FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
Introduced by Senator Miriam Defensor Santiago 
EXPLANATORY NOTE 
The Constitution, Article 2, Section 16 provides: 
The State shall protect and advance the right of the people to a 
balanced and healthful ecology in accord with the rhythm and harmony of 
nature. 
, 
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Despite a slowdown in the rate of global population growth, the world's 
population is still growing and is expected to peak at 9 billion people in 2050, up fi'om 
6.6 billion in 2006. These shifts are placing greater pressure on resources and are 
contributing directly and indirectly to the rising emissions linked to climate change and 
the resulting consequences for the environment. Recent studies indicate climate change is 
occurring faster than expected. Without resolute action we could face irreversible 
changes to the climate. I If emissions continue to rise at the rate of the past 30 years, 
atmospheric concentrations will increase to 700 ppm or more, corresponding to global 
average temperatures of +6°C or more by 2050.2 Even if we stopped emitting greenhouse 
gases altogether, the effects of global warming are now unavoidable. For these reasons, 
societies will need to adapt to the unavoidable consequences of climate change. 
Importantly, it is developing nations which face the worst consequences because 
they are more vulnerable to the physical effects of climate change than developed 
1 Global Risks 2009, Global Risk Network, World Economic Forum, 2009. 
2 Intergovernmental Panel on Climate Change (IPCC) 2007 4th report; World Energy Outlook, 
International Energy Agency 2008. 
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nations. Weather-related disasters disproportionately affect the agricultural sector in least 
developed countries where most farmers have only limited access to financial means such 
as microcredit and insurance solutions3 The Philippines is considered a climate change 
hot spot vulnerable to sea-level rise, cyclones and storm surges which threaten social and 
economic stability particularly in densely populated urban centers such as Metro Manila4 
This high vulnerability is due to its location, high population density, high ecological 
sensitivity, and low adaptive capacity. The twin typhoons and accompanying floods that 
wrecked havoc in the Philippines recently are clear manifestations of the high 
, 
vulnerability of the country to climate change.5 
Automobiles are a major source of greenhouse gases. A prime example is the 
United States where automobiles are the second largest source of carbon dioxide, creating 
nearly 1.5 billion tons of C02 annually.6 Responding to the climate change challenge 
therefore necessitates that existing environmental laws (e.g. Ecological Solid Waste 
Management Act, Clean Air Act, etc); urban pianning regulations; and other relevant 
laws be fully implemented to complement the recently passed Climate Change Act of 
2009. The United Nations itself recognizes the need to promote innovation, clean energy, 
energy efficiency and conservation and to accelerate the deployment of cleaner 
technologies. 7 
This Bill seeks to address the problem of climate change by providing tax 
incentives to entities involved in the development and production of electronic vehicles 
or "e-vehicles" specifically those that are geared towards public and mass transportation. 
Electronic vehicles have zero emissions and their use by the greater public will be 
accelerated by the introduction of government incentives for their production. This will 
not just make us less dependent on oil, but will also address the detrimental effects to the 
environment and the health of our people caused by the emissions of the ubiquitous fuel-
powered vehicles in the status quo. 
31d. 
4 Climate Change and Migration in Asia and the Pacific, University of Adelaide, et aI, Asian Development 
Bank, 2009 
S Francisco, Hermina, Going Beyond the Map: What is next in the Climate Change Challenge for the 
Philippines?, Economy and Environment Program for Southeast Asia, International Development Research 
Centre; Singapore, 2009. 
'Natural Resources Defense Council, http://www.nrdc.org/globalwarming/flOl.asp, accessed on 25 August 
2010. 
7 2005 World Summit Outcome of the United Nations General Assembly. 
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FIFTEENTH CONGRESS OF THE REPUBLIC 
) 
OF TI-IE PHILIPPINES 
) 
First Regular Session 
) 
,I 
ot~&~tGE <'J': 
Introduced by Senator Miriam Defensor Santiago 
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AN ACT 
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TO ESTABLISH A SYSTEM OF TAX INCENTIVES FOR INDIVIDUALS AND 
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CORPORATIONS THAT ENGAGE IN THE RESEARCH, DEVELOPMENT AND 
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PRODUCTION OF ELECTRONIC PUBLIC TRANSPORT VEHICLES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
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SECTION I. Short Title. - This Act shall be known as the "E-Vehicle Tax 
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Incentive Act of2010." 
