? 
FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
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) 
) 
SENATE 
S.No. 1793 
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Introduced by Senator Miriam Defensor Santiago 
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EXPLANATORY NOTE 
The massive flooding caused by Storm Ondoy and Pepeng created personal hardships and 
economic distress to millions of Filipinos. According to the National Disaster Coordinating 
Council's (NDCC) latest updates, Pepeng displaced about 533,856 families or more than two 
million individuals, while Ondoy affected 880,175 families or more than 4 million people. 
As of October 2009, damage to property from Pepeng has reached P16.5 billion, 
including P4.8 billion in infrastructure and PI1.6 billion in agriculture. On the other hand, 
authorities pegged the damage caused by Ondoy at PII billion, including P4.3 billion in 
infrastructure "nd P6.7 billion in agriculture. 
The c'ountry cannot afford the tragic losses of life caused by flood occurrences, nor 
increasing losses of property suffered by flood victims. It is in the public interest for persons 
already living in flood-prone areas to have both an opportunity to purchase flood insurance and 
access to more adequate limits of coverage so that they will be indemnified for their losses in the 
event of future flood disasters. 
This Bill establishes a National Flood Insurance Program to provide appropriate 
protection to homeowners, small business owners, and farmers against the perils of flood losses. 1 
J This bill was originally filed in the third regular session of the 14th Congress. 
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FIFTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S.No. 1793 
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Introduced by Senator Miriam Defensor Santiago 
AN ACT 
INSTITUTING A NATIONAL FLOOD INSURANCE PROGRAM 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
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SECTION 1. Short Title. - This Act shall be known as the "National Flood Insurance 
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Act." 
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SECTION 2. Declaration of Policy. - It is hereby declared the policy of the State to 
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promote general welfare and interest by providing property owners with insurance protection 
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from the government against losses from flooding. This insurance is an alternative to disaster 
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assistance to meet the escalating costs of repairing damage to residential and other buildings and 
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their contents caused by floods. It is in the public interest for persons already living in flood-
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prone areas to have both an opportunity to purchase flood insurance and access to more adequate 
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limits of coverage so that they will be indemnified for their losses in the event of future flood 
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disasters. 
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SECTION 3. Definitions. - In this Act, the term -
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(a), "agency" means the National Flood Insurance Agency; 
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(b) 
"agricultural structure" means any structure used exclusively in connection with 
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(c) 
(d) 
the production, harvesting, storage, raising, or drying of agricultural commodities; 
"agricultural commodities" means agricultural commodities and livestock. 
"director" means the administrator ofthe National Flood Insurance Program; 
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(e) 
"financial assistance" means any form of loan, grant, guaranty, insurance, 
payment, rebate, subsidy, disaster assistance loan or grant, or any other form of direct or indirect 
assistance from the government; 
(f) 
"financial assistance for acquisition or construction purposes" means any form of 
financial assistance which is intended in whole or in part for the acquisition, construction, 
reconstruction, repair, or improvement of any publicly or privately owned building, and for any 
machinery, equipment, fixtures, and furnishings contained or to be contained therein, and shall 
include the purchase or subsidization of mortgages or mortgage; 
(g) 
(h) 
(i) 
G) 
"flood insurance policy" means a flood insurance policy issued under this Act; 
"improved real estate" means real estate upon which a building is located; 
"lender" means a lending institution or a government agency lender; 
"program" means the National Flood Insurance Program established under this 
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Act; 
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(k) . 
"lending institution" means any bank, savings and loan association, credit union, 
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credit association, or similar institution; and 
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(I) 
"task force" means the Flood Insurance Task Force. 
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SECTION 4. National Flood Insurance Agency. - (a) There is hereby established a 
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National Flood Insurance Agency to administer and implement the National Flood Insurance 
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Program under this Act. 
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(b) 
The agency shall be headed by a Director to be appointed by the President of the 
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Philippines. 
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(c) 
The agency shall be an attached agency of the Department of Finance. 
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SECTION 5. National Flood Insurance Program. - (a) There is hereby established a 
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National Flood Insurance Program which will enable interested persons to purchase insurance 
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against loss reSUlting from physical damage to or loss of real property or personal property 
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related thereto arising from any flood occurring in the Philippines. 
