Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Manila

NINETEENTH CONGRESS
Second Regular Session

House BILL No. 10635

INTRODUCED BY REP. JOSE MANUEL F. ALBA AND
REP. ANNA VICTORIA VELOSO-TUAZON

EXPLANATORY NOTE

The proposed Carbon Rights Act seeks to address the significant gaps in the current
legal and policy frameworks governing carbon rights in the Philippines. The intent of
this legislation is to create a comprehensive, clear, and robust legal framework that
will facilitate private sector investments in carbon projects including nature-based
solutions and technology-based solutions, thereby contributing to global climate
change mitigation efforts and supporting the socio-economic development of local
communities and indigenous peoples.

Trends in Carbon Markets

Globally, carbon markets have experienced substantial growth, driven by the
increasing recognition of the urgent need to address climate change and the economic
opportunities presented by carbon trading. The value of the global voluntary carbon
market grew to nearly $2 billion in 2021, a significant increase from previous years,
reflecting the heightened demand for carbon credits as corporations and governments
strive to meet their emission reduction targets (Ecosystem Marketplace, 2022)’.
Compliance markets, such as those established under the Paris Agreement, provide
additional platforms for trading carbon credits generated from various carbon
reduction and sequestration projects. These markets incentivize investments in
sustainable practices, offering economic benefits to project developers and
contributing to global emission reduction targets (World Bank, 2022)?

Opportunities for the Philippines

The Philippines, with its rich biodiversity and extensive natural resources, holds
significant potential for carbon sequestration projects. The country's forests,
mangroves, and other ecosystems are capable of sequestering substantial amounts
of carbon. According to the Food and Agriculture Organization (FAO), the Philippines
has approximately 7.6 million hectares of forested land, which offers vast opportunities
for carbon sequestration through afforestation, reforestation, improved forest

1 Ecosystem Marketplace (2022). State of the Voluntary Carbon Markets 2021. Ecosystem
Marketplace Report.
2 World Bank (2022). State and Trends of Carbon Pricing 2022. World Bank Report.



management, and mangrove restoration projects (FAO, 2020). Additionally,
technological solutions such as renewable energy projects and waste management
initiatives can further contribute to the country's carbon reduction efforts. By tapping
into both voluntary and compliance carbon markets, the Philippines can attract
substantial private sector investments, drive sustainable development, and enhance
its climate resilience.

Barriers to Private Sector Investment

Despite these opportunities, several barriers hinder the scaling up of private sector
investments in carbon forestry and other carbon projects in the Philippines:

1. Lack of Clarity on Carbon Rights: Existing laws such as the Philippine
Constitution, PD 705 (Revised Forestry Code), and RA 8371 (Indigenous
Peoples’ Rights Act) do not explicitly define carbon rights, creating uncertainty
regarding ownership, transfer, and benefit-sharing of carbon credits derived
from carbon sequestration activities. Without clear legal definitions and
guidelines, project developers face significant risks and uncertainties that can
deter investments.

2. Overlapping Jurisdictions: Conflicts between state-declared forest lands and
ancestral domains complicate project implementation and management. These
overlaps can lead to disputes over land use and resource rights, necessitating
clear legal guidelines to resolve such conflicts. The absence of a harmonized
framework for recognizing and respecting overlapping jurisdictions hampers the
effective implementation of carbon projects.

3. Regulatory and Administrative Barriers: The complex regulatory environment in
the Philippines, coupled with the absence of local validation and verification
bodies, increases costs and causes delays for carbon project developers. The
lack of streamlined processes for project approval, monitoring, and certification
further deters private sector investments. Simplifying these processes and
establishing local validation and verification bodies could significantly reduce
transaction costs and facilitate timely project implementation.

4. Proving Additionality: Demonstrating additionality, a requirement for carbon
certification, is particularly challenging under current laws like the NIPAS Act,
which already mandates conservation activities. Additionality requires that
carbon sequestration activities provide benefits beyond what would have
‘occurred in the absence of the project. The existing legal framework does not
provide clear guidelines on how to prove additionality, creating obstacles for
project certification (Verra, 2020)°.

