I agree with what Brooke said, and I'd add that I think you may have the stem of your Phal buried a little too deep... I would suggest to do as Brooke said, and also, to remove the top layer of bark, don't worry if you uncover a little bit/parts of the roots, they can be out in the air, but the base of the stem (where the leaves have come from/grown off of -- I'm talking about the portion below the leaves) should not be potted quite as deep as you have it... It's not too too deep, but deeper than I would like, IMHO.
It may be that it has an infection from the area surrounding the stem being kept too moist. Peroxide, Listerine (the original, brown colored one), isopropyl alcohol, or Physan 20, should help fend it off... Just pour them straight out of the bottle, (*except* for the Physan, mix/dilute that according to label instructions), and onto the stem/base of the leaf - just don't let any liquid stay in the crown too long (if you get liquid in the crown, just soak it out with a tissue or paper towel or something. Re-apply every couple days, and keep the area dry otherwise.
If I were at home, I could take a pic of (in my opinion) how high you should have your Phal in its pot, but I'm not near any of my orchids to take pics of them (8 hrs away, atm). Sorry.
Good Luck! Hope your Phal recovers! I don't think it's too bad tho, just keep an eye on it, and keep it disinfected, and dry.