​Honda Cars v. Honda Cars Technical Specialists and Supervisors, November 19, 2014

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
WON the Voluntary Arbitrator has jurisdiction to settle tax matters?
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.