HONDA CARS PHILIPPINES, INC. vs. HONDA CARS TECHNICAL SPECIALIST AND SUPERVISORS UNION PDF

9/20/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 741 9/20/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 741
disputes. 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
G.R. No. 204142. November 19, 2014.*
relation of employer and employee.”

HONDA CARS PHILIPPINES, INC., Same; Same; Same; The Voluntary
petitioner, vs. HONDA CARS Arbitrator has no competence to rule on the
TECHNICAL SPECIALISTS AND taxability of the gas allowance and on the
SUPERVISORS UNION, respondent. propriety of the withholding of tax.—The
Voluntary Arbitrator has no competence to rule
Labor Law; Voluntary Arbitrators; on the taxability of the gas allowance and on
Jurisdiction; The Labor Code vests the the propriety of the withholding of tax. These
Voluntary Arbitrator original and exclusive issues are clearly tax matters, and do not
jurisdiction to hear and decide all unresolved involve labor disputes. To be exact, they
grievances arising from the interpretation or involve tax issues within a labor relations
implementation of the Collective Bargaining setting as they pertain to questions of law on
Agreement (CBA) and those arising from the the application of Section 33(A) of the NIRC.
interpretation or enforcement of company They do not require the application of the Labor
personnel policies.— The Labor Code vests the Code or the interpretation of the MOA and/or
Voluntary Arbitrator original and exclusive company personnel policies. Furthermore, the
jurisdiction to hear and decide all unresolved company and the union cannot agree or
grievances arising from the interpretation compromise on the
or implementation of the Collective
Bargaining Agreement and those arising _______________
from the interpretation or enforcement of
company personnel policies. Upon agreement * SECOND DIVISION.
of the parties, the Voluntary Arbitrator shall 282

also hear and decide all other labor disputes,
including unfair labor practices and bargaining
deadlocks. In short, the Voluntary 282 SUPREME COURT REPORTS
Arbitrator’s jurisdiction is limited to labor ANNOTATED
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Honda Cars Philippines, Inc. vs. Honda in bad faith. On the other hand, if the union
Cars Technical Specialists and disputes the withholding of tax and desires a
Supervisors Union refund of the withheld tax, it should have filed
an administrative claim for refund with the
CIR. Paragraph 2, Section 4 of the NIRC
taxability of the gas allowance. Taxation is
expressly vests the CIR original jurisdiction
the State’s inherent power; its imposition
over refunds of internal revenue taxes, fees or
cannot be subject to the will of the parties.
other charges, penalties imposed in relation
Taxation; Commissioner of Internal thereto, or other tax matters.
Revenue; Jurisdiction; Under paragraph 1,
Same; Withholding Tax; Except in the case
Section 4 of the National Internal Revenue Code
of a minimum wage earner, every employer has
(NIRC), the Commissioner of Internal Revenue
the duty to deduct and withhold upon the
(CIR) shall have the exclusive and original
employee’s wages a tax determined in
jurisdiction to interpret the provisions of the
accordance with the rules and regulations to be
NIRC and other tax laws, subject to review by
prescribed by the Secretary of Finance, upon the
the Secretary of Finance.—Under paragraph 1,
Commissioner of Internal Revenue’s (CIR’s)
Section 4 of the NIRC, the CIR shall have the
recommendation.—Under the withholding tax
exclusive and original jurisdiction to
system, the employer as the withholding agent
interpret the provisions of the NIRC and other
acts as both the government and the taxpayer’s
tax laws, subject to review by the Secretary of
agent. Except in the case of a minimum wage
Finance. Consequently, if the company and/or
earner, every employer has the duty to deduct
the union desire/s to seek clarification of these
and withhold upon the employee’s wages a tax
issues, it/they should have requested for a tax
determined in accordance with the rules and
ruling from the Bureau of Internal Revenue
regulations to be prescribed by the Secretary of
(BIR). Any revocation, modification or reversal
Finance, upon the CIR’s recommendation. As
of the CIR’s ruling shall not be given retroactive
the Government’s agent, the employer collects
application if the revocation, modification or
tax and serves as the payee
reversal will be prejudicial to the taxpayers,
except in the following cases: (a) Where the 283
taxpayer deliberately misstates or omits
material facts from his return or any document
required of him by the BIR; (b) Where the facts VOL. 741, NOVEMBER 19, 2014 283
subsequently gathered by the BIR are Honda Cars Philippines, Inc. vs. Honda
materially different from the facts on which the Cars Technical Specialists and
ruling is based; or (c) Where the taxpayer acted Supervisors Union
PETITION for review on certiorari of the

