Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGTHEENTH CONGRESS
First Regular Session

0144

HOUSE BILL No.

Introduced by Honorable Rodante D. Marcoleta

EXPLANATORY NOTE

Article II, Section 16 of the 1987 Constitution 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.”

Despite existing laws that protect the environment, there are still lapses in

implementing the lawful right to a healthy and balanced ecology.

There have been many instances of man-made environmental damages like
the 1996 Marcopper Mining tragedy in Marinduque which led to the biological
death of the Boac and Makalupnit rivers, destroyed hectares of farmlands and
displaced families. The 2005 and 2007 massive fish kills in Rapu-Rapu, Albay
caused by cyanide spills from the mining operations of Lafayette, Philippines, Inc.

also caused severe damage to the community.

In 2013, a tragedy between 2GO Group Incorporation and Philippine Span
Asia Carrier Corporation ships claimed twenty-four (24) lives and imperiled the
Cadova marine environment in Talisay, Cebu. One of the sunken ships was loaded
with 120,000 liters of Bunker oil, 20,000 liters of Lube oil and 20,000 liters of

Diesel fuel. Days after the collision, oils from wrecked and sunken ships had


reached five (5) barangays of Cardova town. The marine ecosystem of the
concerned areas was affected causing the residents to lose their sources of
livelihood. Regrettably, even with these environmental disasters, there is still no
policy to ensure sufficient financial coverage for communities affected by man-

made disasters.

This bill seeks to require Mandatory Environmental Insurance Coverage
for owners and operators of environmentally-critical projects which activities
destroy or pose risks to the environment, the ecosystems and their constituent
elements. The said insurance will be used to guarantee sufficient funding coverage

for the needed restoration and compensate for damages caused by their operations.

In view of the foregoing, approval of this bill is highly and earnestly

recommended.

RODANTWD. MARCOLETA



Republic of the Philippines
HOUSE OF REPRESENTATIVES.
Quezon City

EIGTHEENTH CONGRESS
First Regular Session

HOUSE BILL No. 0144

Introduced by Rep. Rodante D. Marcoleta

AN ACT

PROVIDING FOR THE ESTABLISHMENT OF A NATIONAL FRAMEWORK FOR
MANDATORY ENVIRONMENTAL INSURANCE COVERAGE FOR CERTAIN
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”.

SEC. 2. Definition of Terms. As used in this Act:

a) Environmentally Critical Project (ECP) — 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.

1)

Heavy industries ~ refer to non-ferrous metal industries, iron and steel mills, petroleum
and Petro-chemical industries including oil and gas, smelting plants.

°)

Resource Extractive Industries ~ refer to major mining and quarrying projects, forestry
projects (logging, major wood processing projects, introduction of fauna (exotic animals)
in public and private forests, forest occupancy, extraction of mangrove products,
grazing), fishery projects (dikes for/ and fishpond development projects).

d)

Infrastructure Projects ~ refer to major dams, major power plants (fossil-fueled, nuclear
fueled, hydroelectric or geothermal), major reclamation projects, major roads and
bridges.


e)

Multipartite Monitoring Team (MMT) - refers to a multi-sectoral team covered for the
primary purpose of monitoring compliance by the proponent with the ECC, the EMP and
applicable laws, rules and regulations.

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 shall be established. The framework shall
consider the following:

7)

»

Coverage. All owners and operators of environmentally critical projects shall be
required to secure a Mandatory Environmental Insurance Coverage (MEIC) to
compensate for damages to health and property, environmental rehabilitation,
remediation and clean-up costs and expenses as a result of environmental impairment
arising from their operations. For purposes of this Act, environmentally critical
projects shall include but not be limited to 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.