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(b) 
The National Flood Insurance Program established pursuant to subsection (a) of 
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this section shall enable the purchase of insurance to cover the cost of implementing measures 
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that are consistent with land use and control measures established by a local government unit for -
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(1) 
(2) 
(3) 
(c) 
properties that are repetitive loss structures; 
properties that are substantially damaged structures; and 
properties that have sustained flood damage on multiple occasions, if the Director 
determines that it is cost-effective and in the best interests of the National Flood 
Insurance Fund to require the implementation of such measures. 
In carrying out the flood insurance program the Director shall, to the maximum 
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extent practicable, encourage and arrange for (1) appropriate financial participation and risk 
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sharing in the program by insurance companies and other insurers; and (2) other appropriate 
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participation, on other than a risk-sharing basis, by insurance companies and other insurers, 
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insurance agents and brokers, and insurance adjustment organizations, in accordance with this 
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Act. 
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SECTION 6. Supplemental Forms. - (a) In General. - Not later than six (6) months after 
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the date of enactment of this Act, the Director shall develop supplemental forms to be issued in 
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conjunction with the issuance of a flood insurance policy that set forth, in simple tenus -
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(1) 
the exact coverage being purchased by a policyholder; 
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(2) 
(3) 
(4) 
(5) 
any exclusions from coverage that apply to the coverage purchased; 
iln explanation, including illustrations, of how lost items and damages will be 
, valued under the policy at the time of loss; 
the number and peso values of claims filed under a flood insurance policy over 
the life of the property, and the effect, under this Act, of the filing of any further 
claims under a flood insurance policy with respect to that property; and 
any other information that the Director detenuines will be helpful to policyholders 
in understanding flood insurance coverage. 
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(b) 
Distribution. - The fonns developed under subsection (a) shall be given to (I) all 
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holders of a flood insurance policy at the time of purchase and renewal; and (b) insurance 
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companies and agents that are authorized to sell flood insurance policies. 
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SECTION 7. Acknowledgment Form - (a) In General. - Not later than six (6) months 
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after the date of enactment of this Act, the Director shall develop an acknowledgment fonn to be 
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signed by the purchaser of a flood insurance policy that contains -
(I) 
an acknowledgment that the purchaser has received a copy of the standard flood 
insurance policy, and any fonns developed under section 5; and 
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(2) 
,an acknowledgment that the purchaser has been told that the contents of a 
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(b) 
property or dwelling are not covered under the tenns of the standard flood 
insurance policy, and that the policyholder has the option to purchase additional 
coverage for such contents. 
Distribution. - Copies of an acknowledgment form executed under subsection (a) 
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shall be made available to the purchaser and the Director. 
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SECTION 8. Flood Insurance Claims Handbook. - (a) In General. - Not later than six 
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(6) months after the date of enactment of this Act, the Director shall develop a flood insurance 
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claims handbook that contains -
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(1) 
a description of the procedures to be followed to file a claim under the Program, 
including how to pursue a claim to completion; 
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(2) 
how to file supplementary claims, proof of loss, and any other infonnation 
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relating to the filing of claims under the Program; and 
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(3) 
detailed information regarding the appeals process established under this Act. 
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(b) 
Distribution. - The handbook developed under subsection (a) shall be made 
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available to -
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(I) 
each insurance company and agent authorized to sell flood insurance policies; and 
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(2) 
each purchaser, at the time of purchase and renewal, of a flood insurance policy, 
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and at the time of any flood loss sustained by such purchaser. 
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SECTION 9. Appeal of Decisions Relating to Flood Insurance Coverage. - Not later than 
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six (6) months after the date of enactment of this Act, the Director shall, by regulation, establish 
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an appeals process through which holders of a flood insurance policy may appeal the decisions, 
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with respect to claims, proofs of loss, and loss estimates relating to such flood insurance policy, 
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of (a) any insurance agent or adjuster, or insurance company; or (2) any employee of the 
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National Flood Insurance Agency. 
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SECTION 10. Study and Report on Use of Cost Compliance Coverage. - Not later than 
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one (1) year after the date of enactment of this Act, the Director shall submit to Congress a report 
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that sets forth -
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(a) 
the use of cost of compliance coverage under this Act in connection with flood 
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insurance policies; 
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(b) 
any barriers to policyholders using the funds provided by cost of compliance 
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coverage pursuant to this Act under a flood insurance policy, and recommendations to address 
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those barriers; and 
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(c). the steps that the agency has taken to ensure that funds paid for cost of 
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compliance coverage under this Act are being used to lessen the burdens on all homeowners and 
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the Program. 
