Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

NINETEENTH CONGRESS,
First Regular Session

ino, _165

HOUSE BI

Introduced by Rep. Rodante D. Marcoleta and Rep. Caroline L. Tanchay

EXPLANATORY NOTE
Article I. 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 2003 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 Diese! fuel
Days alier 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.

@

CAROLIN:

THAY



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

NINETEENTH CONGR’
First Regular Session

HOUSE BILL NO. 165

Introduced by Rep. Rodante D. Marcoleta and Rep. Caroline L. Tanchay

AN ACT
ESTABLISHING A NATIONAL FRAMEWORK FOR THE MANDATORY
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 Enviromnental
Insurance Coverage Act”

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

a) Environmemally 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:

b

Heavy industries refer wo non-ferrous metal industries. iron and steel mills
petroleum. and petrochemical industries, including oil and gas smelting plants:

©

Infrastructure projects refer to. major dams, major power plants, major
nd major roads and bridges: and,

reclamation project
d) 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


. 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:

a)

b)

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

Forms of MEIC. - ‘The MEIC shall be in the form of

1. Environmental guarantee cash fund established pursuant to existing
environmental laws: or

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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
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:

i. Environment performance bond (EPB) ~ which shall be required for all
vironmental Compliance

ongoing activities or projects issued with f
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

ii, Environment pollution, impairment, and cleanup liability insurance
(EPICLI) ~ which shall be required for all existing and future activities or


projects issued with 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 Committee (IATC). with the Commissioner of the Insurance
Commission and representatives of the insurance industry, the mining industry, and other
stakeholders that the DENR may deem fit. as members. Within the same period. the
ATC shall

a) Identil\ the perils or possible negative environmental impacts, activities.
processes or undertakings that need to be mandatorily insured as provided in
Section 3 hereof.

b) Conduct risk assessment to determine the appropriate insurance coverage for
different ECPs and activities:

c) Formulate guidelines for the identification of primary impact areas and
prescription of rehabilitation or remediation measures in cases of
environmental damages:

d) Formulate cleanup guidelines:

ce) Formulate guidelines for the identification of beneficiaries of the MEIC,

f) Ensure that the premium rates of the EIP are commensurate to the risks
covered:

g) Formulate guidelines for the determination of veracity of claims;

h) Formulate guidelines for the establishment of insurance facilities, and

1) 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 establishment of
insurance facilities, 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

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. Penalties. ~ 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. 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

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

Approved