Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.,  
HON. MIGUEL LUIS R. VILLAFUERTE, HON. TSUYOSHI ANTHONY G. HORIBATA 
AND HON. NICOLAS ENCISO VIII 
EXPLANATORY NOTE 
There are many human acts that have caused major alterations in our surroundings. 
Instances such as the 1996 Marcopper Mining tragedy, which led to the biological death 
of the Boac and Makalupnit rivers, and the destruction of hectares of farmlands that 
displaced families or the 2005 and 2007 massive fish kills caused by a cyanide spill from 
the operations of Lafayette Philippines, Inc. These operations have provided an honest 
living for the people in the area but have left only misfortune and mishap on the 
environment which it will forever carry. 
Operations to mitigate and rehabilitate the unforeseen damages to the ecosystem and 
its constituents need funds. However, the lack of an institutionalized financial assistance 
from the institutions and corporations that caused these damages greatly stunts the 
rehabilitation of the elements affected.  
There is a need for financial compensation from environmentally-critical businesses in 
order to prevent these disasters from happening and to be able to readily provide for 
rehabilitation in case repercussions are inevitable. The goal is to be able to handle the 
damage that unanticipated and unforeseen disasters make and to compensate for 
losses to the environment through the insurance coverage. The Philippines is already 
considered as the most disaster-prone region in Southeast Asia. The creation of 
business entails the use of natural resources such as land and water. Given that, an 
ecosystem is greatly affected as its natural resources is used and manipulated for the 
interest of the business. With the country already being a disaster-prone region, the 
need becomes greater in making sure businesses provide insurance for possible 
environmental damages that may occur in the course of them doing their business. 
With businesses being created for the intended purpose of profit and economic 
development for the area, the environmental degradation that comes with this is an 
unfortunate side effect. It is considered as a “negative externality”, which are unintended 
and indirect negative effects of economic activities on other producers and consumers. 
This could prompt owners to forego the importance of the social costs that they impose 
on the other constituents of the area. 
July 14, 2022
1:45 pm
 1937


The Philippines must hold accountable the institutions and corporations that pose risks 
to the environment, the ecosystem and their constituents. This bill seeks to 
institutionalize an insurance plan given to corporations of a certain nature, in 
coordination with the DENR, to ensure that possible damages to the environment are 
well covered for. Every time an environmentally-critical business moves forward with a 
project, they must avail of a Mandatory Environmental Insurance Coverage (MEIC) as 
insurance for unforeseen damage towards the environment. The said insurance will be 
used to guarantee sufficient funding coverage for the needed restoration and 
rehabilitation of a damaged ecosystem and all of its constituents caused by the said 
businesses. 
In view of the foregoing, approval of this bill is earnestly sought. 
LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR. 
 MIGUEL LUIS R. VILLAFUERTE 
TSUYOSHI ANTHONY G. HORIBATA 
NICOLAS ENCISO VIII 


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.,  
HON. MIGUEL LUIS R. VILLAFUERTE, HON. TSUYOSHI ANTHONY G. HORIBATA 
AND HON. NICOLAS ENCISO VIII 
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 Environmental 
Insurance Coverage Act". 
SECTION 2. Definition of Terms. — As used in this Act: 
(a) 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 8 in
accordance with Section 4 of Presidential Decree No. 1586 or the Philippine
Environmental Impact Statement System;
(b) Heavy industries refer to non-ferrous metal industries, iron and steel mills, petroleum,
and petrochemical industries, including oil and gas smelting plants;
(c) Infrastructure projects refer to major dams, major power plants, major reclamation
projects, and major roads and bridges; and
(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.
 1937


 
SECTION 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) 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. 
 
(b) Forms of MEIC. — The MEIC shall be in the form of: 
 
(1) Environmental guarantee cash fund established pursuant to existing environmental 
laws; or 
 
(2) 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 ongoing 
activities or projects issued with Environmental Compliance Certificate (ECC) 
pursuant to Presidential Decree No. 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 Presidential Decree No. 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. 
 
 
SECTION 4. Prerequisite 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. 
 
SECTION 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 IATC shall: 
 
(a) Identify 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; 
(e) 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 
(i) 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. 
 
SECTION 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 Section 5 of this Act. 
 
SECTION 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. 
 
SECTION 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. 
 
SECTION 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. 
 
SECTION 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. 
 
SECTION 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,