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SECTION 11. Minimum Training and Education Requirements. - The Director shall, in 
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cooperation with the Insurance Commissioner, the insurance industry, and other interested 
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parties-
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(a) 
establish minimum training and education requirements for all insurance agents 
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who sell flood insurance policies; and 
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(b) 
not later than six (6) months after the date of enactment of this Act, publish these 
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requirements in a newspaper of general circulation, and inform insurance companies and agents 
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ofthe requirements. 
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SECTION 12. eGA Study and Report. - (a) The Commission on Audit shall conduct a 
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study of-
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(1) 
(2) 
(3) 
(b) 
the adequacy of the scope of coverage provided under flood insurance policies in 
meeting the intended goal of Congress that flood victims be restored to their pre-
flood conditions, and any recommendations to ensure that goal is being met; 
the adequacy of payments to flood victims under flood insurance policies; and 
the practices of the National Flood Insurance Agency and insurance adjusters in 
estimating losses incurred during a flood, and how such 'practices affect the 
adequacy of payments to flood victims 
Not later than one (1) year after the date of enactment of this Act, and every three 
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(3) years thereafter, the Commission on Audit shall submit to Congress a report regarding the 
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results of the study under subsection (a). 
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SECTION 13. Flood Insurance Interagency Task Force. - (a) There is hereby established 
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an interagency task force to be known as the Flood Insurance Task Force. 
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(b) 
The Task Force shall be composed of ten (10) members to be appointed by the 
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President. The members shall be the representatives from -
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(1) 
(2) 
(3) 
(4) 
(5) 
(6) 
(7) 
the Office ofthe President; 
the Insurance Commission; 
the National Flood Insurance Agency; 
the National Economic Development Authority; 
the National Housing Authority; 
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the National Disaster Coordinating Council; 
the Government Service Insurance System; 
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(8) 
the Social Security System; 
(9) 
the Home Development Mutual Fund; and 
(10) 
a state university. 
(c) 
Members of the Task Force shall be designated for membership on the Task Force 
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by reason of demonstrated knowledge and competence regarding the National Flood Insurance 
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Program. 
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(d) 
(1) 
(2) 
(3) 
(e) 
The Task Force shall carry out the following duties: 
Make recommendations to government agencies regarding establishment or 
adoption of standardized enforcement procedures among such agencies 
responsible for enforcing compliance with the requirements under the National 
Flood Insurance Program to ensure fullest possible compliance with such 
requirements. 
Conduct a study of the extent to which government agencies and the private 
sector can provide assistance in ensuring compliance with the requirements under 
, the national flood insurance program and submit to the Congress, a report 
describing the study and any conclusions. 
Develop recommendations regarding enforcement and compliance procedures, 
based on the studies and findings of the Task Force, and publish such 
recommendations. 
Members of the Task Force shall receive no additional pay by reason of their 
service on the Task Force. 
(t) 
The members of the Task Force shall elect one member as chairperson ofthe Task 
Force. 
(g) 
The Task Force shall meet at the call of the chairperson or a majority of the 
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members of the Task Force and may take action by a vote of the majority of the members. The 
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Director of the National Flood Insurance Agency shall coordinate and call the initial meeting of 
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the Task Force. 
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(h) 
The chairperson ofthe Task Force may appoint any officers to carry out the duties 
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of the Task Force under this Act. 
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(i) 
Upon request of the chairperson of the Task Force, the head of any government 
department or agency may detail, on a temporary basis, and of the personnel of such department 
or agency to the Task Force to assist the Task Force in carrying out its duties under this section. 
(j) 
In carrying out this section, the Task Force may hold hearings, sit and act at times 
and places, take testimony, receive evidence and assistance, provide information, and conduct 
research as the Task Force considers appropriate. 
SECTION 14. Scope of Program and Priorities. - (a) In carrying out the flood insurance 
program the Director shall afford a priority to making flood insurance available to cover 
residential properties which are designed for the occupancy of from one to four families, small 
farms, properties of cooperatives, and business properties which are owned or leased and 
operated by small business concerns. 
