· . 
SIXTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
) 
SENATE 
Introduced by Senator Ralph G. Recto 
Explanatory Note 
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JUL -1 P'i :2.0 
Transportation is the activity of moving people or things from one place to another. 1 It is 
an integral part of our civilization. It enables us to travel long distances in comfort and helps us 
drive our economy because despite the creation of the information highway, much of trade still 
moves on motorized wheels. 
During the Spanish colonial period, carabao and horse-drawn carts were used as primary 
modes of transportation. After World War II, four-wheeled vehicles began plrng the streets, 
offering a more convenient and cheaper mode of transportation in Metro Manila. A decade since 
the new millennium, the number of motor vehicles had doubled, from 3.7 million to 7.4 million.3 
There is now one motor vehicle for every 13 Filipinos.4 
More than 500,000 diesel-fueled jeepneys, buses, trucks and other vehicles in Metro 
Manila are responsible for about seventy percent (70%) of the total soot or black carbon 
emissions in the Philippines.s Emission from transportation accounts for a big chunk of 
particulate matter, carbon monoxide, nitrogen oxides and volatile organic compounds (VOC).6 
According to the Asian Development Bank (ADB), the energy use in non-Organisation for 
Economic Co-operation and Development (OECD) Asia such as the Philippines is expected to 
increase 118% by 2035, and harmful greenhouse gas emissions from the transport sector are 
projected to increase more than 200% worldwide by 2030.7 
Although the transport sector has a significant contribution to the Philippines' economic 
growth, it also poses a threat to our quality of life as it greatly impacts on our national health, 
energy, security and environment. 
Air pollution primarily; .causes respiratory diseases including acute and chronic bronchitis, 
acute lower respiratory infection (ALRI) and pneumonia, and cardiovascular diseases. A World Bank 
study conducted in 2006 foulld that the impact on our economy from treating the reported air 
1 Macmillan Dictionary. http://www.macmillandictionary.comlus/dictionary/american/transportation. 
(Accessed 5 June 2013). 
. 
2 The Philippines Heritage. http://philippinesheritage.phlfi!er/Transportation-hislorv-of-the-Philippines.pdf 
(Accessed 5 June 2013). 
3 Sheila Flor D. Javier, National Center for Transportation Studies. "Philippine Transportation Statistics 2012" 
4 Jose Ramon G. Albert, Ph.D, National Statistical Coordination Board. "Understanding Changes in the 
Philippine Population." November 16, 2012. 
http://www.nscb.gov.phlbeyondthenumbers/2012111162012 jrga popn.asp (Accessed on May 22,2013). 
5 Jerry E. Esplanada. Philippine Daily Inquirer. "Diesel-powered Motor Vehicles Blamed for Most of PH's Air 
Pollution." 05 February 2013. http://newsinfo.inguirer.netl353117/diesel-powered-motor-vehic1es-blamed-for-
most-of-phs-air-pollution (Acce.'ised on June 4,2013) 
6 UP National Center for Transportation Studies. "Formulation of a National Environmentally Sustainable 
Transport Strategy for the Philippines. May 2011. 
7 Asian Development Bank. "E-Trikes Driving Change." http://www.adb.org/projects/43207-012lbackground. 
(Accessed 3 June 2013) 


pollution-related diseases is ':estimated at PHP962 million per year while lost income due to air 
pollution-related deaths amount to P6.7 billion per year. 8 
Our economy has been adversely affected by crude oil prices for the past decades. The 
Philippines being highly dependent on petroleum and petroleum products spent P72l.8 billion9 
on 123.5 million barrels of imported oil in 2012.10 
By promoting Clean Energy Vehicles (CEV s), we can temper our dependence on 
petroleum and increase fuel savings. The riding public benefits too as the amount of fares will no 
longer be dictated by the volatility of fuel prices. At the same time, pollution-related diseases and 
productivity losses will be minimized. 
The Philippines, being highly vulnerable to climate change risks and natural hazards, 
needs to seriously address the threat it poses to our survival as it triggers more intense tropical 
cyclones, drastic changes in rainfull patterns, sea level rise, and intense increase in temperatures. 
All these factors contribute to serious impacts on our natural ecosystems-on our river basins, 
coastal and marine systems, and their biodiversity-then cascading to impacts on our food 
security, water resources, human health, public infrastructure, energy, and human settlementsY 
Alarmingly, the Germanwatch stated in its study that the Philippines ranked fifth among 183 
countries that have experienced extreme weather events, such as storm and floods in 2011 Y It 
was also in 2011, when the , Philippines endured a harsh typhoon season and got severely hit by 
typhoon Sendong (Washi) with 7,961 casualties, 52,435 damaged houses, and an estimated Pl.7 
billion damages to infrastructure and agriculture. 13 
The State recognizes its role in addressing the detrimental effects on the environment, 
safeguarding the welfare, and protecting the health of the people by improving air quality and by 
reducing the impact of greenhouse gas effects emitted from man-made sources such as vehicles 
operating on fossil fuels. Consequently, on January 30, 2009, the President of the Philippines 
issued Administrative Order No. 254 which mandated the Department of Transport and 
Communications (DOTC) to lead the formulation of an Environmentally Sustainable Transport 
(EST) strategy.14 EST can only be achieved if every Filipino will take responsibility and get 
involved. The Congress takes an important role by crafting a bill that will facilitate the 
implementation of the National EST strategy. 
