Eighteenth Congress
First Regular Session

HOUSE BILL NO. BENS

Introduced by
REPRESENTATIVE LOREN B. LEGARDA

AN ACT
TO PROMOTE THE MANUFACTURE, ASSEMBLY, IMPORTATION, SALE,
DISTRIBUTION, USE AND DEVELOPMENT OF HYBRID AND ALTERNATIVE
FUEL VEHICLES BY GRANTING TAX EXEMPTIONS AND PROVIDING
INCENTIVES THEREFOR AND FOR OTHER PURPOSES

Explanatory Note

According to the data of the World Health Organization (WHO), 7.6% of all deaths
worldwide in 2016 can be attributed to ambient air pollution or specifically known as
urban outdoor air pollution. Based on the 2015 National Emissions Inventory, 65% of
air pollutants in the Philippines came from mobile sources such as cars,
motorcycles, trucks, and buses.

WHO also identified that Particulate Matter or PM2.5 particles, which can be found in
diesel vehicles, is considered to be the most harmful pollutants that penetrate into
the lung passageways increasing risk of chronic respiratory illness. In 2004, the
Department of Health released a report stating that the “considerable morbidity and
mortality due to respiratory and cardiovascular diseases could have been prevented
with better air quality in Metro Manila in 2002.” Whereas Asian Development Bank in
their December 2006 Synthesis Report on Urban Air Quality Management in the
Philippines also noted that limited ambient air quality data in the country is a
deterrent to the identification of correlation between the severity of air pollution and
its health effects on the exposed communities.

According to the World Bank, at a global level the cost associated with health
damage from ambient air pollution is estimated to be $5.7 trillion, equivalent to 4.8%


“of global GDP in 2016. Given this data, we have to consider that addressing
pollution is a vital action to be done by the government because of its intolerable toll
‘on the health of the people, the environment and even on economic development.

Thus, this bill seeks to promote the use of alternative fuel vehicles as substantial
strategy to contribute in pollution management and promote clean development for
healthier lives and better economic productivity. This bill will further encourage the
transition to hybrid and alternative fuel vehicles by providing fiscal and non-fiscal
incentives to manufacturers, motorists, and operators who opt to convert their
vehicles into electric, hybrid and alternative fuel vehicles

In view of the foregoing, immediate passage of this bill is earnestly sought.

OREN. LEGARDA


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Eighteenth Congress
First Regular Session

HOUSE BILL No. 6604

Introduced by
REPRESENTATIVE LOREN B. LEGARDA

AN ACT
TO PROMOTE THE MANUFACTURE, ASSEMBLY, IMPORTATION, SALE,
DISTRIBUTION, USE AND DEVELOPMENT OF HYBRID AND ALTERNATIVE
FUEL VEHICLES BY GRANTING TAX EXEMPTIONS AND PROVIDING
INCENTIVES THEREFOR AND FOR OTHER PURPOSES

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

SECTION 1. Title. — This Act shall be known as the “Alternative Fuel Vehicles Act of
2020.”

SEC. 2. Declaration of Policy. — It is the policy of the state to safeguard life and the
environment by encouraging the use of alternative sources of energy for vehicles

intended for public and private use. To this end, the State shall:

1. Recognize and address the detrimental effects on the environment of fossil
fuels;

2. Safeguard the welfare and 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;

3. Support the need to promote the development of new technology to
accelerate social progress and promote human development, and particularly

encourage the use of alternative sources of energy on vehicles intended for


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public and private use in the light of technological innovation, energy
efficiency, security and conservation, and cleaner technology; and

4. Provide necessary incentives to private enterprises and individuals engaged
in the manufacture, assembly, conversion and importation of hybrid and other

alternative fuel vehicles.