(b) 
If the Director determines that it would be feasible to extend the flood insurance 
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program to cover other properties, he or she may take such action under this section as from time 
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to time may be necessary in order to make flood insurance available to cover, on such basis as 
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may be feasible, any types and classes of (I) other residential properties; (2) other business 
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properties; (3) other agricultural properties; (4) properties occupied by private nonprofit 
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organizations; (5) church properties; and (6) properties owned by the State and local 
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governments. Any such extensions of the program to any types of classes of these properties 
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shall from time to time be prescribed in regulations. 
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(c) 
The Director shall make flood insurance available in only those local government 
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units which he'or she has determined to have (I) evidenced a positive interest in securing flood 
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insurance coverage under the flood insurance program; and (2) given satisfactory assurance that 
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before two (2) years after the effectivity of this Act, adequate land use and control measures will 
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have been adopted for the local government unit which are consistent with the provisions of this 
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Act, and that the application and enforcement of such measures will commence as soon as 
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technical information on flood ways and on controlling flood elevations is available from the 
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proper government agencies. 
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SECTION 15. Flood Insurance Purchase and Compliance Requirements. - (a) After the 
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expiration of sixty (60) days following three (3) years from the effectivity of this Act, no 
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government officer or agency shall approve any financial assistance for acquisition or 
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construction purposes [or use in any area that has been identified by the Director as an area 
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having special flood hazards and in which the sale of flood insurance has been made available 
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under the National Flood Insurance Program, unless the building and any personal property to 
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which such financial assistance relates is covered by flood insurance in an amount at least equal 
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to its development or project cost (less estimated land cost) or to the maximum limit of coverage 
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made available with respect to the particular type of property under the program, whichever is 
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less: PrOVided; That if the financial assistance provided is in the form ofa loan or an insurance or 
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guaranty of a loan, the amount of flood insurance required need not exceed the outstanding 
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principal balance of the loan and need not be required beyond the term of the loan. The 
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requirement of maintaining flood insurance shall apply during the life of the property, regardless 
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of transfer of ownership of such property. 
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(b) 
Notwithstanding the other provisions of this section, flood insurance shall not be 
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required on any property owned by a local government unit that is covered under an adequate 
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policy of self-insurance satisfactory to the Director. The Director shall publish and periodically 
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revise the list oflocal government units to which this subsection applies. 
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(c) 
Notwithstanding any other provisions of this section, subsections (a) and (b) shall 
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not apply to any load having (1) an original outstanding principal balance of one hundred 
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thousand pesos (PI 00,000.00) or less; and (2) a repayment term of one (1) year or less. 
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(d) 
If, at the time of origination or at any time during the term of a loan secured by 
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improved real estate located in an area that has been identified by the Director (at the time of the 
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origination of the loan or at any time during the term of the loan) as an area having special flood 
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hazards and in which flood insurance is available under the National Flood Insurance Program, 
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the lender or serVIcer for the loan determines that the building and any personal property 
securing the l~an is not covered by flood insurance or is covered by such insurance in an amount 
less than the amount required for the property pursuant to subsection (a), the lender or servicer 
shall notify the bOlTower under the loan that the borrower should obtain, at the borrower's 
expense, an amount of flood insurance for the building and such personal property that is not less 
than the amount under subsection (a) of this section, for the term ofthe loan. 
(e) 
If the borrower fails to purchase such flood insurance within forty-five (45) days 
after notification under subsection (e), the lender or servicer for the loan shall purchase the 
insurance on behalf of the borrower and may charge the borrower for the cost of premiums and 
fees incurred by the lender or servicer for the loan in purchasing the insurance. 
(f) 
The borrower and lender for a loan secured by improved real estate may jointly 
request the Director to review a determination of whether the building is located in an area 
having special flood hazards. Such request shall be supported by technical information relating to 
the improved real estate. Not later than forty-five (45) days after the Director receives the 
request, the Director shall review the determination and provide to the borrower and the lender 
with a notice stating whether or not the building is in an area having special flood hazards. The 
determination of the Director shall be final. 
(g) 
Any person to whom a borrower provides a notice issued by the Director pursuant 
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to subsection (f), stating that the building securing the loan of the borrower is not in an area 
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having special flood hazards, shall have no obligation under this section to require the purchase 
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of flood insurance for such building during the period determined by the Director, which shall be 
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specified in the notice and shall begin on the date on which such notice is provided. 