As the title of the measure suggests, fiscal and non-fiscal incentives shall be granted to 
the importation and manufacture of electric, hybrid and other vehicles using clean energy sources 
such as, but not limited to, solar, wind, hydrogen fuel cell, methane, compressed natural gas or 
liquefied natural gas and liquefied petroleum gas. In addition to this, it will also exempt the 
owners of CEVs from the payment of the Motor Vehicle User's Charge or the MVUC upon 
registration of their vehicles. Likewise, non-fiscal incentives shall be granted under this bill. 
The bill's primary Objective is to deploy more CEVs such as E-jeepneys, e-tricycles, LPG 
taxis, CNG-powered buses a!ld hybrid cars on the road in order to abate the level of air pollution 
in urban areas all over the country which can be translated to hundreds of thousands of tons of 
carbon dioxide emission eliminated. 
8 The World Bank Group. Philippines Euvironment Monitor 2006. 
9 Indexmundi. ht!p:llwww.indexmundi.comlcommoditiesl?commoditv=crude-
oil&months=300&currencv=php. (Accessed on 30 May 2013) 
10 Indexmundi. www.indexmundi.comig/g.aspx?v=93&c=rp&l=en. (Accessed on 30 May 2013.) 
11 Climate Change Commission. "National Framework Strategy on Climate Change 2010-2022." 28 April 
2010. 
12 Sven Harmeling and David Eckstein, Germanwatch. "Global Climate Risk Index 2013: Who Suffers Most 
From Extreme Weather Events? Weather-Related Loss Events in 2011 and 1992 to 2011." 
13 National Disaster Risk Reduction and management Council. NDRRMC Update: Situation Report No. 47 re 
Effects of Tropical Storm Sendong (Washi) and Status of Emergency Response Operations." 26 January 2012. 
14 University of the Philippines-National Ceuter for Transportation Studies (NCTS). Fiual Report: Sustainable 
Transport Strategy. May 20 II. 


Moreover, the use of CEVs for public and private transport will encourage technology 
innovation, create green jobs, accelerate the deploynlent of clean energy vehicles, increase fuel 
savings, promote better air quality and provide solutions to climate change. 
The bill attaches sunset provisions on when the incentives expire. Any manufactmer or 
assembler of CEVs has nine (9) years to avail of the incentives under this bill, thereby allowing 
the industry enough time to grow and develop. 
Member-countries of the Organisation for Economic Co-operation and Development 
(OECD) have allotted millions of dollars to support technologies to attain EST. They also 
provide incentives such as tax credits and exemptions as well as subsidies and policy support for 
all new energy vehicles. 
Even if only a fracti9n' of the funds are spent here or a shadow of the policies will be 
institutionalized, these will be enough to establish a vibrant domestic clean energy industry th1at 
will reel in investors to setup shop and create jobs here. Our government should not lose this 
opportunity like what happened in the past wherein an internationally competitive auto industry 
for the Philippines failed to take off and make us the ASEAN hub of many international 
automakers like Thailand due to lack of economies of scale, limited supply base and high cost of 
production.ls The growth of the clean energy industry can spur our country's targeted inclusive 
growth to take the lead in expanding its allied industries and capture new jobs that would 
otherwise go to our competit9rs. 
The passage of this bill supports the Fueling Sustainable Transport Program (FSTP) of 
the Department of Energy (DOE), which is an initiative on diversif'ying fuels for transport use in 
the Philippines. The program seeks to convert public and private vehicles from diesel and 
gasoline to low- and zero-emission vehicles to address the impact of increasing fuel prices and 
reduce carbon footprint on the transport sector. 16 The DOE has recently issued an Invitation for 
Bids for the supply and delivery of the first batch of 3,000 units of e-trikes which represents a 
fraction of the planned 100,000 e-trikes under the government's $500 million electric vehicle 
project. Converting the power source of 100,000 tricycles from gas engine to lithium battery 
will result in fuel savings of around P41 billion and will prevent an estimated 260,000 tons of 
carbon dioxide emissions annually. And this is just equivalent to three percent (3%) of the 
national tricycle fleet. l7 Retn,)fitting the rest of public utility vehicles (PUVs) like jeepneys and 
buses can have a tremendous impact on clean environment. If the manufacturers can avail of the 
fiscal incentives to bring down their input costs, they can offer more competitive price of electric 
vehicles as compared to their existing gasoline-fed counterparts. 