SEC. 3. Definition of Terms. — As used in this Act:

a) Alternative energy sources refer to energy sources other than petroleum or
fossil fuel;
b)

Altemative Fuel Vehicle or Altemative Technology Vehicle (AFV) refers to any
vehicle using alternative sources of energy such as but not limited to solar,
wind, hydrogen fuel cell, compressed natural gas (CNG) or liquefied natural
gas (LNG) and liquefied petroleum gas (LPG), other than conventional
sources of energy like petroleum and gasoline for propulsion and vehicles
which use propulsion other than internal combustion engine;

°)

Hybrid vehicles refer to any vehicle that combines the technologies of using
internal combustion engine (ICE) with one or more alternative propulsion
systems to gain the advantages of the propulsion systems;

4) Importer refers to any individual, partnership, corporation or other entity
engaged in the importation of completely knocked down units (CKD) and
completely built units (CBUs) of electric, hybrid and other alternative fuel
vehicles incorporated, organized and existing under Philippine laws; and

) Manufacturer or Assembler refers to any individual, partnership, corporation

or other entity engaged in the manufacture, assembly and conversion of

electric, hybrid and other alternative fuel vehicles incorporated, organized and

existing under Philippine laws;


§ % SEC. 4. Fiscal and Non-Fiscal Incentives. — For ten (10) years from the effectivity

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of this Act, the following incentives shall be enjoyed:

1. Fiscal Incentives:

1.1. The manufacture, assembly, importation, sale, purchase and
distribution of hybrid and alternative fuel vehicles, including their
components and spare parts, and the main equipment that will be used
in any charging facility shall be exempt from the payment of import
duties, excise, value-added, and income taxes arising from such
activities

1.2. Motorists who trade their used vehicles for electric, hybrid and

alternative fuel vehicles shall be exempt from payment of motor vehicle

users charge for the hybrid vehicle therein purchased;

1.3. Motorists who convert their vehicles into electric, hybrid and

alternative fuel vehicles shall be exempt from payment of motor vehicle

users charge;

1.4. The manufacture of electric, hybrid and alternative fuel engines of

vehicles for public conveyance shall be exempt from payment of taxes for

income derived from the sale thereof;

1.5. An entity or person engaged in the development of electric, hybrid

and alternative fuel vehicles for public conveyance shall enjoy exemption

from value-added, import taxes and duties on inputs, and from payment of
income tax due on the sale thereof;

4.6. Electric, hybrid and alternative fuel vehicles shall be exempt from the

payment of fees of registration, emission testing and such other regulatory

activities, except vehicle insurances, required by the Land Transportation

Office (LTO) of the Department of Transportation (DOTr);


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1.7. Electric, hybrid and alternative fuel vehicles using the expressway
‘shall be exempt from payment of toll fees;

1.8. Fueling/refueling and charging stations for electric, hybrid and
alternative fuel vehicles shall enjoy exemption from the payment of
income tax;

1.9. Transport of electric, hybrid and alternative fuel vehicles on sea
vessels shall enjoy a fifty percent (50%) discount on such fees being
collected by the government for this purpose;

4.10. Electric, hybrid and alternative fuel vehicles shall enjoy fifty percent
(60%) discount on parking fees in any and all establishments; and

4.11. Public conveyances using electric, hybrid and alternative fuel

technologies shall enjoy exemption from income tax.

2. Non-Fiscal Incentives

2.1. The registration and renewal of registration of hybrid and alternative
fuel vehicles shall be prioritized by the LTO by providing a special lane
therefor;

2.2. A special type of vehicle plate to be prescribed by the LTO shall be
exclusively issued to all these vehicles upon registration;

2.3. Public utility vehicle (PUV) operators exclusively utilizing hybrid and
alternative fuel vehicles shall be granted priority by the Land
Transportation Franchising and Regulatory Board (LTFRB) in the
approval of applications for franchise to operate, including its renewal;

2.4. All electric, hybrid and alternative fuel vehicles shall be exempted
from the vehicular volume reduction program or number coding scheme

being implemented by the government; and


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2.5. All parking buildings and areas of commercial buildings shall provide
parking spaces and/or give priority parking slots for hybrid and alternative

fuel vehicles.

SEC. 5. Registration, Implementation and Monitoring. - The Department of
Finance (DOF) and Department of Trade and Industry (DTI) shall be responsible for

the administration and implementation of the incentives granted under this Act.

Manufactures, assemblers, converters and importers of electric, hybrid and other
alternative fuel vehicles shall register with the DTI and DOF in order to avail of the
incentives provided under this Act. For proper monitoring, the DOF and the DTI shall
meet regularly to monitor and review the implementation of the incentives provided

herein.