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(h) 
If a request under subsection (f) is made in connection with the origination of a 
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loan and the Director fails to provide the notice before the expiration of the forty-five (45) -day 
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period, no person shall have an obligation under this section to require the purchase of flood 
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insurance for the building securing the loan until such letter is provided. 
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SECTION 16. Nature and Limitation of Insurance Coverage. - (a) The Director shall 
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from time to time, after public consultation, provide by regulation for general terms and 
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conditions of insurability which shall be applicable to properties eligible for flood insurance 
4 
coverage, including -
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(1) 
(2) 
The types, classes, and locations of any such properties which shall be eligible for 
flood insurance; 
The nature and limits of loss or damage in any areas (or subdivisions thereof) 
which may be covered by such insurance; 
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(3) 
The classification, limitation, and rejection of any risks which may be advisable; 
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(4), Appropriate minimum premiums; 
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(5) 
Appropriate loss-deductibles; and 
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(6) 
Any other terms and conditions relating to insurance coverage or exclusion which 
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may be necessary to carry out the purposes of this Act. 
(b) 
In addition to any other terms and conditions under subsection (a) of this section, 
such regulations shall provide that -
(1) 
Any flood insurance coverage shall not exceed -
(i) 
(ii) 
in the case of residential properties -
(A) 
two million pesos (P2,000,000.00) for any single-family dwelling, 
and five million pesos (P5,000,000.00) for any residential structure 
containing more than one dwelling unit; and 
(B) 
three hundred thousand pesos (P300,000.00) aggregate liability per 
dwelling unit for any contents related to such unit. 
in the case of business properties which are owned or leased and operated 
by small business concerns, an aggregate liability with respect to any 
single structure, including any contents thereof related to premises of 
small business occupants (as that term is defined by the Director), which 
shall be equal to five million pesos (P5,000,000.00), plus five million 
pesos (P5,000,000.00) multiplied by the number of such occupants and 
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shall be allocated among such occupants (or among the occupant or 
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occupants and the owner) under regulations prescribed by the Director; 
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except that the aggregate liability for the structure itself may in no case 
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exceed five million pesos (P5,OOO,OOO.OO); and 
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(iii) 
in the case of small farms and any other properties which may become 
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eligible for flood insurance under this Act, two million pesos 
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(P2,000,000.00) aggregate liability. 
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SECTION 17. Dissemination of Flood Insurance Information. - The Director shall from 
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time to time take such action as may be necessary in order to make information and data 
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available to the public, and to any government agency or official, with regard to (a) the flood 
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insurance program, its coverage and objectives, and (2) estimated and chargeable flood insurance 
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premium rates. 
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SECTION 18. Land Use Controls by Local Governments. - (a) After five (5) years from 
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the effectivity of this Act, no new flood insurance coverage shall be provided under this Act in 
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any city, municipality, or province unless the local government concerned shall have adopted 
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adequate land use and control measures with effective enforcement provisions which the 
, 
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Director finds' are consistent the comprehensive criteria for land management and use under this 
18 
Act. 
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(b) 
Notwithstanding any other provision of law, the adequate land use and control 
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measures required to be adopted pursuant to subsection (a) may provide, at the discretion of the 
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local government, for the repair and restoration to predamaged conditions' of an agricultural 
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structure that -
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(1) 
is a repetitive loss structure; or 
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(2) 
has incurred flood-related damage to the extent that the cost of restoring the 
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structure to its predamaged condition would equal or exceed fifty percent (50%) 
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of the market value ofthe structure before the damage occurred. 
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(c) 
The Director shall provide technical assistance and counseling, upon request of 
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the owner of the stmcture, regarding wet flood-proofing and other flood damage reduction 
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measures for agricultural structures. The Director shall not be required to make flood insurance 
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coverage available for such an agricultural stmcture unless the stmcture is wet flood-proofed 
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through permanent or contingent measures applied to the stmcture or its contents that prevent or 
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provide resistance to damage from flooding by allowing flood waters to pass through the 
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stmcture, as determined by the Director. 
, 
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SECTION 19. Properties in Violation of Law. - No flood insurance coverage shall be 
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provided under this Act for any property which the Director finds has been declared by a duly 
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constituted zoning authority of the local government, or other authorized government agency, to 
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be in violation of laws, regulations, or ordinances whiCh are intended to discourage or otherwise 
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restrict land development or occupancy in flood-prone areas. 