5. State's Share of Carbon Rights: The lack of explicit provisions detailing the
government's share of revenues from carbon credits creates uncertainty for

equitable benefit-sharing arrangements. Without clear legal mechanisms for
revenue allocation, it is difficult to ensure that the benefits of carbon projects

3 Verra (2020). Standards for Carbon Certification. Verra Guidelines.

2



are distributed fairly among stakeholders, including the government, local
communities, and project developers.

Proposal for the Carbon Rights Act

To address the barriers to scaling up private sector investments in carbon forestry and
other carbon projects in the Philippines, the Carbon Rights Act is proposed with the
following key provisions:

1

Definition of Carbon Rights Ownership and Transfer: Clearly define carbon
rights as the legal entitlements to benefits from carbon sequestration activities,
including ownership, transfer, and trading mechanisms, providing a firm legal
basis for carbon credits.

Resolution of Overlapping Jurisdictions: Establish provisions to resolve
conflicts of carbon rights ownership between state-deciared forest lands and
ancestral domains, ensuring clarity in policy frameworks guided by relevant
jurisprudence.

. Affirmation of Market Rights: Grant owners of carbon credits the freedom to sell

these credits in local and international markets, providing legal certainty and
market access.

. Mandate to Government for Exclusion of Carbon Credits from Nationally

Determined Contributions (NDCs): Ensure that carbon credits from private and
indigenous projects are not double-counted in national climate commitments,
making them available for market transactions.

. Dynamic NDC Monitoring, Reporting, and Verification (MRV) System and

Corresponding Adjustments: Mandate the Climate Change Commission (CCC)
to establish a comprehensive MRV system for accurate accounting of national
climate actions and compliance with international standards. The CCC shall
also lead in coordinating mitigation outcomes from various sectors, including
agriculture, waste, industry, transport, forestry, and energy.

. Baseline Development for Carbon Stock: Require the Department of

Environment and Natural Resources (DENR) to develop carbon stock
baselines to reduce upfront costs for project developers and facilitate project
registration

Government Responsibility for Carbon Stock Maintenance: Ensure the
government maintains carbon stocks upon the expiration of tenurial
instruments, ensuring long-term sustainability and carbon sequestration
benefits.

._Benefit-Sharing Mechanisms: Establish guidelines for equitable benefit-sharing

from carbon sequestration projects to support community development and
conservation efforts.



9. Streamlined Regulatory Framework: Simplify regulatory and administrative
processes for carbon projects to reduce costs and improve efficiency.

10. Tax Incentives for Carbon Project Developers: Provide tax incentives, including
100% tax deductibility of expenses related to project registration in carbon
certification programs and tax exemptions on the sale of carbon credits, to
encourage private sector investment in carbon projects.

In view of the foregoing, the urgent passing of this bill is earnestly sought.

- Antu
JOSE MANUEL F. ALBA ANNA VICTORIA VELOSO-TUAZON



Somrmausona

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Manila

NINETEENTH CONGRESS
Second Regular Session

10635

HOUSE BILL NO.

INTRODUCED BY REP. JOSE MANUEL F. ALBA AND
REP. ANNA VICTORIA VELOSO-TUAZON

AN ACT ESTABLISHING THE CARBON RIGHTS ACT, PROVIDING FOR THE
OWNERSHIP, TRANSFER, AND BENEFIT-SHARING OF CARBON CREDITS,
AND FOR OTHER PURPOSES

Be it enacted in the Senate and House of Representatives of the Philippines in
Congress assembled:

ARTICLE 1
General Provisions

SECTION 1. Short Title. - This Act shall be known as the “Carbon Rights Act of
2024.”

SECTION 2. Declaration of Policy. — It is hereby declared the policy of the State
to promote sustainable development and address climate change through the
establishment of a comprehensive legal framework for carbon rights. This includes the
recognition, transfer, and benefit-sharing of carbon credits derived from carbon
sequestration activities to foster private sector investment and support the socio-
economic development of local communities and indigenous peoples.