decision and resolution of the Court of
by fiction of law. As the employee’s agent,
Appeals.
the employer files the necessary income tax
The facts are stated in the opinion of the
return and remits the tax to the Government.
Court.
Same; Same; If the Bureau of Internal De la Rosa & Nograles Law Office for
Revenue (BIR) illegally or erroneously collected petitioner.
tax, the recourse of the taxpayer, and in proper Burkley and Aquino Law Office for
cases, the withholding agent, is against the BIR, respondent.
and not against the withholding agent.—If the
BIR illegally or erroneously collected tax, the
recourse of the taxpayer, and in proper cases, BRION, J.:
the withholding agent, is against the BIR, and
not against the withholding agent. The union’s We resolve the present petition for
cause of action for the refund or non- review on certiorari1 seeking to nullify the
withholding of tax is against the taxing March 30, 2012 decision2 and October 25,
authority, and not against the employer. 2012 resolution3 of the Court of Appeals
Section 229 of the NIRC provides: Sec. 229. (CA) in C.A.-G.R.
Recovery of Tax Erroneously or Illegally
Collected.—No suit or proceeding shall be _______________
maintained in any court for the recovery
of any national internal revenue tax 1 Rollo, pp. 10-31, filed pursuant to Rule 45 of the
hereafter alleged to have been erroneously or Rules of Court.
illegally assessed or collected, or of any penalty 2 Id., at pp. 38-51.
claimed to have been collected without 3 Id., at pp. 53-56.
authority, or of any sum alleged to have been
excessively or in any manner wrongfully 284
collected, until a claim for refund or credit

has been duly filed with the 284 SUPREME COURT REPORTS
Commissioner; but such suit or proceeding ANNOTATED
may be maintained, whether or not such tax,
Honda Cars Philippines, Inc. vs. Honda
penalty, or sum has been paid under protest or
Cars Technical Specialists and
duress.
Supervisors Union

S.P. No. 109297. These rulings were gasoline is not fully consumed, the gasoline
penned by Associate Justice Noel G. Tijam not used may be converted into cash,
and concurred in by Associate Justices subject to whatever tax may be applicable.
Romeo F. Barza and Edwin D. Sorongon. Since the cash conversion is paid in the
monthly payroll as an excess gas
The Factual Antecedents allowance, the company considers the
amount as part of the managers’ and AVPs’
On December 8, 2006, petitioner Honda compensation that is subject to income tax
Cars Philippines, Inc., (company) and on compensation.
respondent Honda Cars Technical Accordingly, the company deducted from
Specialists and Supervisors Union (union), the union members’ salaries the
the exclusive collective bargaining withholding tax corresponding to the
representative of the company’s conversion to cash of their unused gasoline
supervisors and technical specialists, allowance.
entered into a collective bargaining
agreement (CBA) effective April 1, 2006 to _______________
March 31, 2011.4
Prior to April 1, 2005, the union 4 Id., at pp. 103-120.
members were receiving a transportation 5 Id., at pp. 14-16.
allowance of P3,300.00 a month. On
285
September 3, 2005, the company and the
union entered into a Memorandum of
Agreement5 (MOA) converting the VOL. 741, NOVEMBER 19, 2014 285
transportation allowance into a monthly
gasoline allowance starting at 125 liters
effective April 1, 2005. The allowance Supervisors Union
answers for the gasoline consumed by the
union members for official business
purposes and for home to office travel and The union, on the other hand, argued
vice versa. that the gasoline allowance for its
The company claimed that the grant of members is a “negotiated item” under
the gasoline allowance is tied up to a Article XV, Section 15 of the new CBA on
similar company policy for managers and fringe benefits. It thus opposed the
assistant vice presidents (AVPs), which company’s practice of treating the gasoline
provides that in the event the amount of allowance that, when converted into cash,
is considered as compensation income that _______________