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SECTION 20. Industry Flood Insurance Pool. -
(a) The Director is authorized (0 
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encourage and othelwise assist any insurance companies and other insurers which meet the 
15 
requirements under under subsection (b) of this section to form, associate, or otherwise join 
16 
together in a pool -
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(1) 
in order to provide the flood insurance coverage authorized under this Act; and 
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(2) 
for the purpose of assuming, on such terms and conditions as may be agreed upon, 
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such financial responsibility as will enable such companies and other insurers, to 
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assume a reasonable proportion of responsibility for the adjustment and payment 
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of claims for losses under the flood insurance program. 
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(b) 
In order to promote the effective administration of the flood insurance program 
23 
under this Act, and to assure that the objectives of this Act are furthered, the Director is 
24 
authorized to prescribe appropriate requirements for insurance companies and other insurers 
25 
participating in such pool including, but not limited to, minimum requirements for capital or 
26 
surplus or assets. 
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(c) 
The Director is authorized to enter into such agreements with the pool formed or 
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otherwise created under this Act as he or she deems necessary to carry out the purposes of this 
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Act. 
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(d) 
Such agreements shall specify-
(1) 
the terms and conditions under which risk capital will be available for the 
adjustment and payment of claims; 
(2) 
the terms and conditions under which the pool, and the companies and other 
insurers participating therein, shall participate in premiums received and profits or 
losses realized or sustained; and 
(3) 
the terms and conditions under which operating costs may be paid. 
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In addition, such agreements shall contain such provisions as the Director finds necessary 
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to assure that -
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(1) 
(2) 
(3) 
no insurance company or other insurer which meets the requirements prescribed 
under regulations by the Director, and which has indicated an intention to 
participate in the flood insurance program on a risk-sharing basis, will be 
. excluded from participating in the pool; 
the insurance companies and other insurers participating in the pool will take 
whatever action may be necessary to provide continuity of flood insurance 
coverage by the pool; and 
any insurance companies and other insurers, insurance agents and brokers, and 
21 
insurance adjustment organizations will be permitted to cooperate with the pool as 
22 
fiscal agents or otherwise, on other than a risk-sharing basis, to the maximum 
23 
extent practicable. 
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SECTION 21. Adjustment and Payment olClaims. - The insurance companies and other 
25 
insurers which form, associate, or otherwise join together in the pool under this part may adjust 
26 
and pay all claims for proved and approved losses covered by flood insurance in accordance with 
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the provisions of this Act and, upon the disallowance by any such company or other insurer of 
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any such claim, or upon the refusal of the claimant to accept the amount allowed upon any such 
claim, the claimant, within one (1) year after the date of receipt by registered mail of notice of 
disallowance or partial disallowance of the claim, may institute an action on such claim against 
such company or other insurer in the Regional Trial Court which has jurisdiction over the 
insured property or the major part thereof shall have been situated, and original exclusive 
jurisdiction is hereby conferred upon such court to hear and determine such action without regard 
to the amount in controversy. 
SECTION 22. Records and Audits. - (a) The .flood insurance pool formed or otherwise 
created under this Act, and any insurance company or other private organization executing any 
contract, agreement, or other appropriate arrangement with the Director under this Act, shall 
keep such records as the Director shall prescribe, including records which fully disclose the total 
costs of the program undertaken or the services being rendered, and such other records as will 
facilitate an effective audit. 
(b) 
The Director and the Commission on Audit shall have access for the purpose of 
audit and examination to any books, documents, papers, and records of the pool and any such 
insurance company or other private organization that are pertinent to the costs of the program 
undertaken or the services being rendered. 
SECTION 23. Identification of Flood-Prone Areas. - (a) The Director is authorized to 
consult with, receive information from, and enter into any agreements or other arrangements 
with other departments and agencies of the government, nongovernment organizations, 
international organizations, and international state agencies, in order that the Director may-
(1) 
Identify publish information with respect to all flood plain areas, including coastal 
areas located in the Philippines, which has special flood hazards, within five (5) 
years from the effectivity of this Act, and 
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(2) 
(b) 
establish or update flood-risk zone data in all such areas, and make estimates with 
respect to the rates of probable flood caused loss for the various flood risk zones 
for each of these areas. 