Forms of Mandatory Environmental Insurance Coverage. The Mandatory
Environmental Insurance Coverage may be an environmental guarantee cash fund
pursuant to existing environmental laws and an environmental insurance policy
obtained only from bonding or insurance companies duly accredited by the
Department of Environment and Natural Resources (DENR) and the Insurance
Commission. The environmental insurance policy may take the form of but not be
limited to the following:

i, Environment Performance Bond (EPB) — which shall be required for all ongoing
activities or projects with Environmental Compliance Certificate to guarantee
adequate and timely compliance with the environmental standards and the terms
and conditions set forth by the DENR during the pre-development, development
and construction phases of the project. The Environmental Performance Bond
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

ii, Environment Pollution, Impairment and Clean-up Liability Insurance (EPICLI) —
which shall be required for all existing and future activities or projects to cover
operational phases, with those projects that have been issued an Environmental
Compliance Certificate. The EPICLI shall answer for all claims arising from
damages to the environment, bodily injury, and property damage arising from a
pollution event including environmental rehabilitation, clean-up or remediation
costs and expenses for contamination or impairment of the environment.


SEC. 4. Creation of an Inter-Agency Technical Committee. Within one (1) year following
the effectivity of this act, the DENR, in coordination with the Insurance Commission, insurance
industry, mining industry, and other stakeholders that the committee might deem fit shall:

a. Identify the perils or possible negative environmental impacts, activities, processes or
undertaking that need to be covered by environmental insurance policies;

b. Conduct of risk assessment for the determination of the insurance coverage;

c. In cases of environmental damages, formulate guidelines for the identification of primary
impact areas and prescription of rehabilitation or remediation measures;

4d. Formulate guidelines for clean-up operations;

e. Formulate guidelines for the identification of beneficiaries of the environmental insurance
policy;

f Formulate guidelines for the determination of veracity of claims; and,

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

The Insurance Commission shall formulate guidelines for the accreditation of insurance
companies in coordination with the DENR within one (1) year following the effectivity of this Act.

SEC. 5. Pre-requisite To The Construction Or Operational Phase. ~ Owners and operators
of environmentally critical projects shall not be allowed to commence construction or commercial
operation without first obtaining the Mandatory Environmental Insurance Coverage required under
Section 3 of this Act.

SEC. 6. Multi-partite Monitoring. — During the insurance coverage period, the multi-partite
monitoring team created by the DENR pursuant to existing environmental laws shall conduct
quarterly, bi-annual or annual visits to the business firm’s project to evaluate measures established
by the project proponent to prevent environmental disasters.

SEC. 7. Beneficiaries. - The beneficiaries of the Mandatory Environmental Insurance
Coverage include affected communities, stakeholders and local government units within the
projects’ primary impact areas. Beneficiaries also include government departments, bureaus and
agencies which are tasked under law to undertake the rehabilitation, clean-up and monitoring of the
sites affected by the pollution event for which no responsible private or public entity is specified.

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.4 of this Act.

SEC. 8. 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
corresponding payment to beneficiaries only upon the advice of the DENR after proper
documentation.

The DENR may create a multi-sectoral body composed of representatives from the 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 claim component which properly accrues to it as an insurance
beneficiary.

The government agency tasked with rehabilitation and beneficiary of the Mandatory
Environmental Insurance Coverage as provided under Section 6 of this Act shall undertake the same
with funds coming from the insurance claim upon recommendation of the DENR or the multi-
sectoral body created by DENR and approved by the Secretary of Environment and Natural
Resources.

SEC. 9. Penalties. — The failure of the owner and operator of environmentally-<critical
projects to take out Mandatory Environmental Insurance Coverage or of the insurance company to
pay within reasonable time a verified claim in violation of this Act, 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 be deported immediately without further
proceedings in the Bureau of Immigration after the service of sentence.

Government officials, employees and agent who shall approve the construction or operation
of environmentally-critical projects without the necessary Mandatory Environmental Insurance
Coverage, in violation 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. 10. Implementing Rules and Regulations. ~ Within sixty (60) days from the approval
of this Act, the Secretary of the Department of Environment and Natural Resources shall, in
coordination with the Commissioner of the Insurance Commission, promulgate the necessary rules
and regulations for the effective implementation of this Act.

SEC. 11. Repealing Clause. — All laws, decrees, orders, rules and regulations, and other
issuances inconsistent with the provisions of this Act are repealed, amended or modified

accordingly.

SEC. 12. Effectivity. — This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in a newspaper of general circulation.

APPROVED.