is subject to withholding tax.
6 Composed of Jane Peralta Viana, Chairperson
The disagreement between the company
and Arnel V. Lajada and Delia T. Uy, members.
and the union on the matter resulted in a
7 Rollo, pp. 79-85.
grievance which they referred to the CBA
8 Id., at pp. 86-87.
grievance procedure for resolution. As it
remained unsettled there, they submitted 286
the issue to a panel of voluntary
arbitrators as required by the CBA.
286 SUPREME COURT REPORTS
The Voluntary Arbitration’s ANNOTATED
Decision Honda Cars Philippines, Inc. vs. Honda
On February 6, 2009, the Panel of Supervisors Union
Voluntary Arbitrators6 rendered a
decision/award7 declaring that the cash The CA’s Ruling
conversion of the unused gasoline
allowance enjoyed by the members of the The CA Eighth Division denied the
union is a fringe benefit subject to the petition and upheld with modification the
fringe benefit tax, not to income tax. The voluntary arbitration decision. It agreed
panel held that the deductions made by the with the panel’s ruling that the cash
company shall be considered as advances conversion of the unused gasoline
subject to refund in future remittances of allowance is a fringe benefit granted under
withholding taxes. Section 15, Article XV of the CBA on
The company moved for partial “Fringe Benefits.” Accordingly, the CA
reconsideration of the decision, but the held that the benefit is not compensation
panel denied the motion in its June 3, 2009 income subject to withholding tax.
order,8 prompting the company to appeal to This conclusion notwithstanding, the
the CA through a Rule 43 petition for CA clarified that while the gasoline
review. The core issue in this appeal was allowance or the cash conversion of its
whether the cash conversion of the unused unused portion is a fringe benefit, it is “not
gasoline allowance is a fringe benefit necessarily subject to fringe benefit tax.”9
subject to the fringe benefit tax, and not to It explained that Section 33(A) of the
a compensation income subject to National Internal Revenue Code (NIRC) of
withholding tax.
1997 imposed a fringe benefit tax, effective

January 1, 2000 and thereafter, on the
287
grossed up monetary value of fringe benefit
furnished or granted to the employee
(except rank-and-file employees) by the VOL. 741, NOVEMBER 19, 2014 287
employer (unless the fringe benefit is
required by the nature of, or necessary to
the trade, business or profession of the Supervisors Union
employer, or when the fringe benefit is for
the convenience or advantage of the
employer). the cash conversion of the gasoline
According to the CA, “it is undisputed allowance of the union members is a fringe
that the reason behind the grant of the benefit or compensation income, for
gasoline allowance to the union members is taxation purposes.
primarily for the convenience and The company reiterates its position that
advantage of Honda, their employer.”10 It the cash conversion of the union members’
thus declared that the gasoline allowance gasoline allowance is compensation income
or the cash conversion of the unused subject to income tax, and not to a fringe
portion thereof is not subject to fringe benefit tax. It argues that the tax
benefit tax.11 treatment of a benefit extended by the
employer to the employees is governed by
The Petition law and the applicable tax regulations, and
not by the nomenclature or definition
Its motion for reconsideration denied, provided by the parties. The fact that the
the company appeals to this Court to set CBA erroneously classified the gasoline
aside the CA’s dispositions, raising the allowance as a fringe benefit is immaterial
very same issue it brought to the appellate as it is the law — Section 33 of the NIRC
court — whether — that provides for the legal classification
of the benefit.
It adds that there is no basis for the CA
_______________
conclusion that the cash conversion of the
9 Supra note 2 at p. 12, par. 1. unused gasoline allowance redounds to the
10 Id., at p. 13. benefit of management. Common sense
11 Id., at p. 14, dispositive portion. dictates that it is the individual union
members who solely benefit from the cash
conversion of the gasoline allowance as it In its Comment12 dated April 19, 2013,
goes into their compensation income. the union argues for the denial of the
In any event, the company submits that petition for lack of merit. It posits that its
even assuming that the cash conversion of members’ gasoline allowance and its
the unused gasoline allowance is a tax- unused gas equivalent are fringe benefits
exempt fringe benefit and that it erred in under the CBA and the law [Section 33(A)
withholding the income taxes due, still the of NIRC] and is therefore not subject to
union members would have no cause of withholding tax on compensation income.
action against it for the refund of the Moreover, under that law and BIR
amounts withheld from them and remitted Revenue Regulations 2-98, the same
to the Bureau of Internal Revenue (BIR). benefit is not subject to the fringe benefit
Citing Section 204 of the NIRC, the tax because it is required by the nature of,
company contends that an action for the or necessary to the trade or business of the
refund of an erroneous withholding and company.
payment of taxes should be in the nature of The union further submits that in 2007,
a tax refund claim with the BIR. It further the BIR ruled that fixed and/or
contends that when it withheld the income precomputed transportation allowance
tax due from the cash conversion of the given to supervisory employees in pursuit
unused gasoline allowance of the union of the business of the company, shall not
members, it was simply acting as an agent be taxable as compensation or fringe
of the government for the collection and benefits of the employees.13 It
payment of taxes due from the members. maintains that the gasoline allowance is
already precomputed by the company as
288
sufficient to cover the gasoline
consumption of the supervisors whenever
288 SUPREME COURT REPORTS they perform work for the company. The
ANNOTATED fact that the company allowed its members
to convert it to cash when not fully
consumed is no longer their problem
Supervisors Union because the benefit was already given.