The Director is directed to accelerate the identification of risk zones within flood-
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prone and mudslide-prone areas, in order to make known the degree of hazard within each such 
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zone at the earliest possible date. To accomplish this objective, the Director is authorized, to 
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make grants, provide technical assistance, and enter into contracts, cooperative agreements, or 
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other transactions, on such terms as he may deem appropriate, or consent to modifications 
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thereof, and to make advance or progress payments in connection therewith. 
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(c) 
The Secretary of National Defense, the Secretary of the Interior, the Secretary of 
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Agriculture, the Secretary of Environment, the Secretary of Science and Technology, and the 
12 
heads of all other government agencies engaged in the identification or delineation of flood-risk 
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zones, in consultation with the Director, give the highest practicable priority in the allocation of 
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available manpower and other available resources to the identification and mapping of flood 
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hazard areas and flood-risk zones, in order to assist the Director to meet the deadline established 
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by this section. 
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(d) 
The Director shall, not later than three (3) years from the effectivity of this Act, 
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submit to the Congress a plan for bringing all communities containing flood-risk zones into full 
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program status not later than five (5) years from the submission of such plan. 
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(e) 
Once during each five- (5) year-period, the Director shall assess the need to revise 
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and update all floodplain areas and flood risk zones identified, delineated, or established under 
22 
this section, based on an analysis of all natural hazards affecting flood risks. 
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SECTION 24. CriteriaJor Land Management and Use. - (a) The Director is authorized 
24 
to carry out studies and investigations, utilizing to the maximum extent practicable the existing 
25 
facilities and services of other government departments or agencies, local governmental 
26 
agencies, and any other organizations, with respect to the adequacy of local government 
27 
measures in flood-prone areas as to land management and use, flood control, flood zoning, and 
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flood damage prevention, and may enter into any contracts, agreements, or other appropriate 
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arrangements'to carry out such authority. 
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(b) 
Such studies and investigations shall include, but not be limited to, laws, 
regulations, or ordinances relating to encroachments and obstructions on stream channels and 
floodways, the orderly development and use of flood plains of rivers or streams, floodway 
encroachment lines, and flood plain zoning, building codes, building permits, and subdivision or 
other building restrictions. 
(c) 
On the basis of such studies and investigations, and such other information as he 
or she deems necessary, the Director shall from time to time develop comprehensive criteria 
designed to encourage, where necessary, the adoption of adequate national and local government 
measures which, to the maximum extent feasible, will-
(1) 
(2) 
(3) 
constrict the development of land which IS exposed to flood damage where 
appropriate; 
guide development of proposed construction away from locations which are 
threatened by flood hazards; 
assist in reducing damage caused by floods; and 
(4) 
otherwise improve the long-range land management and use of flood-prone areas, 
and the Director shall work closely with and provide any necessary technical assistance to 
national and local governmental agencies, to encourage the application of such criteria and the 
adoption and enforcement of such measures. 
SECTiON 25. Notice Requirements. - (a) The Bangko Sentral ng Pilipinas shall by 
regulation require lending institutions, as a condition of making, increasing, extending, or 
renewing any loan secured by improved real estate that the lending institution determines is 
located or is to be located in an area that has been identified by the Director under this Act as an 
area having special flood hazards, to notify the purchaser or lessee of such special flood hazards, 
in writing, a reasonable period in advance of the signing of the purchase agreement, lease, or 
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other documents involved in the transaction. The regulations shall also require that the lending 
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institution retain a record of the receipt of the notices by the purchaser or lessee. 
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(b) 
(1) 
(2) 
(3) 
(4) 
(c) 
The written notification required under this section shall include-
a warning, in a form to be established by the Director, stating that the building on 
the improved real estate securing the loan is located, or is to be located in an area 
having special flood hazards; 
a.description of the flood insurance purchase requirements under this Act; 
a statement that flood insurance coverage may be purchased under the national 
flood insurance program and is also available from private insurers; and 
,any other information that the Director considers necessary to carry out the 
purposes ofthe national flood insurance program. 
The Director shall, not less than forty-five (45) days before the expiration of any 
13 
contract for flood insurance under this Act, issue notice of such expiration by registered mail to 
14 
the owner of the property covered by the contract, and (if known to the Director) the owner of 
15 
the loan. 