SECTION 3. Definition of Terms. - For the purposes of this Act, the following terms
are defined:

a) Carbon Rights - The legal entitlements to the benefits derived from carbon
avoidance, carbon reduction, or carbon removal activities. These rights pertain
to the outputs of such activities, which shall not be deemed as natural
resources. Carbon rights include the ownership, transfer, and trading of carbon
credits resulting from these activities.

b) Carbon Credits - Certificates or instruments representing the reduction,
avoidance, or removal of one metric ton of carbon dioxide equivalent (CO2e)
from the atmosphere. These credits are generated through verified carbon



°)

d

e)

g

h)

reduction or sequestration activities, and their ownership is tied to the carbon
rights defined in this Act.

Certificate of Ancestral Domain Title (CADT) - Refers to the formal recognition
of the rights of Indigenous Cultural Communities/indigenous Peoples
(ICCs/IPs) over their ancestral domains as provided under the Indigenous
Peoples’ Rights Act (RA 8371).

Corresponding Adjustments - Refers to the process of adjusting a country's
greenhouse gas inventory to account for the transfer of mitigation outcomes to
ensure that there is no double counting of emission reductions.

Internationally Transferred Mitigation Outcomes (ITMOs) - Refers to
internationally traded units of greenhouse gas reductions or removals as
provided under Article 6 of the Paris Agreement, which can be used by
countries to meet their Nationally Determined Contributions (NDCs).

Monitoring, Reporting, and Verification (MRV) - Refers to a system of accurately
monitoring, reporting, and verifying greenhouse gas emissions reductions or
removals to ensure transparency and accountability in climate actions.

Nationally Determined Contributions (NDCs) - Refers to the climate action
plans submitted by countries under the Paris Agreement, outlining their efforts
to reduce national emissions and adapt to the impacts of climate change.

Nature-Based Solutions (NBS) - Refers to actions that protect, sustainably
manage, and restore natural or modified ecosystems to address societal
challenges effectively and adaptively, simultaneously providing human well-
being and biodiversity benefits. NBS includes activities such as Afforestation,
Reforestation, and Restoration (ARR) and Reducing Emissions from
Deforestation and Forest Degradation (REDD+).

Project Developers - Refers to individuals, companies, or organizations that
initiate, develop, and implement carbon projects, including those involved in the
generation and trading of carbon credits

Tenurial Instruments - Refers to legal documents issued by the DENR granting
tenure holders the rights to use and manage specific areas of public domain
lands for conservation, restoration, and other related activities. This includes
instruments such as Forest Land Use Agreement (FLAG), Community-Based
Forest Management Agreement (CBFMA), Integrated Forest Management
‘Agreement (IFMA), Protected Area Community-Based Resource Management
Agreement (PACBRMA), and Special Use Agreement in Protected Areas
(SAPA).



k) Voluntary Carbon Markets - Refers to markets where carbon credits are traded
on a voluntary basis, allowing private entities, organizations, and individuals to
offset their carbon emissions by purchasing carbon credits from verified
projects that reduce or sequester greenhouse gas emissions.

ARTICLE 2
SCOPE OF CARBON PROJECTS COVERED

SECTION 4. Carbon Project Specifications. A carbon project, for purposes of
this Act, refers to any initiative, activity, or program that results in the reduction,
removal, or avoidance of carbon dioxide (CO2) or other greenhouse gas (GHG)
emissions, thereby generating carbon credits. Such projects shall adhere to
internationally recognized standards and methodologies, including those outlined by
the United Nations Framework Convention on Climate Change (UNFCCC), globally
accepted voluntary carbon market standards and certification programs. Alll projects
must adhere to the principles of these standards including demonstrating
additionality, ensure proper monitoring, reporting, and verification, and comply with
relevant local, national, and international regulations.

SECTION 5. Types of Carbon Projects covered. Carbon projects covered in
this act covered the following types:

a) Nature-Based Solutions (NBS): Projects utilizing natural processes to reduce,
remove, or avoid GHG emissions, including but not limited to:

a.1) Afforestation, Reforestation, and Revegetation (ARR): Initiatives involving
the planting of trees or vegetation on land that has not been forested for
a significant period, or restoring previously forested or vegetated land to
enhance carbon sequestration.

a.2) Improved Forest Management (IFM): Practices aimed at enhancing the
carbon sequestration potential of existing forests through sustainable
management techniques, such as selective logging, extended rotation
periods, and reduced-impact logging.

