Honda Car Phils vs. Honda Cars Technical Specialist & Supervisors Union
Honda Car Phils vs. Honda Cars Technical Specialist & Supervisors Union
Facts:
On 2006, petitioner Honda Cars Philippines, Inc., (company) and respondent Honda Cars
Technical Specialists and Supervisory Union, entered into a collective bargaining agreement.
Prior to April 1, 2005, the union members were receiving a transportation allowance of 3,300.00
a month. On September 3, 2005, the company and the union entered into a Memorandum of
Agreement5 (MOA) converting the transportation allowance into a monthly gasoline allowance. It was
provided, that in the event the amount of gasoline is not fully consumed, the gasoline not used may be
converted into cash, subject to whatever tax may be applicable. Since the cash conversion is paid in the
monthly payroll as an excess gas allowance, the company considers the amount as part of the managers’
and AVPs’ compensation that is subject to income tax on compensation.
The union, on the other hand, argued that the gasoline allowance for its members is a "negotiated
item" under their CBA on fringe benefits.
The disagreement between the company and the union on the matter resulted in a grievance
which they referred to the CBA grievance procedure for resolution. As it remained unsettled there, they
submitted the issue to a panel of voluntary arbitrators as required by the CBA.
The Panel of Voluntary Arbitrators declared that the cash conversion of the unused gasoline
allowance enjoyed by the members of the union is a fringe benefit subject to the fringe benefit tax, not to
income tax.
Issue:
WON the Voluntary Arbitrator has jurisdiction to settle tax matters
Ruling:
No. The Voluntary Arbitrator has no competence to rule on the taxability of the gas allowance
and on the propriety of the withholding of tax. These issues are clearly tax matters, and do not involve
labor disputes. To be exact, they involve tax issues within a labor relations setting as they pertain to
questions of law on the application of Section 33 (A) of the NIRC. They do not require the application of
the Labor Code or the interpretation of the MOA and/or company personnel policies. Furthermore, the
company and the union cannot agree or compromise on the taxability of the gas allowance. Taxation is
the State’s inherent power; its imposition cannot be subject to the will of the parties.
Under paragraph 1, Section 4 of the NIRC, the CIR shall have the exclusive and original
jurisdiction to interpret the provisions of the NIRC and other tax laws, subject to review by the Secretary
of Finance. Consequently, if the company and/or the union desire/s to seek clarification of these issues,
it/they should have requested for a tax ruling from the Bureau of Internal Revenue (BIR). Any revocation,
modification or reversal of the CIR’s ruling shall not be given retroactive application if the revocation,
modification or reversal will be prejudicial to the taxpayers, except in the following cases:
(a) Where the taxpayer deliberately misstates or omits material facts from his return or any
document required of him by the BIR;
(b) Where the facts subsequently gathered by the BIR are materially different from the facts on
which the ruling is based; or
(c) Where the taxpayer acted in bad faith.18
Notes:
Labor dispute means "any controversy or matter concerning terms and conditions of employment
or the association or representation of persons in negotiating, fixing, maintaining, changing, or arranging
the terms and conditions of employment, regardless of whether the disputants stand in the proximate
relation of employer and employee."16
The issues raised before the Panel of Voluntary Arbitrators are: (1) whether the cash conversion
of the gasoline allowance shall be subject to fringe benefit tax or the graduated income tax rate on
compensation; and (2) whether the company wrongfully withheld income tax on the converted gas
allowance.