FIFTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S.No. 2798 
Introduced by Senator Miriam Defensor Santiago 
EXPLANATORY NOTE 
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MAY -4 
f) 2 :1 9 
This bill seeks to grant tax incentives to importers and manufacturers of hybrid cars in the 
Philippines. 
With the fluctuating gasoline prices in the country, car owners are mulling on other ways 
and means to save fuel on their vehicles. 
One feasible solution is the use of hybrid cars. Hybrid cars are vehicles that use a 
rechargeable energy system and normal gasoline-fueled power source for propulsion. These cars 
are durable, low polluting, and consume less gasoline than conventional cars with pure internal 
combustion engines. Though most hybrid cars still use gasoline as their primary fuel source, new 
technologies include the use of ethanol and hydrogen fuel. 
At a glance, a hybrid car is really the answer to the fuel-saving problem in the country. 
However, it is very expensive to produce. A hybrid car costs around USD 5,000 more than its 
non-hybrid counterpart. While carmaker companies in the country are considering the 
importation and manufacture of hybrid models, they still cannot do so due to higher costs 
compared with regular gas-fed vehicles. They are willing to invest if only the government will 
grant importers and manufacturers special incentives like duty-free and tax-free importation of 
parts and components of hybrid vehicles. 
Parts and components are currently charged with 15% to 30% most favored nation tariffs 
if they are sourced outside of member-countries of the ASEAN. Imports from ASEAN members, 
on the other hand, are charged with a 5% common effective preferential tariff rates. 
The duty-free and tax-free importation of parts will make hybrid car assembly 
competitive with the production of normal gas-fed cars. If only the govermnent will grant tax 
incentives to manufacturers and importers of hybrid cars, these cars will become more affordable 


and available to Filipinos. Grant of tax exemptions shall be subject to a periodic review of the 
Secretary of Finance. The time frame may be enough to give time for the local automotive 
industry to develop its own capability to locally produce the said parts and components. 
This bill is the counterpart bill of House Bill No.1 by Reps. Ronald V. Singson and Jose 
Ma. F. Zubiri III. 
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FIFTEENTH CONGRESS OF THE REPUBLIC 
) 
OF TI-IE PHILIPPINES 
) 
First Regular Session 
) 
SENA.'l:.E 
S. No. G'/9a 
Introduced by Senator Miriam Defensor Santiago 
1 
AN ACT 
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'11 
MAY -4 P 2 :1 9 
2 
EXEMPTING MANUFACTURERS AND IMPORTERS OF HYBRID VEHICLES FROM 
3 
THE PAYMENT OF CERTAIN TAXES 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
4 
SECTION 1. Any provision of existing laws to the contrary notwithstanding, any person, 
5 
partnership, or corporation, who is engaged in the business of manufacturing or importing fuel-
6 
saving hybrid cars, including parts and components, shall be exempt from the payment of import 
7 
duties, customs and tariff duties, excise, value-added, and ad valorem taxes with respect to the 
8 
manufacture or importation of such cars. 
9 
For purposes of this Act, "hybrid vehicles" shall refer to vehicles that combine the 
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teclmologies used in a gasoline-powered internal combustion engine with a battery powered 
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electric motor to gain the advantages of both propulsion systems. 
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SECTION 2. The grant of tax exemptions provided in Section 1 shall be subject to 
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periodic review by the Secretary of Finance every three (3) years from the effectivity of this Act, 
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and the corresponding report shall be submitted to the appropriate committees in Congress. 
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SECTION 3. Separability Clause. - If any provision of this Act is declared to be 
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unconstitutional or invalid, the other sections or provisions hereof which are not affected thereby 
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shall continue to be in full force and effect. 
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SECTION 4. Repealing Clause. - All laws, decrees, orders, rules and regulations or parts 
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thereof inconsistent with the provisions of this Act are hereby repealed, amended or modified 
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accordingly. 
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SECTION 5. Effectivity Clause. - This Act shall take effect after fifteen (15) days 
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following its publication in the Official Gazette or in two (2) newspapers of general circulation. 
Approved, 
1