a.3) Reduced Emissions from Deforestation and Forest Degradation
(REDD+): Projects aimed at reducing emissions by preventing
deforestation and forest degradation, conserving forest carbon stocks,
and promoting sustainable forest management.

a4) Wetland Restoration and Conservation (WRC): Rehabilitation and
conservation of wetlands to enhance their capacity for carbon
sequestration, including peatland restoration and the protection of
freshwater and coastal wetlands.

a5)

Mangrove Restoration: Replanting and protection of mangrove
ecosystems to enhance their carbon storage benefits and provide coastal
protection.



a6) Soil Carbon Sequestration: Practices that increase carbon storage in soils
through improved agricultural techniques, such as no-till farming, cover
cropping, and agroforestry.

b)

Technology-Based Solutions (TBS): Projects applying _ technological
innovations to reduce or capture GHG emissions, including but not limited to:

b.1) Renewable Energy Projects: Generation of energy from renewable
sources such as solar, wind, hydro, biomass, and geothermal.
Methodologies include those under Verra's Verified Carbon Standard
(VCS) and Gold Standard.

b.2)

Energy Efficiency Projects: Implementation of measures to reduce energy
consumption and improve efficiency in industrial, commercial, and
residential settings. Methodologies include energy savings through
improved appliances, lighting, and building retrofits under Verra and Gold
‘Standard frameworks.

b.3) Carbon Capture and Storage (CCS): Capture of carbon emissions from
industrial processes and their storage underground to prevent release into
the atmosphere. This includes methodologies recognized by Verra and
other international standards.

b.4) Waste Management Projects: Reduction of emissions through waste
reduction, recycling, composting, and methane capture from landfills.
Methodologies include landfill gas capture and utilization, and organic
waste composting under Verra and Gold Standard.

°)

Hybrid Projects: Projects combining nature-based and technology-based
approaches to achieve greater carbon sequestration and emission reduction,
including but not limited to:

c.1) Integrated Renewable Energy and Agroforestry: Combination of solar or
wind energy projects with agroforestry practices to maximize land use and
carbon benefits.

¢.2) Sustainable Agriculture with Biogas Production: Utilization of agricultural
residues for biogas production while implementing sustainable farming
practices.

ARTICLE 3
CARBON RIGHTS OWNERSHIP AND TRANSFER

SECTION 6. Carbon Rights for NBS Cabon Projects. Carbon rights shall be
recognized as separate and distinct property rights, independent of land ownership.
The ownership of carbon rights shall not affect or alter existing land tenure rights,
including but not limited to ownership, possession, or management of land.



SECTION 7. Carbon Rights for NBS Carbon Projects on Lands under Public
Domain. The Ownership of carbon rights on activities that generate carbon credits on
lands under public domain are hereby defined as follows:

a) Ownership. Carbon rights on carbon reduction or avoidance generated from
lands under public domain belong to the State, as defined by the Regalian
Doctrine and laws such as PD 705 (Revised Forestry Code), NIPAS Act (RA
7586 as amended by RA 11038), and the Public Land Act.

b)

Affirmation of carbon rights. All holders to land tenure issued by DENR under
various tenurial instruments including but not limitted to: Forest Land Use
Agreement (FLAG), Community-Based Forest Management Agreement
(CBFMA), Integrated Forest Management Agreement (IFMA), PACBRMA
(Protected Area Community-Based Resource Management Agreement) and
SAPA (Special Use Agreement in Protected Areas) are granted rights to carbon
credits gained from the conservation, restoration, and protection activities of
the tenure holders.

SECTION 8. Carbon Rights for NBS Carbon Projects on Private Land and
Indigenous Peoples’ Land. The Ownership of carbon rights on activities that generate
carbon credits on private lands and ancestral domains are hereby defined:

a) Carbon Rights on Private Land. The full rights of private landowners to carbon
credits generated from activities that generate carbon credits on private lands
are hereby affirmed. These rights are based on the provisions of the Public
Land Act and the 1987 Philippine Constitution, specifically Article 12, Section
6.

b)

Carbon Rights on Ancestral Domains. The full rights of Indigenous Cultural
Communities/Indigenous Peoples (ICCs/IPs) to carbon credits generated from
activities that generate carbon credits on ancestral domains are hereby
affirmed. These rights are based on the provisions of the Indigenous Peoples
Rights Act (RA 8371) and the 1987 Philippine Constitution, specifically Article
12, Section 5.