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SEC. 2. Declaration of Policy. - It is the policy of the State to afford full 
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protection and the advancement of the right of the people to a healthful ecology in accord 
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with the rhythm and harmony of nature. In this light, the State has adopted the Philippine 
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Agenda 21 framework which espouses sustainable development, to fulfill human needs 
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while maintaining the quality of the natural environment for current and future 
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generations. 
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As a party to the United Nations Framework Convention on Climate Change, the 
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State adopts the ultimate objective of the Convention which is the stabilization of 
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greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous 
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anthropogenic interference with the climate system which should be achieved within a 
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time frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure 
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that food production is not threatened and to enable economic development to proceed in 
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a sustainable manner. 
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SEC. 3. Definition of Terms. - As used in this Act, the following terms shall 
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mean: 
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(a) e-vehicle - or electronic vehicle shall refer to any vehicle that may be used for 
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public tra~sport such as, but not limited to, e-taxi cabs, e-buses, and e-jeepneys, that uses 
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electric motors for propulsion; This does not include motor vehicles propelled by 
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gasoline or diesel engines or hybrid motor vehicles that are powered by both fuel and 
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electricity; 
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(b) emission - means any air contaminant, pollutant, gas stream or unwanted sound 
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from a known source which is passed into the atmosphere; 
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SEC. 4. Tax Incentives. - The following tax incentives shall be enjoyed by 
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producers of e-vehicles: 
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(a) 
The imposition of the Expanded Value Added Tax (EVAT) for the 
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purchase of materials needed for the research, development and production of e-vehicles 
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shall be suspended for the next ten (10) years: Provided, however, that such expenses 
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shall be exclusively used for the research, development and production of e-vehicles. 
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(b) 
The impOliation of machinery, equipment, tools for production, spare 
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parts, supplies, and materials to be used actually, directly and exclusively for the 
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production of e-vehicles are not subject to Duty and Internal Revenue Taxes for the next 
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ten (10) years; Provided, That the National Economic and Development Authority 
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certifies to the non-availability of the above-mentioned items in the local market of 
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sufficient quantity, comparable quality, and price to meet the needs of the producers 
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subject tG existing taxes; Provided, further, that if such tax-exempt items brought or 
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importee! into the country are subsequently sold, transferred or exchanged in the 
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Philippines to be devoted to non-e-vehicle purposes, the purchasers or recipients shall be 
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considered the importer thereof, and shall be liable for the Duty and Internal Revenue 
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Tax due on such importation, subject to depreciation allowance. The tax due on such 
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items shall constitute a lien on the article itself, superior to all other charges or liens, 
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irrespective of the possessor thereof; 
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(c) 
In computing taxable income, a corporation or individual engaged in the 
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production of an e-vehicle, may, at its option, deduct research and development 
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expenditures paid or incurred in the development and production of an e-vehicle during 
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the taxable year. The election by the taxpayer to deduct the development and production 
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expenditures is irrevocable and shall be binding in succeeding taxable years. 
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SEC. 5. Tax Deduction or Exemption of Donations and Contributions. -
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Donations, contributions, gift,s, or grants for the research, development and production of 
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e-vehicles shall be exempted from donor's taxes and shall be deductible in full from the 
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gross income of the donor. The tax privilege may only be claimed for the taxable year the 
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donation was made. 
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SEC. 6. Registry of E-Vehicle Corporations and implementing Rules and 
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Regulations. - The Department of Finance with the assistance of the Department of Trade 
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and Industry shall maintain a registry of individuals and corporations that engage in the 
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production of e-vehicles and claim tax incentives under this Act; The Secretaries of the 
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two Departments are also mandated to issue the Implementing Rules and Regulations of 
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this Act within six months from its effectivity; 
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SEC. 7. Separability Clause. - If any provision or part hereof, is held invalid or 
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unconstitutional, the remainder of the Act or the provision not otherwise affected shall 
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remain valid and subsisting. 
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SEC. 8. Repealing Clause. - Any law, presidential decree or issuance, executive 
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order, letter of instruction, administrative order, rule or regulation contrary to, or 
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inconsistent with the provisions of this Act is hereby repealed, modified or amended 
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accordingly. 
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SEC. 9. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
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public~tion in at least two (2) newspapers of general circulation. 
Approved, 
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