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Howse OF REPRESENTATIVES = DATE August 6, 2026 g
Quezon City * TIME _ 3:46pm

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20th CONGRESS Ko
First Regular Session ip INDEX:

HOUSE BILL No. _3293

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Introduced by REP. JUAN CARLOS “ARJO” C. ATAYDE

AN ACT
tY
ESTABLISHING A NATIONAL FRAMEWORK FOR THE MANDATOR’
ENVIRONMENTAL INSURANCE COVERAGE OF ENVIRONMENTALLY
CRITICAL PROJECTS

EXPLANATORY NOTE

Article Il, Section 16 of the 1987 Philippine Constitution mandates the State to
“protect and atoance the right of the people to.a balanced and healthful ecology in accord with the
rhythm and harmony of nature.” This constitutional Principle imposes an obligation not
only to prevent environmental degradation, but also to ensure the accountability of those
who place our ecosystems and communities at risk,

‘mining disaster in Marinduque is a well-documented example. In that case, tailings from
‘a mining project spilled into the Boac River, causing irreversible environmental harm and
affecting the health and livelihood of thousands, A case study published in the Asian
Journal of Business Ethics (Lindon et al, 2014) noted that while an Environmental
Guarantee Fund (EGF) was in place, it was severely underfunded and eventually


exhausted. The authors concluded that “[once] the fund was depleted, regulators had no
further leverage,” leaving most victims uncompensated and environmental damage

largely unremedied.

This failure is not isolated. A 2022 legal thesis by Mendoza (DLSU) found that
although some financial assurance mechanisms exist—such as rehabilitation bonds or
tailings fees in mining — their structure is fragmented, reactive, and often insufficient. The
study stressed the urgent need to create a dedicated, proactive financial safety net for
environmental damage caused by high-risk projects. Mendoza proposed establishing a
legislated fund, financed by industry contributions, to support rehabilitation and cleanup

efforts when polluters are either unable or unwilling to pay.

In contrast, global and regional experiences show the benefits of mandatory
environmental insurance. South Korea enacted a law in 2016 requiring high-risk
industries to carry environmental liability insurance, ensuring coverage for
environmental damage, third-party claims, and cleanup costs. In China, pilot programs
in hazardous sectors have shown that compulsory environmental insurance improves
pollution control and environmental transparency among covered firms. These findings
are echoed in a 2024 study published in Frontiers in Environmental Science (Chen & Xie),
which found that firms with environmental liability insurance not only had better
environmental performance, but also increased investment in green innovation, driven

by easier access to capital and regulatory incentives.

Even international stakeholders support this approach. A 2022 report by the
United Nations Environment Programme Finance Initiative (UNEP Fl) found that a
majority of global experts—56%—favor making environmental liability insurance
compulsory, citing its value in securing funding for rehabilitation and enforcing the
"polluter pays" principle.

In the Philippines, the present system still allows projects with potentially

catastrophic environmental consequences to operate without clear, enforceable financial


security. This bill seeks to correct that by establishing a Mandatory Environmental
Insurance Coverage framework. All owners and operators of Environmentally Critical
Projects (ECPs) ~as identified under Presidential Proclamation Nos. 2146 and 803— shall
be required to secure either an environmental insurance policy or a performance bond.
‘The insurance will cover environmental impairment, bodily and property damage, and

the costs of rehabilitation, remediation, and cleanup.

Additionally, an inter-agency technical committee led by the Department of
Environment and Natural Resources (DENR) shall be tasked with identifying risk
thresholds, accrediting insurance providers, and ensuring that premiums and coverage
evels reflect the true environmental risks involved. Importantly, the insurance proceeds
will not be handled by government agencies directly, but disbursed via escrow accounts
in designated banks upon advice of the DENR and with supporting documentation. This

is to ensure accountability, efficiency, and proper use of funds.

‘The intent of this measure is not to burden investors or industries but to create a
fair and effective system where those who stand to profit from high-risk operations also
bear the cost of preventing and remedying the damage they may cause. By aligning
financial responsibility with environmental stewardship, this measure upholds the

Constitution's mandate to protect ecological balance and public welfare.