SECTION 9. Carbon Rights for NBS Carbon Projects in Overlapping
Jurisdictions. Carbon rights in jurisdictions where there are overlaps are hereby
defined

In cases where there is an overlap in jurisdiction between an Ancestral Domain Title
(CADT) or Certificate of Ancestral Domain Title (CADT) and tenurial instruments
issued by the Department of Environment and Natural Resources (DENR), the carbon
rights shall be vested in the holders of the CADT. This provision recognizes the
precedence of ancestral domain claims over conflicting tenurial instruments, ensuring


that the Indigenous Cultural Communities/Indigenous Peoples (ICCs/IPs) retain their
full carbon rights within their ancestral domains.

Provided, however, that in areas declared as part of the National Integrated Protected
Areas System (NIPAS) under the NIPAS Act, the carbon rights shall belong to the
State, even if these areas are part of a CADT. This exception ensures that the State
retains carbon rights within nationally protected areas to support national conservation
goals.

SECTION 10. Transfer of Ownership of Carbon Rights for NBS Carbon

Projects. The transfer of ownership of carbon rights shall be governed by the following
provisions:

a) Contractual Agreements: The transfer of carbon rights from carbon rights

b)

°)

d

owners to carbon project developers shall be effected through contractual
agreements. These agreements shall be duly notarized and shall specify the
terms and conditions of the transfer, including the duration, scope, and any
associated rights and obligations.

Benefit-Sharing Agreements: Contractual agreements transferring carbon
rights shall include provisions for equitable benefit-sharing. These agreements
shall clearly define the allocation of revenues generated from carbon credits,
ensuring fair compensation for all parties involved. Benefit-sharing mechanisms
shall consider the extent of land use, carbon sequestration potential, and
project profitability.

Transparency and Equity: All agreements for the transfer of carbon rights shall
be transparent and equitable. The terms of the agreements shall be
communicated clearly to all parties, and provisions shall be made to ensure that
the agreements are mutually beneficial and just.

Registration: The transfer of carbon rights and the associated contractual
agreements shall be registered with the Climate Change Commission (CCC)
for monitoring and compliance purposes. The agreements shall comply with all
relevant laws and regulations.

Dispute Resolution: In case of disputes arising from the transfer of carbon rights
or the implementation of benefit-sharing agreements, the parties shall first seek
resolution through mediation or arbitration. If disputes remain unresolved, they
may be brought before the appropriate legal or administrative bodies for
adjudication.

10


SECTION 11. Carbon Rights for Technology-Based Solutions (TBS) Carbon

Projects. Carbon rights for Technology-Based Solutions (TBS) carbon projects are
hereby defined:

a) Ownership: Carbon rights for TBS carbon projects shall belong to the project

developers. Project developers shall have full rights to these carbon projects,
including the right to use, sell, trade, or transfer the carbon credits generated
from such projects.

b) Full Entitlement: Project developers shall be entitled to all benefits arising from

the carbon credits, and they shall have the authority to engage in transactions
involving these credits, whether in local or international markets, under
voluntary or compliance frameworks.

ARTICLE 4
SALE OF CARBON CREDITS

SECTION 12. Sale in Voluntary Carbon Markets. This section provides legal

certainty and facilitate market access for carbon credits generated by private entities,
and indigenous communities. The following aspects are hereby defined:

a) Liberty to Transact: Owners of carbon credits, as defined under the carbon

b)

°)

d)

rights and transfer provisions of this Act, are hereby granted the unrestricted
right to sell, trade, or transfer said carbon credits in both local and international
voluntary carbon markets, or to buyers operating under voluntary carbon
market frameworks. This right includes entering into agreements with buyers,
brokers, and other market participants without undue interference.

Compliance with Market Standards: All transactions involving the sale of carbon
credits must comply with the standards and requirements of the respective
voluntary carbon markets. This includes adherence to certification, validation,
and verification processes recognized by reputable international voluntary
carbon market standards.

