By Mark Joseph M. Sanchez
THE court order halting Metro Manila’s latest minimum wage increase raises questions about how far judges can intervene in wage-setting and whether the country’s existing system gives enough weight to workers’ needs alongside employers’ ability to absorb higher labor costs.
The Pasig City Regional Trial Court (RTC) Branch 152 on Aug. 13 issued a writ of preliminary injunction blocking the first P60 increase under Wage Order No. NCR-27, which took effect on July 25. A second P25 increase is scheduled for January 2027. The court set a P10-billion injunction bond.
The ruling followed a 20-day temporary restraining order that was due to expire on Aug. 13. The court said the case raised a legitimate question over how Article 124 of the Labor Code should be applied, particularly in balancing workers’ needs with management’s capacity to pay.
At issue is whether the regional wage board had enough information to determine employers’ ability to absorb the increase. The court found that the board relied largely on information voluntarily submitted by stakeholders rather than employer-specific financial data.
Labor groups and analysts said that standard could make wage-setting impractical and risk shifting too much weight toward potential business losses.
Jose Sonny G. Matula, labor lawyer and president of the Federation of Free Workers (FFW), said Article 124 does not require employers’ capacity to pay to take precedence over workers’ needs, the cost of living and other considerations.
“FFW respectfully disagrees. The sky will not fall, and the claim that it will lead to job losses is speculative,” Mr. Matula said in a Viber message in mixed English and Filipino.
Article 124 directs wage boards to consider workers’ needs and their families, the cost of living, fair return on capital, employers’ capacity to pay, employment generation and equitable distribution of income and wealth, among other factors.
The P60 increase represents an 8.63% rise from the previous P695 minimum wage.
“The irony is that the injunction seeks to protect employers from a predicted economic injury while imposing an immediate and certain economic injury upon workers,” Mr. Matula said. “The feared unemployment is prospective; the missing P60 is already absent from the worker’s pocket.”
The court acknowledged the pressure on workers, saying it was “not indifferent to the plight of the work force, particularly the minimum wage earners” as prices of commodities and utilities rise.
But it said it was also weighing businesses’ constitutional right to reasonable returns, expansion and growth.
The court cited testimony from the wage board that some terminations resulted from mandated wage increases, although these were described as “very minimal” or less than 1%.
“Losing one’s employment is graver and irreversible than the temporary inability to receive additional wages,” the court said.
Josua T. Mata, secretary-general of labor group Sentro ng mga Nagkakaisa at Progresibong Manggagawa, said the court’s concern over employment appeared to go beyond what the company challenging the wage order had established.
Readycon Trading and Construction Corp. had cited additional costs and losses from the wage increase but did not claim that the order would force it to lay off workers, Mr. Mata said.
“The ‘less than 1%’ figure on employee terminations was not a claim made by Readycon. It came from the head of the NCR Wage Board during examination,” he said.
Mr. Mata also pointed to Section 6 of Republic Act No. 6727, or the Wage Rationalization Act, which provides that prescribed wage increases in construction contracts should be borne by principals or clients of contractors. Readycon has undertaken projects for the Department of Public Works and Highways, according to publicly available agency records.
The court acknowledged the provision but said respondents had not shown that the cost-passing mechanism is actually observed across the industry. Readycon’s witness, it noted, said the company could not lower its bids because it had to account for the additional wage costs.
The dispute has also raised questions over how wage boards should measure employers’ ability to pay.
Mr. Mata said requiring wage boards to obtain financial information from hundreds of thousands of businesses would make their work “next to impossible.”
Jose Enrique “Sonny” A. Africa, executive director of think tank IBON Foundation, said the board could instead use representative statistical data to assess businesses’ capacity to absorb wage increases.
“The ASPBI is a good starting point for estimating employer capacity to pay and economic capacity to absorb wage increases,” he said, referring to the Philippine Statistics Authority’s Annual Survey of Philippine Business and Industry.
IBON estimated that the full P85 increase would amount to slightly more than 4% of establishment profits on average, while Metro Manila establishments would still have about P1.4 trillion in profits, Mr. Africa said.
“Representative, timely and reliable statistical data is needed, not individualized firm-by-firm financial examination,” he said.
‘MOTIONS FOR EXTENSION’Mr. Africa said the case exposes a broader weakness in the wage-setting system, which he said gives insufficient weight to workers’ needs.
The legal question could be even more consequential because Article 126 of the Labor Code states that “no preliminary or permanent injunction or temporary restraining order may be issued by any court, tribunal or other entity” against proceedings before the National Wages and Productivity Commission or regional wage boards.
The RTC said it was not “recklessly transgressing Article 126,” describing the injunction instead as “preservative relief” meant to protect both labor and management while the dispute is resolved.
Mr. Matula disagreed, saying the characterization does not itself establish judicial authority.
“Calling an injunction ‘preservative’ cannot create jurisdiction. A court either has the legal authority to issue it or it does not,” he said.
He said the existing framework gives regional wage boards authority to set minimum wages, establishes standards for wage fixing and provides an appeals process through the National Wages and Productivity Commission (NWPC).
“What we now need from the Supreme Court is authoritative guidance on the boundary: Where does the specialized authority of the Wage Boards and NWPC end, and where does ordinary judicial intervention properly begin?” he said.
A definitive ruling would matter beyond Metro Manila because wage orders in other regions could face similar legal challenges, potentially complicating the country’s decentralized wage-setting system.
Mr. Mata called for a national minimum wage complemented by industry-level wage boards and collective bargaining. Mr. Africa said wage-setting should also be linked more closely to productivity growth and broader economic development.
Mr. Matula said the immediate issue remains the money withheld from minimum-wage workers.
“While lawyers debate jurisdiction and economic theory, the worker loses P60 for every compensable day the increase remains restrained,” he said.
“Courts have motions for extension. Rice, jeepney fare, medicine and the electric bill unfortunately do not.”