SEC. 6. Environmental, Safety and Quality Compliance. — All products applying
for the incentives provided herein shall comply with the Philippine National

‘Standards and other relevant laws and issuance related to environment, quality and

safety.

SEC. 7. Electronic Vehicle Battery Collection, Transportation and Disposal
System. — The Department of Environment and Natural Resources (DENR) in
coordination with the Department of Trade and Industry (DTI) and Department of
Energy (DoE) shall establish a system of informing the end-users of the hazards of
batteries used in electronic vehicles and other alternative fur vehicles should contain
an information sheet or material safety data sheet. Fees shall be collected from the
manufacturer, distributor or marketing agent for every alternative fuel vehicle sale for

the purpose of tracking, recovering, recycling and disposing the said batteries.


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i The DENR shall likewise establish a non-stock and non-profit electronic vehicle

waste battery market operator that will manage the collected fund and implement the

collection, transportation and disposal of the electronic vehicle waste battery.

SEC. 8. Land Allocation, Zoning and Utilization by Local Government Units
(LGUs) for hybrid and alternative fuel vehicles. - Local Government Units (LGUs)
shall allocate land and lot space for the construction of charging stations to
encourage wider deployment of hybrid and alternative fuel vehicles in their areas of

jurisdiction.

LGUs shall also provide free power/electricity for the charging of hybrid and

alternative fuel vehicles designed for mass public transportation.

SEC. 9. Mandatory Installation of Charging Stations. — Within one year following
the effectivity of this Act, all commercial buildings, condominiums, malls, office and
parking buildings or facilities shall be installed with charging stations for hybrid and
alternative fuel vehicles.

SEC. 10. Alternative Fuel Vehicle Program Trust Fund. — The Alternative Fuel

Vehicle Program Trust Fund is hereby created to:

a) Finance the local research, development, and promotion of the use of hybrid
and alternative fuel vehicles; and
b) Conduct such other activities to carry out the provisions of this Act.

An initial seed fund in the amount of fifty million pesos (Php 50,000,000.00) shall be
established for the said purpose. The Department of Energy (DoE), and of Science
and Technology (DOST), shall manage and administer twenty-five million pesos
(Php 25,000,000.00) each from such fund, subject to existing government

accounting and auditing procedures.


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“The DOE and the DOST are hereby authorized to manage and disburse said funds

to be used as grants, study grants, loans, equity investments, loan guarantees, and
insurance or to access other local international funds pursuant to the provisions of

this Act.

SEC. 11. Information Dissemination and Education. — The Departments of
Energy (DoE), of Trade and Industry (DTI), of Transportation (DOT), and of Science
and Technology (DOST) are hereby mandated to conduct their respective outreach
programs to disseminate information concerning the promotion of the manufacture,

sale, distribution, use and development of hybrid and alternative fuel vehicles.

SEC. 12. Appropriations. — The amount necessary for the effective implementation
of this Act shall be taken from the current fiscal year’s appropriation of the DOE and
the DOST. Thereafter, such sum as may be necessary for the implementation of this
Act shall be included in the annual budget of the DOE and DOST under the General

Appropriations Act.

SEC. 13. Penalty Clause. — Any violation of the provisions of this Act by a recipient
of the incentives granted under Section 4 herein shall automatically cause the
cancellation of such incentives and shall be refunded in favor of the government. A
government official or employee who violates any provision of this act shall be
subjected to the provisions of the Administrative Code or the Anti-Graft and Corrupt
Practices Act..

SEC. 14. Separability Clause. — If any provision of this Act or the application of
such provision to any person or circumstances is declared invalid or unconstitutional,

the remainder of the Act shall remain in effect and subsisting.


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j SEC. 15. Implementing Rules and Regulations. — The DTI, the DOE, the DOTr,

the DILG, the DOF, the DENR, and the DOST shall formulate the rules and
regulations necessary for the effective implementation of this Act within six (6)

months from its effectivity.

SEC. 16. Repealing Clause. — All other issuances, laws, decrees. Orders, rules and
regulations, or part thereof inconsistent with this Act are hereby repealed or modified

accordingly.

SEC. 17. Effectivity. - This Act shall take effect fifteen (15) days following its
publication in the Official Gazette or in at least two (2) newspapers of general

circulation.

Approved,