Benefit-Sharing Agreements: Transactions must honor existing benefit-sharing
agreements with local communities, indigenous peoples, and other
stakeholders. Sellers must ensure that the benefits derived from the sale of
carbon credits are distributed equitably and in accordance with previously
established agreements.

Penalties for Double Selling or False Claims: Any individual or entity found
guilty of double selling carbon credits or making false claims regarding the
carbon credits shall be subject to penalties and potential criminal charges as
per the relevant laws. The Climate Change Commission (CCC) shall have the

1


authority to investigate and enforce these penalties to maintain the integrity of
the carbon market.

1

2

3

4 SECTION 13. Sale and Transfer of Credits Under the Paris Agreement Article
5 6 Carbon project developers may collaborate with the government to sell carbon
6 credits under the Paris Agreement, specifically through Article 6 mechanisms. These
7 mechanisms include Internationally Transferred Mitigation Outcomes (ITMOs) under
8 Article 6.2 and the Sustainable Development Mechanism (SDM) under Article 6.4.

9
10
11 ARTICLE 5
12 ROLE OF GOVERNMENT AGENCIES
13
14 SECTION 14. Lead Agency - Mandate to the Climate Change Commission

145 (CCC). The Climate Change Commission (CCC) is hereby mandated to establish the
16 necessary protocols, procedures, and systems to effectively implement the
17 mechanisms for ITMOs and other Article 6 transactions, including:

18

19 a) Coordination of Mitigation Outcomes: The CCC shall serve as the lead agency
20 for coordinating and consolidating mitigation outcomes from various sectors,
24 including agriculture, waste, industry, transport, forestry, and energy. This
22 integrated approach ensures a comprehensive and unified national climate
23 action and reporting framework.

24

25 b) Monitoring of GHG Emissions Mitigation Outcomes Under the Nationally-
26 determined Contribution (NDC): The CCC shall establish a comprehensive
ar Monitoring, Reporting, and Verification (MRV) system to dynamically adjust the
28 Nationally Determined Contributions (NDC) mitigation outcomes. This system
29 shall ensure accurate and transparent accounting of national climate actions
30 and compliance with international carbon market standards.

3

32 ©) System for Issuance of Letter of Authority (LoA): The CCC shall be responsible
33 for issuing Letters of Authority (LoA) to project developers seeking to engage
4 in ITMOs. This LoA shall serve as official government approval for the transfer
35 of carbon credits under Article 6 mechanisms, ensuring compliance with
36 national and intemational regulations.

37

38 d) System for Corresponding Adjustments: The CCC shall establish a system for
39 making corresponding adjustments to the national greenhouse gas inventory
40 and mitigation outcomes to reflect the transfer of ITMOs. This system shall
a prevent double-counting of emission reductions and ensure the integrity of the
42 country's NDC commitments. Carbon credits based on carbon rights granted
43 by the government to tenure holders for lands of the public domain, as well as
a4 those generated in public lands and ancestral domain lands, shall not be

12


1 claimed by the government as part of its NDC accomplishment or must be
2 removed from government accounts. Such credits must be excluded from
3 government accounts to prevent double-counting and ensure they remain
4 available for market transactions. This provision aims to uphold the integrity of
5 private and indigenous carbon projects and their contributions to global climate
6 mitigation efforts.
7
8 e) Coordination for NDC Targets: The CCC shall be responsible for coordinating
9 with relevant agencies to ensure that NDC targets are met even as project
10 developers are entitled to sell ITMOs to other countries. The CCC shall develop
" a mitigation strategy for the government to deliver mitigation action to meet
12 NDC targets, such as through conservation and restoration efforts in the
13 forestry sector, or investments in GHG emissions mitigation in the waste sector.
14 This mandate ensures that the government fulfills its NDC commitments while
15 allowing the private sector to engage in international carbon markets.
16
7 SECTION 15. Mandates to the Department of Environment and Natural
18 Resources (DENR). The DENR is provided the followng mandates:
19
20 a) Monitoring and Reporting: The DENR is mandated to work with the CCC to
24 monitor and report mitigation outcomes in the forestry, waste, and industry
22 sectors. The DENR shall implement conservation, restoration, and waste
23 management practices that contribute to GHG emission reductions and ensure
24 these are accurately accounted for in the national climate action framework.
25 b) Baseline Development for Carbon Stock: The DENR is required to develop
26 carbon stock baselines to reduce upfront costs for project developers and
ar facilitate project registration. This includes establishing a 10-year historical
28 deforestation or forest degradation baseline for areas suitable for carbon
29 forestry projects. The provision aims to standardize and provide scientifically
30 robust data to support carbon sequestration projects.
34 c) Government Responsibility for Carbon Stock Maintenance: The DENR shall