Our Ruling
The Union’s Position
We partly grant the petition.

The Voluntary Arbitrator has no association or representation of persons in

jurisdiction to settle tax matters negotiating, fixing, maintaining, changing,
or arranging the terms and conditions of
The Labor Code vests the Voluntary employment, regardless of whether the
Arbitrator original and exclusive disputants stand in the proximate relation
jurisdiction to hear and decide all of employer and employee.”16
unresolved grievances arising from the The issues raised before the Panel of
interpretation or implemen- 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
12 Rollo, pp. 325-330. compensation; and (2) whether the
13 BIR Ruling DA-233-2007 dated April 17, 2007. company wrongfully withheld income tax
on the converted gas allowance.
289
The Voluntary Arbitrator has no
competence to rule on the taxability of the
VOL. 741, NOVEMBER 19, 2014 289 gas allowance and on the propriety of the
withholding of tax. These issues are
clearly tax matters, and do not involve
Supervisors Union labor disputes. To be exact, they involve
tax issues within a labor relations setting
as they pertain to questions of law on the
tation of the Collective Bargaining application of Section 33(A) of the NIRC.
Agreement and those arising from the They do not require the application of the
interpretation or enforcement of Labor Code or the interpretation of the
company personnel policies.14 Upon MOA and/or company personnel policies.
agreement of the parties, the Voluntary Furthermore, the company and the union
Arbitrator shall also hear and decide all cannot agree or compromise on the
other labor disputes, including unfair labor taxability of the gas allowance. Taxation is
practices and bargaining deadlocks.15 the State’s inherent power; its imposition
In short, the Voluntary Arbitrator’s cannot be subject to the will of the parties.
jurisdiction is limited to labor
disputes. Labor dispute means “any
_______________
controversy or matter concerning terms
and conditions of employment or the 14 Labor Code, Article 261.
15 Labor Code, Article 262. (c) Where the taxpayer acted in bad faith.18
16 Labor Code, Article 212(l).

290 On the other hand, if the union disputes
the withholding of tax and desires a refund
of the withheld tax, it should have
290 SUPREME COURT REPORTS
ANNOTATED
_______________
Cars Technical Specialists and 17 Section 1 of Revenue Memorandum Order
Supervisors Union defines “tax ruling” as follows:
Sec. 1. Tax Rulings
Under paragraph 1, Section 4 of the Tax rulings are official position of the Bureau on
NIRC, the CIR shall have the exclusive inquiries of taxpayers, who request clarification on
and original jurisdiction to interpret certain provisions of the National Internal Revenue
the provisions of the NIRC and other tax Code (NIRC), other tax laws, or their implementing
laws, subject to review by the Secretary of regulations, usually for the purpose of seeking tax
Finance. Consequently, if the company exemptions. Rulings are based on particular facts and
and/or the union desire/s to seek circumstances presented and are interpretations of
clarification of these issues, it/they should the law at a specific point in time.
have requested for a tax ruling17 from the The Bureau also issues rulings to answer written
Bureau of Internal Revenue (BIR). Any questions of individuals and juridical entities
revocation, modification or reversal of the regarding their status as taxpayers and the effects of
CIR’s ruling shall not be given retroactive their transactions for taxation purposes.
application if the revocation, modification 18 National Internal Revenue Code, Article 246.
or reversal will be prejudicial to the
taxpayers, except in the following cases: 291
(a) Where the taxpayer deliberately

VOL. 741, NOVEMBER 19, 2014 291
misstates or omits material facts from his
return or any document required of him by the Honda Cars Philippines, Inc. vs. Honda
BIR; Cars Technical Specialists and
(b) Where the facts subsequently gathered by Supervisors Union
the BIR are materially different from the facts
on which the ruling is based; or

filed an administrative claim for refund the employee’s right by the mere act of
with the CIR. Paragraph 2, Section 4 of the withholding the tax that may be due the
NIRC expressly vests the CIR original government.22
jurisdiction over refunds of internal Moreover, the NIRC only holds the
revenue taxes, fees or other charges, withholding agent personally liable for the
penalties imposed in relation thereto, or tax arising from the breach of his legal
other tax matters.
_______________
The union has no cause of action
against the company 19 National Internal Revenue Code, Section 79(A).
20 Commissioner of Internal Revenue v. Procter &
Under the withholding tax system, the Gamble Philippine Manufacturing Corp., No. L-
employer as the withholding agent acts as 66838, December 2, 1991, 204 SCRA 377.
both the government and the taxpayer’s 21 Id.
agent. Except in the case of a minimum 22 Heirs of Magdaleno Ypon v. Ricaforte, G.R. No.
wage earner, every employer has the duty 198680, July 8, 2013, 700 SCRA 778.
to deduct and withhold upon the
employee’s wages a tax determined in 292
accordance with the rules and regulations

