EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
S E N A T E
S. No. 5 8 0
!!ic £.v rfta; p
•19 
JUL 17 P5 :49
Introduced by Senator Grace Poe
Rtwh,
AN ACT
REQUIRING MANDATORY ENVIRONMENT INSURANCE COVERAGE TO 
PROMOTE ECOLOGICAL PROTECTION
Explanatory Note
The primacy of the environment is enshrined in Article II, Section 8 of the 
1987 Philippine Constitution, which mandates the state to "...protect and advance 
the right of the people to a balanced and healthful ecology in accord with the 
rhythm and harmony of nature." In the landmark environmental case of Oposa vs 
Factoran (G.R. No. 101083), the Supreme Court ruled that "the right to a balanced 
and healthful ecology carries with it the correlative duty to refrain from impairing the 
environment."
The "duty to refrain from impairing the environment" is spelled out in several 
laws such as the Revised Forestry Code (P.D. No. 705); the Water Code of the 
Philippines (P.D. No. 1067); the Philippine Mining Act of 1995 (R.A. 7942); the 
Philippine Fisheries Code of 1998 (R.A. 8550); the Philippine Clean Air Act of 1999 
(R.A. 8749); the Ecological Solid Waste Management Act of 2000 (R.A. 9003); and 
the Wildlife Resources Conservation and Protection Act (R.A. 9147).
However, there remain lapses in the protection of the people's right to a 
healthy and balanced ecology. In particular, environmental degradation and man­
made disasters which arise from economic activities are extremely under-regulated.


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, and 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 Lafayettes, Philippine, Inc. also caused 
severe damage to the community. More detailed cases are listed below:
• 
In 2012, 20 million metric tons of sediments flowed into water channels from 
the Philex tailings pond in Itogon, spilling tons of sediments into the Agno 
River and Balog Creek. An investigation by the Samahan ng Nagtataguyod ng 
Agham at Teknolohiya Para sa Sambayanan (AGHAM) reported that Balog 
Creek is now "biologically dead". The livelihoods of residents near the spill 
were also severely affected.
• 
In August 2013, a mishap between 2GO Group Incorporated and Philippine 
Span Asia Carrier Corporation ships claimed twenty-four (24) lives and 
imperilled the Cordova 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. Days after the collision, oils from wrecked 
and sunken ships had reached 12 villages of Cordova town. The marine 
ecosystem of the affected areas was affected causing the residents to lose 
their livelihoods.
• 
According to a study by Greenpeace, the Chemphil Manufacturing Corporation 
has contributed to the wastewater in Pasig River. Sediments found in their 
channels that drain into the river were found to have high-levels of copper, 
manganese, lead, nickel, and zinc.
Environmental degradation due to economic activities is a form of "negative 
externality" or the unintended and indirect negative effects of economic activities on 
other producers and consumers. It is characterized as a social cost that is greater 
than the cost borne by private producers. Without prudent government regulation, 
producers of negative externalities will have no incentive to either absorb or account


for the social costs which they impose upon the Filipino people. This is particularly 
important given the steady economic growth due to commercial and industrial 
development.
As a remedy, this biil proposes Mandatory Environmental Insurance Coverage 
(MEIC) as a measure to somehow compensate the people and rehabilitate the 
environment from the environmental damages caused by certain economic activities. 
It requires mandatory environmental insurance coverage for owners and operators 
of environmentaliy-criticai 
businesses. 
The 
said 
insurance 
will 
be 
used 
to 
compensate for damages and to rehabilitate any environmental impairment caused 
by their operation. The MEIC is designed to relieve a business firm of the financial 
burden to spend for environmental loss or damage as a consequence of its project's 
construction or operation. It will answer for all claims for the payment of damages to 
heaith and property; and the environmental rehabilitation, remediation and clean-up 
costs and expenses.
Although the government recognizes the indispensable role of the private 
sector and encourages private enterprise and provides incentives to needed 
investments, it also protects and advances the right of the people to a balanced and 
healthful ecology in accord with the rhythm and harmony of nature. This bill is 
essential, therefore, to protect the business sector, the people and the environment.
In view of the foregoing, the approvai of this bill is urgently sought.
^
 /
 G It'C E


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
S E N A T E  
S. No. 58-Q
frK-
e«i(J Jf
*19 
JUL 17 P5 ’49
Introduced by Senator Grace Poe RECEi
REQUIRING MANDATORY ENVIRONMENT INSURANCE COVERAGE TO 
PROMOTE ECOLOGICAL PROTECTION
Be it enacted by the Senate and House o f Representatives o f the Philippines in 
Congress assembled:
1 
Section 1. 
Mandatory Environment Insurance Coverage. -  All owners and
2 
operators of environmentally-critical businesses shall be required to secure a
3 
Mandatory Environmental Insurance Coverage (MEIC) to compensate for damages
4 
to health and property, and remunerate environmental rehabilitation, remediation
5 
and clean-up costs and expenses as a result of environmental impairment arising
6 
from their operations.
7 
For the purposes of this Act, environmentally-critical businesses refer to
8 
commercial and industrial establishments and enterprises, among others, that could
9 
pose serious risks to people and the environment.
10 
Sec. 2. 
Forms o f Mandatory Environment Insurance Coverage. -  The MEIC
11 
shall be obtained only from bonding or insurance companies duly accredited by the
12 
Department of Environment and Natural Resources (DENR) in the following forms:
13 
a) 
Environmental Performance Bond -  which shall be required for all
14 
ongoing activities or projects and applications for Environmental Compliance
15 
Certificate or Certificate of Non-coverage to guarantee adequate and timely
16 
compliance with the environmental standards and the terms and conditions set forth
17 
by the DENR during the pre-development, development and construction phases of
18 
the 
project. 
The 
Environmental 
Performance 
Bond 
shall 
answer 
for 
all
1