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

REP. JUAN CARLQB “ARJO” C. ATAYDE


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

20th CONGRESS
First Regular Session

HOUSE BILL No. _3293

Introduced by REP. JUAN CARLOS “ARJO” C. ATAYDE
eS

[EWORK FOR THE MANDATORY
AN ACT ESTABLISHING A NATIONAL FRAM)
ENVIRONMENTAL INSURANCE COVERAGE OF ENVIRONMENTALLY
CRITICAL PROJECTS

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

assembled:

SECTION 1. Title. — This Act shall be known as the “Mandatory Environmental

Insurance Coverage Act of 2025.”
SEC. 2. Definition of Terms. — As used in this Act:

1. Environmentally Critical Project refers to a project that has high potential for
significant negative environmental impact and is listed as such under Presidential
Proclamation (P.P.) No. 2146, series of 1981, and P.P. No. 803, series of 1996, as well
as other projects which the President may proclaim as environmentally critical in
accordance with Section 4 of P.D. 1586 or the Philippine Environmental Impact
Statement System;

2. Heavy industries refer to non-ferrous metal industries, iron and steel mills,

petroleum, and petrochemical industries, including oil and gas smelting plants;


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3. Infrastructure projects refer to major dams, major power plants, major reclamation

projects, and major roads and bridges; and

4, Resource Extractive Industries refer to major mining and quarrying projects; forestry
projects involving logging, major wood processing projects, introduction of fauna
or exotic animals in public or private forests, forest occupancy, extraction of
mangrove products, and grazing; and fishery projects, specifically fishpond
development projects and dikes for such projects.

SEC. 3. Establishment of a National Framework for Mandatory Environmental
Insurance Coverage. — Within one (1) year following the effectivity of this Act, a national
framework for Mandatory Environmental Insurance Coverage (MEIC) shall be
established.

The framework shall consider the following:

1. Coverage. All owners and operators of Environmentally Critical Projects (ECPs)
shall be required to secure MEIC for ECPs as prescribed under this Section, to
compensate for the adverse environmental consequences which include damage
to health and property, and costs for environmental rehabilitation, remediation,
cleanup, and other environmental impairments arising from their operations. For
purposes of this Act, ECPs shall include heavy industries, major manufacturing
industries, major resource-extractive industries, major infrastructure projects, and
other similar projects that could pose serious risks to people and the environment.

2. Forms of MEIC. — The MEIC shall be in the form of:

a. Environmental guarantee cash fund established pursuant to existing
environmental laws; or

b. Environmental insurance policy (EIP) obtained from bonding or insurance
companies, whenever the environmental guarantee cash fund is insufficient

to cover the said adverse environmental consequences, upon determination


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and recommendation of the Inter-Agency Technical Committee created

pursuant to Section 5 of this Act.
‘The EIP may take the form of the following:

4. Environmental Performance Bond (EPB) - which shall be required for all ongoing
activities or projects issued with an Environmental Compliance Certificate (ECC)
pursuant to P.D, 1586, to guarantee adequate and timely compliance with the
environmental standards and the terms and conditions set forth by the
Department of Environment and Natural Resources (DENR) during the pre-
development, development, and construction phases of the project. The EPB shall
answer for all environmental damages, penalties, and legal obligations which may
arise from the failure of the project proponent to comply with its undertakings

during the aforementioned phases; and

2, Environmental Pollution, Impairment, and Cleanup Liability Insurance (EPICLI) ~
which shall be required for all existing and future activities or projects issued with
an ECC pursuant to P.D. 1586, to cover the operational phases. The EPICLI shall
answer for all claims arising from damages to the environment; bodily injury and
property damage arising from a pollution event; and for the cost of environmental
rehabilitation, cleanup, or remediation responses to address the contamination or

impairment of the environment.

SEC. 4. Pre-requisite to the Construction or Operational Phase. - Owners and
operators of ECPs shall not be allowed to commence construction or commercial

operation without initially obtaining the MEIC required under Section 3 of this Act.

