With a discussion of DENR DAO 2023-02 (EPR IRR)
What is EPR?
Extended Producer Responsibility is the environmental policy approach and practice that requires producers to be environmentally responsible throughout the life cycle of a product, especially its post-consumer or end-of-life stage. You can find a copy of the EPR Act here.
The EPR requires Obliged Enterprises to establish a mechanism for the proper and effective recovery, treatment, recycling, or disposal of their products after the said products have been sold and used by consumers.
Who Are Required to Implement an EPR Program?
There are three categories of businesses required to comply with the EPR Program under the EPR Act and its Implementing Rules and Regulations (IRR). These are called the “Obliged Enterprises” (or “OEs“):
Product Producers
Product Producers refer to brand owners who sell or supply any commodity under a brand, label or identity using a product it produced or a material supplied to it by another manufacturer or supplier.
Product Manufacturers or Importers
Product manufactures or importers are those who supply commodities for the use of the general consumer, or distributes the same product as a material product of the brand owner.
Large Enterprises
If a business complies with these requirements, they are considered “large enterprises” under the EPR Act:
- Total assets of over Php 100,000,000.00;
- Generates plastic packaging waste
- Large enterprises (corporations with total assets of over Php100,000,000.00) that generate plastic packaging waste; when the total value of assets of all enterprises carrying the same brand, label of trademark exceeds that of medium enterprises.
- Such other persons and entities as determined by the DENR Secretary
Who Are Not Covered by the EPR Law?
Are you a Micro, Small, or Medium-Sized Enterprise (MSME)?
MSMEs under RA 9501 are not covered by the EPR Law, but they are still encouraged to voluntarily practice EPR, or to be a part of the network of OEs or Producer Responsibility Organizations (PROs) practicing EPR.
But businesses are still covered by the EPR Law if…
MSMEs are also considered as Obliged Enterprises when the total value of assets of all enterprises carrying the same brand, label or trademark exceeds that of Medium Enterprises (currently at Php100 Million) under RA 9501
How to Register an EPR Program
When to Register with the Department of Environment and National Resources
An obliged enterprise or the PRO must register EPR programs with the National Solid Waste Management Commission (NSWMC), through the Department within 6 months upon the effectivity of the EPR Act of 2022
What should an OE submit to the National Solid Waste Management Committee?
An OE should submit an application for registration of its EPR program to the NSWMC.
What to do while waiting for approval of the EPR Program
Obliged enterprises shall establish or phase-in EPR programs for plastic packaging.
What Kinds of Plastics are Covered by the EPR Act?
In General
“Plastic packaging” refers to products used to carry, protect, or pack goods for transportation, distribution, and sale
Examples of Plastic Packaging under the EPR Act
The EPR Act provides these examples of “plastic packaging”:
- Sachets, labels, laminates, and other flexible packaging products. It doesn’t matter whether the packaging product is single layer or multi-layered with plastics or other materials.
- Rigid plastic packaging products, which include containers for beverages, food, home, personal care, and cosmetic products. This includes:
- Coverings
- Caps
- Lids
- Cutlery
- PLates
- Drinking straws
- Sticks
- Tarps
- Signage
- Labels
- Other necessities or promotional items
- Single-use plastic bags for carrying or transporting of goods, and provided or utilized at the point of sale
- Polystyrene
How to Recover Waste?
The EPR Act provides four ways to recover plastic waste, including:
- Buying back material or waste from consumers;
- Putting up collection points where the material or waste can be dropped off after consumption, then collected for reuse or recycling;
- Clean-up of waste from coastal areas, public roads, and other places;
- Establishing recycling, composting, thermal treatment, or other waste diversion or disposal facilities.
How Much Waste Does A Business Need to Recover?
The EPR Act and its IRR provide the following target recovery rates within specific compliance periods:
| Compliance Period | Target Recovery |
| 31 December 2023 | 20% |
| 31 December 2024 | 40% |
| 31 December 2025 | 50% |
| 31 December 2026 | 60% |
| 31 December 2027 | 70% |
| 31 December 2028 And every year thereafter | 80% |
Obliged enterprises shall submit the report of their compliance including appropriate documentation to the Department.
How Can Businesses Ensure Compliance with the EPR Act?
Form a Producer Responsibility Organization (PRO)
OEs may voluntarily organize themselves to form or authorize a PRO to establish a viable platform to implement their EPR program.
An organized PRO, with an organized structure and leadership, membership requirements, duties and responsibilities, and financing, can help craft implementation strategies and standards towards plastic neutrality.
Establish an Auditing System
Obliged enterprises or their PROs shall establish and implement an auditing system to monitor and assess their compliance performance with the EPR Law and their EPR programs
Engage a Third Party Auditor
To implement an auditing system, businesses must engage an independent third-party auditor to certify the veracity of the reported plastic product footprint generation, recovery, and EPR program compliance.
Results Will Be Published
The certified reports on plastic product footprint will be available to the public through the DENR’s website, except records, reports, information or particular portions deemed confidential.
Are There Incentives for Businesses to Comply with the EPR Act? Absolutely.
Apply for Tax Incentives under Title XIII of the National Internal Revenue Code.
Large enterprises or PROs acting on behalf of these businesses can apply for tax incentives for their EPR activities following the process under Title XIII of the NIRC.
To avail of tax incentives, the EPR activities must undergo the standard processes in the identification of qualified activities under the Strategic Investment Priority Plan (SIPP).
What is the treatment of EPR expenses under the Tax Code?
EPR expenses of large enterprises and PROs are considered as necessary expenses deductible from gross income and are subject to the substantiation requirements for necessary business expenses under Section 34(A)(1) of the Tax Code.
What Happens if OEs Violate the EPR Act?
What counts as violations of the EPR Act?
The following are violations of the EPR Act:
- Failure to register an EPR Program;
- Falsification of documents submitted to the DENR;
- Misdeclaration of generated or recovered footprint;
- Employing schemes to maliciously evade the responsibility of an enterprise;
- Employing schemes to tamper with an OE’s compliance with the EPR Act.
General Fines
The EPR Act imposes the following fines for either failure to register an EPR Program or Failure to Meet Targets under the EPR Act:
- Php 5M to less than Php 10M for the first offense
- Php 10M to less than Php 15M for the second offense
- Php 15M to less than 20M for the third offense
Other Penalties
For Failure to Register an EPR Program
In case of a third offense, an OE’s business permit will be suspended until the EPR Act’s registration requirements are complied with.
For Failure to Meet Targets within Compliance Period
The OE will pay either the fines above OR a fine of twice the cost of recovery and diversion of the footprint or the shortfall, whichever is higher.
This Primer is posted for academic and general references only and does not constitute legal advice. For further information on this topic, you may contact the De Guzman San Diego Mejia Hernandez Law Offices (GSMH Law) by phone (02)85110908 or email (counsel@gsmhlaw.com). The GSMH Law website can be accessed at www.gsmhlaw.com. GSMH Law is bound by our professional ethics to ensure that any information relayed to us and advice given thereon in the course of, or with a view to, professional employment shall be kept privileged and confidential.