to be prescribed by the Secretary of 292 SUPREME COURT REPORTS
Finance, upon the CIR’s ANNOTATED
19
recommendation. As the Government’s
agent, the employer collects tax and serves
as the payee by fiction of law.20 As the
Supervisors Union
employee’s agent, the employer files the
necessary income tax return and remits
the tax to the Government.21 duty to withhold, as distinguished from
Based on these considerations, we his duty to pay tax.23 Under Section 79(B)
hold that the union has no cause of of the NIRC, if the tax required to be
action against the company. The deducted and withheld is not collected from
company merely performed its statutory the employer, the employer shall not be
duty to withhold tax based on its relieved from liability for any penalty or
interpretation of the NIRC, albeit that addition to the unwithheld tax.
interpretation may later be found to be Thus, if the BIR illegally or erroneously
erroneous. The employer did not violate collected tax, the recourse of the taxpayer,
and in proper cases, the withholding agent, resolution of the Panel of Voluntary
is against the BIR, and not against the Arbitrators. No costs.
withholding agent.24 The union’s cause of
action for the refund or non-withholding of _______________
tax is against the taxing authority, and not
against the employer. Section 229 of the 23 Rizal Commercial Banking Corporation v.
NIRC provides: Commissioner of Internal Revenue, G.R. No. 170257,
September 7, 2011, 657 SCRA 70.
Sec. 229. Recovery of Tax Erroneously 24 Commissioner of Internal Revenue v. Smart
or Illegally Collected.—No suit or Communication, Inc., G.R. Nos. 179045-46, August
proceeding shall be maintained in any
25, 2010, 629 SCRA 342.
court for the recovery of any national
internal revenue tax hereafter alleged to 293
have been erroneously or illegally assessed or
collected, or of any penalty claimed to have been
VOL. 741, NOVEMBER 19, 2014 293
collected without authority, or of any sum
alleged to have been excessively or in any Honda Cars Philippines, Inc. vs. Honda
manner wrongfully collected, until a claim for Cars Technical Specialists and
refund or credit has been duly filed with Supervisors Union
the Commissioner; but such suit or
proceeding may be maintained, whether or not SO ORDERED.
such tax, penalty, or sum has been paid under
protest or duress. Carpio (Chairperson), Del Castillo,
Mendoza and Leonen, JJ., concur.

WHEREFORE, premises considered, Petition partly granted, judgment and
we PARTLY GRANT the petition for resolution reversed and set aside.
review on certiorari filed by Honda Cars
Philippines, Inc. We REVERSE and SET Notes.—A decision or award of a
ASIDE the March 30, 2012 decision and voluntary arbitrator is appealable to the
the October 25, 2012 resolution of the Court of Appeals (CA) via a petition for
Court of Appeals in C.A.-G.R. S.P. No. review under Rule 43. (Royal Plant
109297. We declare NULL and VOID the Workers Union vs. Coca-Cola Bottlers
February 6, 2009 decision and June 3, 2009 Philippines, Inc.-Cebu Plant, 696 SCRA
357 [2013])

9/20/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 741
The fact is undeniable that by referring

the case to the Secretary of Labor,
Conciliator-Mediator Aglibut conceded that
the case fell within the coverage of Article
263 of the Labor Code; the impending
strike in Philtranco, a public
transportation company whose business is
imbued with public interest, required that
the Secretary of Labor assume jurisdiction
over the case. (Philtranco Service
Enterprises, Inc. vs. Philtranco Workers
Union-Association of Genuine Labor
Organizations [PWU-AGLO], 717 SCRA
340 [2014])
——o0o——
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9/20/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 741 9/20/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 741

disputes. Labor dispute means “any

of the parties, the Voluntary Arbitrator shall 282

PETITION for review on certiorari of the

collected, until a claim for refund or credit

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is considered as compensation income that _______________

1997 imposed a fringe benefit tax, effective

The Voluntary Arbitrator has no association or representation of persons in

(a) Where the taxpayer deliberately

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accordance with the rules and regulations

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The fact is undeniable that by referring

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