32 ensure the government assumes responsibility for maintaining carbon stocks
33 upon the expiration of tenurial instruments. This responsibility includes
4 protecting and ensuring carbon stock is maintained or increased upon the
35 return of the land to the government, given the 25-year renewable period of
36 tenurial instruments. This provision aims to ensure the long-term sustainability

7 and carbon sequestration benefits of forestry projects beyond the tenure period.
38 SECTION 16. Mandates to Other Relevant Agencies. The following agencies
39 are also provided the following mandates:

40

a a) Department of Agriculture (DA): The DA is mandated to collaborate with the
42 CCC to monitor and report mitigation outcomes in the agriculture sector. The

13


DA shall implement and oversee agricultural practices that contribute to GHG
emission reductions and ensure these are accurately accounted for in the
national climate action framework.

b)

Department of Energy (DOE): The DOE is mandated to coordinate with the
CCC to monitor and report mitigation outcomes in the energy sector. The DOE
shall implement and oversee energy efficiency and renewable energy projects
that contribute to GHG emission reductions and ensure these are accurately
accounted for in the national climate action framework.

c)

Department of Transportation (DOTr): The DOTr is mandated to collaborate
with the CCC to monitor and report mitigation outcomes in the transport sector.
The DOTr shall implement and oversee transportation initiatives that contribute
to GHG emission reductions and ensure these are accurately accounted for in
the national climate action framework.

ARTICLE 6
INCENTIVES TO PROJECT DEVELOPERS

SECTION 17. Tax Incentives for Carbon Project Developers. The following
incentives shall be provided to project developers:

a) Tax Deductibility of Expenses: All expenses incurred by carbon project
developers related to the registration of their projects in recognized carbon
certification programs shall be 100% deductible from their taxable income. This
includes, but is not limited to, costs associated with project validation,
verification, monitoring, reporting, and any other expenses directly related to
the certification process.

b)

Tax Incentives on Sale of Credits: The sale of carbon credits shall be exempt
from all forms of taxation. This exemption includes, but is not limited to, income
tax, value-added tax (VAT), and any other applicable taxes on the income
derived from the sale or transfer of carbon credits.

ARTICLE 7
Miscellaneous Provisions

SECTION 18. Appropriations. - The amount necessary for the initial
implementation of this Act shall be charged against the current year’s appropriations
of the department/ agencies concemed. Thereafter, such sums as may be necessary
for the continued implementation of this Act shall be included in the annual General
Appropriations Act.


SECTION 19. Annual Report to Congress. ~ The implementing agencies shall
report to Congress on their progress in carrying out the provisions of this Act for each
fiscal year. The reports shall be consolidated by the CCC for presentation to the
appropriate Committee in Congress at a meeting called for the purpose.

SECTION 20. Allocation of funds. — Pursuant to Article 4 of this Act, the
aforementioned agencies shall allocate from their annual appropriations the adequate
funds for the implementation of their mandates, including training and capacity
building, under this Act, subject to support under the mechanism of the Means of
Implementation of the Paris Agreement.

SECTION 21. Implementing Rules and Regulations. - The CCC, in coordination
with relevant agencies, shall draft and issue implementing rules and regulations
necessary, in coordination with other relevant and appropriate government agencies
within sixty (60) days after its approval.

SECTION 22. Separability Clause. - If for any reason any section or provision
of this Act is declared by the Court as unconstitutional or invalid, the other sections or
provisions thereof shalll not be affected thereby.

SECTION 23. Repealing Clause. - All laws, ordinances, rules, and regulations,
and other issuances or parts thereof, which are inconsistent with this Act, are hereby
repealed or modified accordingly.

SECTION 24. Effectivity. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.