1 
environmental damages, penalties and legal obligations which may arise from the
2 
failure of the project proponent to comply with its undertakings during the
3 
aforementioned phases; and
4 
b) 
Environmental Pollution, Impairment and Clean-Up Liability Insurance -
5 
which shall be required for all existing and future activities or projects to cover
6 
operational phases, including those that have been issued an Environmental
7 
Compliance Certificate or Certificate of Non-coverage. The Environmental Pollution,
8 
Impairment and Clean-Up Liability Insurance shall answer for all claims arising from
9 
damages to the environment, bodily injury, and property damage arising from a
10 
pollution event including environmental rehabilitation, clean-up or remediation costs
11 
and expenses for contamination or impairment of the environment.
12 
The DENR shall determine which businesses or industries shall be classified as
13 
environmentally-critical 
and 
shall 
be 
required 
to 
obtain 
an 
Environmental
14 
Performance Bond or an Environmental Pollution, Im pairment and Clean-Up Liability
15 
Insurance.
16 
Sec. 3. Pre-requisite fo r the Issuance o f Environmental Compliance Certificate
17 
o r Certificate o f Non-coverage. -  Owners and operators of environmentally-critical
18 
businesses shall not be issued an Environmental Compliance Certificate or Certificate
19 
of Non-coverage by the DENR without first obtaining the MEIC required by this Act.
20 
Sec. 4. 
Environmental Risk Inspector. -  During the insurance coverage
21 
period, an environmental risk inspector from the DENR shall conduct quarterly, bi-
22 
annual or annual visits to the business firm's project to evaluate and recommend
23 
measures to prevent environmental disasters.
24 
Sec. 5. 
Beneficiaries. -  The beneficiaries of the MEIC include affected
25 
communities, stakeholders and local government units within the projects' primary
26 
impact areas. 
Beneficiaries also include government departments, bureaus and
27 
agencies which are tasked under law to undertake the rehabilitation, clean-up and
28 
monitoring of the projects affected by the pollution event for which no responsible
29 
private or public entity is specified.


1 
The beneficiaries shall be represented by the government, particularly the
2 
DENR, which shall identify the affected areas and prescribe rehabilitation or
3 
remediation measures.
4 
Sec. 6. Payment o f Claims. -  The insurance company shall place all payments
5 
of claims into special escrow accounts in government depository banks which shall,
6 
in turn, disburse corresponding payments to beneficiaries only upon the advice of
7 
the Environmental Management Bureau of the DENR (EMB-DENR) and after proper
8 
documentation.
9 
The 
EMB-DENR 
may 
create 
a 
multi-sectoral 
body 
composed 
of
10 
representatives from the business, labor, government, and civil society groups, and
11 
other stakeholders to assure that claims are verified and rightful parties are
12 
compensated and the environment is properly rehabilitated, cleaned-up, remediated,
13 
stabilized and protected.
14 
The EMB-DENR shall not receive and handle payments of claims for
15 
environmental damages, penalties and charges, except for the claim component
16 
which properly accrues to it as an insurance beneficiary.
17 
The government agency tasked with rehabilitation and is beneficiary of the
18 
MEIC as provided under Section 5 of this Act shall undertake the same with funds
19 
coming from the insurance claim upon the recommendation of the EMB-DENR or the
20 
multi-sectoral body created by EMB-DENR and the approval of the Secretary of
21 
Environment and Natural Resources.
22 
Sec. 7. Penalties. -  The failure of the owner and operator of environmentally-
23 
critical businesses to secure MEIC in violation of this Act shall be punished with a
24 
fine of five hundred thousand pesos (P500,000.00) but not more than two million
25 
pesos (P2,000,000.00) or imprisonment of not less than six (6) years but not more
26 
than twelve (12) years, or both, at the discretion of the court.
27 
In the case of a partnership, association, corporation or any juridical entity,
28 
the fine shall be imposed upon the president, treasurer or any other officer or
29 
person responsible for the violation.


1 
If the offender is a foreigner, the offender shall be deported immediately
2 
without further proceedings in the Bureau of Immigration after the service of
3 
sentence.
4 
Government officials, employees and agents who shall approve the issuance
5 
of certificates to owners or operators of environmentally-critical businesses without
6 
the necessary MEIC, in violation of this Act, shall suffer the penalty of suspension of
7 
not less than thirty (30) days but not more than six (6) months after due notice and
8 
hearing in the appropriate administrative proceedings.
9 
Sec. 8, Im plem enting Rules and Regulations. -  Within sixty (60) days from
10 
the approval of this Act, the Secretary of Environment and Natural Resources shall,
11 
in coordination with the Commissioner of the Insurance Commission, promulgate the
12 
necessary rules and regulations for the effective implementation of this Act.
13 
Sec. 9. 
Repealing Clause. -  All laws, decrees, orders, rules and regulations,
14 
and 
other issuances inconsistent with the provisions of this Act are repealed,
15 
amended or modified accordingly.
16 
Sec. 10. 
Effectivity. -  This Act shall take effect fifteen (15) days after its
17 
publication in the Official Gazette or in a newspaper of general circulation.
Approved,