With this Bill, every Filipino citizen can take responsibility in improving the nation's 
environment, health and economy. 
In view of the foregoing, immediate approval of this bill is eame 
IS Philippine Institute for Development Studies. "Globalization, competition, and international 
production networks: policy directions for the Philippine automotive industrY." No. 2011-13 (June 2011). 
http://dirp4.pids.gov.ph/ris/pn/pidspnl113.pdf (Accessed June 4,2013). 
16 Department of Energy. Press'Release. "Fueling sustainable transport program to mitigate fuel price 
Increases in the future." 6 Aprfl 2011. httu:llwww.gov.ph/201.1/04/06/fueling-sustainable-transport-
program-to-mitigate-fuel-pricechicreases-in-the-futurel (Accessed on June 4, 2013) 
17 Amy R. Remo. Philippine Daily Inquirer. "DOE Seeks Supply Offers for E-Trikes." \3 May 20\3. 
http://business.inquirer.net/12l625/ doe-seeks-supply-offers-for-e-trikes 


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SIXTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
) 
'13 
JUL -1 1'5 :2:0 
SENATE 
S. No. 255 
Introduced by Senator Ralph G. Recto 
AN ACT 
PROMOTING ENVIRONMENTALLY SUSTAINABLE TRANSPORT BY PROVIDING 
INCENTIVES FOR THE MANUFACTURE, ASSEMBLY, CONVERSION AND 
IMPORTATION OF ELECTRIC, 
HYBRID 
AND 
OTHER CLEAN ENERGY 
VEHICLES, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representative of the Philippines in Congress 
assembled: 
1 
SECTION 1. Titlc. - This Act shall be known as the "Electric, Hybrid and Other Clean 
2 
Energy Vehicles Incentives Act of2013". 
3 
SEC. 2. Declaration of Policy. - It is the policy of the State to safeguard life and 
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environment by encouraging the use of clean energy sources for vehicles intended for public and 
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private use. To protect the well-being and promote the economic condition of the people as well 
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as to promote energy independence and security in the midst of development and innovation in 
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technology, the following ate hereby dedated: 
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A) It is the policy of the State to protect and advance the right of the people to a balanced 
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and healthful ecology in. accord with the rhythm and harmony in nature. The State shall 
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recognize and address the detrimental effects on the environment, safeguard the welfare, and 
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protect the health of the people by improving air quality and by reducing the impact of 
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greenhouse gas effects emitted from man-made sources such as vehicles operating on fossil 
13 
fuels. 
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8) The State supports the need to promote the development of new technology to 
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accelerate social progress and promote human development. The use of clean energy sources on 
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vehicles intended for public and private use is encouraged to promote innovation, energy 
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efficiency, security and conservation, and to speed-up the deployment of cleaner technology. 
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C) The State recognizes the indispensable role of the private sector, encourages private 
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enterprise, and provides incentives to needed investments. To accelerate economic growth and 
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generate employment, the ·state shaH provide incentives to private enterprises and individuals 
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engaged in the manufacture, assembly, conversion, and importation of electric, hybrid and other 
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clean energy vehicles. 
23 
SEC. 3. Definition afTerms. As used herein, the following shall mean: 
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· , 
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(a) Electric Vehicle (EV) shall refer to any vehicle that uses electric motors solely for 
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propulsion. 
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(b) Hybrid Vehicle (HV) shall refer to any vehicle that combines the technologies of 
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using internal combustion engine (ICE) with a battery-powered electric motor to gain advantages 
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of both propulsion systems .. 
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(c) Other Clean Energy Vehicle (CEV) shall refer to any vehicle using clean energy 
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sources such as but not limited to: solar, wind, hydrogen fuel cell, compressed natural gas (CNG) 
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or liquefied natural gas (LNG), methane and liquefied petroleum gas (LPG), other than 
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conventional sources of energy like petroleum and gasoline for propulsion. 
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(d) Manufacturer or Assembler shall mean any individual, partnership, corporation or 
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other entity engaged in the manufacture, assembly and conversion of electric, hybrid and other 
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clean energy vehicles incorporated, organized and existing under Philippine laws. 
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(e) Importer shall mean any individual, partnership, corporation or other entity engaged 
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in the importation of completely built units (CBUs) of electric, hybrid and other clean energy 
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vehicles incorporated, organized and existing under Philippine laws. 
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SEC. 4. Coverage. - This Act shall cover electric, hybrid and other clean energy vehicles 
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but shall not include vehicles powered by gasoline, petroleum, bio-diesel and bio-ethanol. 