SEC. 5. Creation of an Inter-Agency Technical Committee. - Within one (1) year
following the effectivity of this Act, the Secretary of the DENR shall establish and chair
an Inter-Agency Technical Committee (IATC), with the Commissioner of the Insurance

Commission and representatives of the insurance industry, the mining industry, and


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other stakeholders that the DENR may deem fit, as members. Within the same period,
the IATC shall:

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_ Identify the perils or possible negative environmental impacts, activities,

processes or undertakings that need to be mandatorily insured as provided in

Section 3 hereof;

Conduct risk assessment to determine the appropriate insurance coverage for

different ECPs and activities;

Formulate guidelines for the identification of primary impact areas and

prescription of rehabilitation or remediation measures in cases of environmental

damages;

. Formulate cleanup guidelines;
Formulate guidelines for the identification of beneficiaries of the MEIC;

Ensure that the premium rates of the EIP are commensurate to the risks covered;

| Formulate guidelines for the determination of veracity of claims;

Accredit insurance companies; and

. Undertake such activities as may be necessary to fulfill the objectives of this Act.

For purposes of paragraph (h) of this Section, the Insurance Commission, in

coordination with the DENR, shall formulate guidelines for the accreditation of insurance

companies, within one (1) year following the effectivity of this Act.

SEC. 6. Beneficiaries. - The beneficiaries of the MEIC include affected

communities, stakeholders, and local government units within the projects’ primary

impact areas. Also included as beneficiaries are government departments, bureaus, and

agencies which are tasked under the law to undertake the rehabilitation, cleanup, and

monitoring of sites affected by the pollution or insurable event, for which no responsible

private or public entity is specified.


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‘The beneficiaries shall be represented by the government, particularly the DENR.
‘The IATC shall identify the affected areas and prescribe rehabilitation or remediation

measures pursuant to Sec. 5 of this Act.

SEC. 7. Payment of Claims. ~ The insurance company shall place all payments of
claims into special escrow accounts in government depository banks, which shall in turn
disburse the corresponding payment to beneficiaries, upon advice of the DENR and with

proper documentation.

‘The DENR may create an ad-hoc body composed of representatives from business,
labor, government, civil society, and other stakeholders to assure that claims are verified
and rightful parties are compensated, and the environment is properly rehabilitated,
cleaned up, remediated, stabilized, and protected.

‘The DENR shall not receive and handle payment of claims for environmental
damages, penalties, and charges, except for the claims component which properly

accrues to it as an insurance beneficiary.

‘The government agency tasked with rehabilitation and assigned as the beneficiary
of the MEIC as provided under Section 6 of this Act, shall undertake the same utilizing
funds coming from the insurance claim upon approval of the DENR.

SEC. 8. The failure of the owner and operator of an ECP to secure an MEIC as
prescribed under Section 3 hereof, or of the insurance company to pay a verified claim in
violation of the provisions of this Act and within reasonable time, shall be punished with
a fine of Five hundred thousand pesos (P500,000.00) but not more than Two million pesos
(P2,000,000.00) or imprisonment of not less than six (6) years but not more than twelve
(12) years, or both, at the discretion of the court.

In the case of a partnership, association, corporation, or any juridical entity, the

fine shall be imposed upon the president, treasurer, or any other officer or person
responsible for the violation.


If the offender is a foreigner, the offender shall, after the service of sentence, be

deported immediately without further proceedings by the Bureau of Immigration.

Government officials, employees, and agents who approve the construction or
operation of environmentally-critical projects without the necessary MEIC, in violation
of the provisions of this Act, shall suffer the penalty of suspension of not less than thirty

30) days, but not more than six (6) months after due notice and hearing in the appropriate

administrative proceedings.

SEC. 9, Implementing Rules and Regulations. — Within sixty (60) days from the
approval of this Act, the DENR shall, in coordination with the Insurance Commission,
promulgate the necessary rules and regulations for the effective implementation of this

Act.

SEC.10. Repeating Clause. — Alllaws, decrees, orders, rules, and regulations, and
other issuances inconsistent with the provisions of this Act are repealed, amended, or
modified accordingly.

SEC. 11. Effectivity. — This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,