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SECTION 26. Mitigation Assistance. - (a) The Director shall carry out a program to 
17 
provide financial assistance to local governments for planning and carrying out activities 
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designed to reduce the risk of flood damage to structures covered under contracts for flood 
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insurance under this Act. Such financial assistance shall be made available to local government 
20 
units in the form of grants under this section for planning assistance and in the form of grants 
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under this section for carrying out mitigation activities. 
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(b) 
The Director may make grants under this subsection to local government units to 
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assist in developing mitigation plans under this section. To be eligible to receive financial 
24 
assistance under this section for mitigation activities, a local government unit shaH develop, and 
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have approved by the Director, a flood risk mitigation plan that describes the mitigation activities 
26 
to be carried out with assistance provided that it is consistent with the criteria established by the 
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Director pursuant to this Act, and provides protection against flood losses to structures for which 
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contracts for flood insurance are available under this Act. The mitigation plan shall be consistent 
2 
with a comprehensive strategy for mitigation activities for the area affected by the mitigation 
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plan, that has been adopted by the local government unit following a public hearing. 
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(c) 
The Director shall notify a local government unit submitting a mitigation plan of 
5 
the approval or disapproval of the plan not later than one hundred twenty (120) days after 
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submission of the plan. If the Director does not approve a mitigation plan submitted under this 
7 
subsection, the Director shall notify, in writing, the local government unit submitting the plan of 
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the reasons for such disapproval. 
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(d) 
The Director shall approve only mitigation plans that specify mitigation activities 
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that the Director determines are technically feasible and cost-effective and only such plans that 
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propose activities that are cost-beneficial. 
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(e) 
The Director shall determine whether mitigation activities described in a 
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mitigation plan submitted pursuant to this section comply with the requirements under subsection 
14 
(d). Such activities may include -
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(1) 
demolition or relocation of any structure located on land that is along the shore of 
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a lake or other body of water and is certified by an appropriate local government 
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land use authority to be subject to imminent collapse or subsidence as a result of 
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erosion or flooding; 
, 
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(2) 
. elevation, relocation, demolition, or floodproofing of structures (including public 
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structures) located in areas having special flood hazards or other areas of flood 
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risk; 
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(3) 
acquisition by local governments of properties located in areas having special 
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flood haza~ds or other areas of flood risk and properties substantially damaged by 
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flood, for public use, as the Director determines is consistent with sound land 
25 
management and use in such area; 
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(4) 
minor physical mitigation efforts that do not duplicate the flood prevention 
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activities of other government agencies and that lessen the frequency or severity 
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of flooding and decrease predicted flood damages, which shall not include major 
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• • 
(5) 
(6) 
(7) 
(8) 
, 
flood control projects such as dikes, levees, seawalls, groins, and jetties unless the 
Director specifically detennines in approving a mitigation plan that such activities 
are the most cost-effective mitigation activities; 
beach nourishment activities; 
the provision of technical assistance by local governments to communities and 
individuals to conduct eligible mitigation activities; 
other activities that the Director considers appropriate and specifies in regulation; 
and 
other mitigation activities not described in subparagraphs (1) through (6) or the 
regulations issued under subparagraph (7), that are described in the mitigation 
11 
plan of the local government unit. 
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SECTION 27. Rules and Regulations. - The Director, in consultation with the Secretary 
13 
of Finance and the Insurance Commissioner, shall issue the necessary rules and regulations to 
14 
carry out the objectives of this Act. 
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SECTION 28. Authorization of Appropriations. - To carry out the provisions of this Act, 
16 
there are authorized to be appropriated such sums as may be necessary for each fiscal year. 
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SECTION 29. Reportorial requirement. - Within two (2) years after the establishment of 
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the National Flood Insurance Program, the Director shall submit a report to Congress on the 
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costs and means to implement the provisions of this Act. Thereafter, the Director shall submit an 
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annual report to Congress. 
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SECTION 30. Separability Clause. - If any provision, or part hereof is held invalid or 
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unconstitutional, the remainder of the law or the provision not otherwise affected shall. remain 
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valid and subsisting. 
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SECTION 31. Repealing Clause. - Any law, presidential decree or issuance, executive 
2 
order, letter of instmction, administrative order, mle or regulation contrary to or inconsistent 
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with, the provisions of this Act is hereby repealed, modified, or amended accordingly. 
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SECTION 32. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
5 
publication in at least two (2) newspapers of general circulation. 
Approved, 
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