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SEC. 5. Incentives to Manufacturers or Assemblers. - The provision of any special or 
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general law to the contrary notwithstanding, the manufacture or assembly of completely 
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knocked-down (CKD) parts. of electric, hybrid and other clean energy vehicles, including the 
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conversion of vehicles into electric, hybrid and other clean energy vehicles, shall be exempt from 
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the payment of excise taxes and duties for nine (9) years from the effectivity of this Act. 
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The imposition of the Value Added Tax (VAT) for the purchase and importation of raw 
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materials, spare parts, components and capital equipment used in the manufacture or assembly of 
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electric, hybrid and other clean energy vehicles shall be suspended for nine (9) years from the 
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effectivity of this Act. 
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SEC. 6. Incentives to Importers. - The provision of any special or general law to the 
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contrary notwithstanding, the importation of completely built units (CBUs) of electric, hybrid 
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and other clean energy vehicles shall be exempt from the payment of excise taxes and duties for 
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nine (9) years from the effectivity of this Act. 
31 
SEC. 7. Exemption from the Payment of Motor Vehicle User's Charge (MVUC). -
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Electric, hybrid and other clean energy vehicles shall be exempt from the payment of the Motor 
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Vehicle User's Charge (MVUC) imposed by the Land Transportation Office (L TO) und'er 
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Republic Act No. 8794, otherwise known as "Motor Vehicle User's Charge (MVUC) Act" for 
35 
nine (9) years from the effeCtivity of this Act. 
36 
SEC. 8. Non-Fiscal Incentives. -
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1. Priority in Registration and Issuance of Plate Number. - Registration and renewal of 
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registration of electric, hybrid and other clean energy vehicles shall be prioritized by the L TO for 
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1 
nine (9) years from the effectivity of this Act. A special type of vehicle plate to be prescribed by 
2 
the LTO shall be exclusively issued to all electric, hybrid and other clean energy vehicles upon 
3 
registration. 
4 
2. Priority in Franchise Application. - Public Utility Vehicle (PUV) operators exclusively 
5 
utilizing electric, hybrid and other clean energy vehicles shall be granted priority by the Land 
6 
Transportation Franchising and Regulatory Board (LTFRB) in the approval of applications for 
7 
franchise to operate, including its renewal, for nine (9) years from the effectivity of this Act. 
8 
3. Exemptionfrom Unified Vehicular Volume Reduction Program (UVVRP) or Number-
9 
Coding Scheme. - All electric, hybrid and other clean energy vehicles shall, for nine (9) years 
10 
from the effectivity of this Act, be exempted from the mandatory Unified Vehicular Volume 
11 
Reduction Program (UVVRP) or Number-Coding Scheme being implemented by the Metro 
12 
Manila Development Authority (MMDA) and other local government nnits (LOUs) concerned. 
13 
4. Provision for Free Parking Spaces in New Establishments. - Business and commercial 
14 
establishments to be constructed after the effectivity of this Act are mandated to provide 
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exclusive parking spaces free of charge for all electric, hybrid and other clean energy vehicles. 
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No building permit shall be issued for the construction of business and commercial 
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establishments that include parking spaces unless the owner submits an affidavit that there shall 
18 
be free parking spaces to be exclusively designated for electric, hybrid and other clean energy 
19 
vehicles, for nine (9) years from the effectivity ofthis Act. 
20 
SEC. 9. Registration; Implementation and Monitoring. - The Department of Finance 
21 
(DOF) and Department of Trade and Industry (DTI) shall be responsible for the administration 
22 
and implementation of the inc.entives granted under this Act. 
23 
Manufacturers, assemblers, converters and importers of electric, hybrid and other clean 
24 
energy vehicles shall register with DOF in order to avail of the incentives provided under this 
25 
Act. For proper monitoring, DOF and DTI shall meet regularly to monitor and review the 
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implementation of the incentives provided herein. 
27 
SEC. 10. Implementing Rules and Regulations. - The Depmtment of Finance (DOF) in 
28 
coordination with the Department of Trade and Industry (DTI) shall promulgate the necessary 
29 
rules and regulations for the effective implementation of this Act. 
30 
SEC. 11. Separability Clause. - If any provision of this Act is declared unconstitutional 
31 
or invalid, other parts or provisions hereof not affected thereby shall continue to be in full force 
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and effect. 
33 
SEC. 12. Repealing' Clause. - All other laws, orders, issuances, circulars, rules and 
34 
regulations or parts thereof, which are inconsistent with the provisions of this Act are hereby 
35 
repealed or modified accordingly. 
36 
SEC. 13. EjJectivit)i Clause. - This Act shall take effect fifteen (15) days following its 
37 
publication in at least two (2) newspapers of general circulation or the Official Gazette. 
Approved, 
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