherrima, and you've seen the photo of it in the wild, you will notice it is growing on rocks - (if you're wondering what kind of rocks; it's a type of limestone). Phalaenopsis (Doritis) pulcherrima is predominantly a lithophyte.
As a fyi, the reason I typed Doritis in parentheses is because some people acknowledge it as Phalaenopsis pulcherrima, and some people acknowledge it as Doritis pulcherrima, but both names describe the same species.