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DOE Sets Guidelines for the Recognition of Testing Laboratories and for the Issuance of Certificate of Endorsement to the Board of Investments for Fiscal Incentives

The Department of Energy (“DOE”) issued Department Circular 2022-03-0005 (the “Circular”) which contains guidelines for the recognition of testing laboratories for the examination, testing and verification of the Energy Efficiency of Energy-Consuming Products (“ECPs”) and the Fuel Efficiency of Transport Vehicles including the issuance of Certificate of Endorsement to the Board of Investments (“BOI”) for fiscal incentives.

Some of the pertinent provisions are as follows:

Issuance of Certificate of Recognition to Recognized Testing Laboratories

In line with Circular 2022-03-005, DOE-recognized testing laboratories (“RTLs”) shall provide testing services on energy performance and fuel efficiency that is relevant to the implementation of “Philippine Energy Labeling Program (“PELP”) and transport vehicle labeling. 

The following documents must be complied with by the applicants applying for Recognition:

  1. Duly accomplished application form under oath by the Applicant or duly authorized representative;
  2. Certified true copy of a valid permit to operate business issued by the local government unit;
  3. Certified true copy of the Bureau of Internal Revenue Certificate of Registration;
  4. Duly accomplished affidavit of undertaking to abide by the terms and conditions for the Recognition of Testing Laboratory;
  5. Letter of Authorization of representative for the Recognition of Testing Laboratory;
  6. Location map of the Testing Laboratory and layout of the Testing Laboratory, including dimensions;
  7. Organizational chart showing the relationship between the Testing Laboratory and other operations of the firm, when applicable;
  8. List of personnel involved in the operation of the Testing Laboratory including their job descriptions, responsibilities, qualifications, and Certificate of Competency;
  9. List of all equipment, manuals of the procedures and reference materials required for the tests and calibrations; and
  10. Certified true copy of Accreditation Certificate issued by the Philippine Accreditation Bureau (“PAB”), or proof of ongoing application for accreditation with the PAB, as compliant with the latest version of PNS ISO/lEC 17025.

According to the Circular, the Certificate of RTL shall only be valid for three (3) years from the date of issuance, unless earlier revoked or cancelled. Further, the application for the renewal of the Certificate must be filed at least three (3) months prior to its expiration.

Issuance of Certificate of Endorsement to the BOI for Fiscal Incentives

The Circular also provides that after due evaluation, the DOE through the Energy Utilization Management Bureau Director shall endorse the project proposal of RTLs to the BOI for the availment of the Fiscal Incentives. This endorsement shall contain the summary of the following:

  1. Project Scope Summary
  2. Fiscal Cost-Benefit Analysis
  3. Projected financial statements
  4. Company Information
  5. Business Model
  6. Technical, legal, and financial analysis demonstrating the necessity for the implementation of the PELP under RA 11285 or its sustainability.

As explained in the Circular, the possible incentives that can be availed by projects include entitlement to Income Tax Holiday, Customs Duty Exemption on Importation of Capital Equipment, Raw Materials, Spare Parts, or Accessories, VAT Zero-Rating, and Exemption for 3-5 years, depending on the project scope and such other incentives under the 2020 Investment Priorities Plan while the Strategic Investment Priority Plan is still being formulated.

Further, the Circular also enumerated the prohibited acts which if violated by any person or entity shall result to appropriate criminal, civil and/or administrative sanctions. These prohibited acts include: 

  1. Violation of any of the obligations of an RTL upon recognition and obligations of the endorsed project; 
  2. Misrepresentation for purposes of securing a Recognition or Renewal thereof;
  3. Willfully refusing, obstructing or attempting to obstruct Surveillance Audit by the Assessment Team or visits by the authorized representative of DOE; 
  4. Failure or willful refusal to submit any of the reports required; 
  5. Tampering of test result or entering any false information about the product being tested.