G.R. No. 204142 , November 19, 2014
HONDA CARS PHILIPPINES, INC., Petitioner, vs. HONDA CARS TECHNICAL SPECIALIST AND SUPERVISORS UNION, Respondent.

FACTS

Petitioner Honda Cars Philippines, Inc. (company) and respondent Honda Cars Technical Specialists and Supervisory Union (union) entered into a Collective Bargaining Agreement (CBA) effective April 1, 2006 to March 31, 2011. Prior to April 1, 2005, union members received a monthly transportation allowance of ₱3,300. On September 3, 2005, the parties executed a Memorandum of Agreement converting this allowance into a monthly gasoline allowance of 125 liters effective April 1, 2005, for official business and home-to-office travel. The company’s policy allowed for the cash conversion of any unused gasoline, which it treated as part of compensation subject to income tax withholding. The union opposed this, arguing the gasoline allowance was a “negotiated item” and a fringe benefit under the CBA. The unresolved grievance was submitted to a Panel of Voluntary Arbitrators, which ruled that the cash conversion of the unused gasoline allowance was a fringe benefit subject to fringe benefit tax, not income tax, and ordered the deductions treated as advances for refund. The company’s motion for reconsideration was denied. The Court of Appeals upheld the Voluntary Arbitrators’ ruling that the benefit was a fringe benefit under the CBA but modified it by clarifying that the gasoline allowance or its cash conversion was “not necessarily subject to fringe benefit tax” because it was primarily for the convenience and advantage of the employer. The company’s motion for reconsideration was denied.

ISSUE

Whether the Panel of Voluntary Arbitrators had jurisdiction to rule on the taxability (i.e., whether subject to fringe benefit tax or income tax) of the cash conversion of the unused gasoline allowance and the propriety of the withholding of tax.

RULING

The Supreme Court PARTLY GRANTED the petition, REVERSED and SET ASIDE the Court of Appeals’ decision and resolution, and declared NULL and VOID the decision and resolution of the Panel of Voluntary Arbitrators. The Court ruled that the Voluntary Arbitrator has no jurisdiction to settle tax matters. The issues of whether the cash conversion is subject to fringe benefit tax or income tax, and whether the company wrongfully withheld tax, are tax matters, not labor disputes. The Voluntary Arbitrator’s jurisdiction under the Labor Code is limited to labor disputes concerning terms and conditions of employment or representation. Taxability is governed by law (the National Internal Revenue Code) and cannot be subject to the parties’ agreement or compromise. The Commissioner of Internal Revenue has the exclusive and original jurisdiction to interpret tax laws and rule on refund claims. If the parties sought clarification, they should have requested a tax ruling from the Bureau of Internal Revenue. If the union desired a refund of withheld taxes, it should have filed an administrative claim for refund with the Commissioner. The employer, as a withholding agent, acts as an agent of the government in collecting taxes, and the union has no cause of action against the company for the refund of withheld amounts remitted to the BIR.