9-1
Chapter 9
Environmental Monitoring and Guarantee Funds
Section 1.0 of Article V: Environmental Monitoring Fund
Proponents required or opting to submit an EIS are
mandated to include in their EIS a commitment to establish
an environmental monitoring fund (EMF) when an ECC is
eventually issued. The EMF shall be established by the
proponent not later than the initial construction phase of
its project or undertaking.
What is an Environmental Monitoring Fund?
The EMF is a fund that a proponent shall commit to establish
in support of the activities of the multipartite monitoring
team (MMT) for compliance monitoring. The EMF shall be
incorporated in proposed MMT MOA as part of the submitted
EIS.
When is an EMF required?
An EMF is required for those projects and undertaking with
Mutlipartite Monitoring Teams (MMT).
Section 2.0 of Article V: Amount of EMF
The amount to be allocated for the EMF shall be
determined on the basis of the estimated cost of approved
post-assessment monitoring and environmental information
programs.
How do you determine the amount to be allocated by the
proponent for EMF?
The initial determination of the EMF is included as part of
the Environmental Management/Monitoring Plan and as
established in the ECC for a particular project or
undertaking. However, the actual amount to be allocated for
the EMF shall be determined on the basis of the annual
environmental monitoring plan that would be agreed upon by
the MMT.
Section 3.0 of Article V: EMF Mechanics
The amount to be paid out from, and the manner of
utilization of the EMF shall be set forth in the EIS
Procedural Manual and incorporated as part of the MOA
referred to in Section 11.0, Article IV.
What is the utilization of the EMF?
The EMF shall be utilized to cover all costs attendant to
the operation of the MMT. It shall specifically be used to
defray MMT expenses such cost of transportation, board and
lodging, MMT meetings, sampling, shipment, or transport of
samples, equipment, documentation (photos, video, etc.),
laboratory analysis, hiring outside experts or
subcontracting of a monitoring work to a neutral party,
training of the MMT, preparation of monitoring reports and
distribution, public information campaign/dissemination,
etc. Payment of honoraria shall be commensurate to the time
the MMT members will provide for meetings and actual
monitoring activities. Rates for honoraria should not be
unreasonable considering that membership in the MMT is not a
money making venture but a performance of a civic duty.
DENR officials and personnel are not entitled to such
honoraria.
Who will manage the EMF?
The EMF shall be allocated and administered by the
proponent on an annual basis in accordance with the annual
monitoring plan submitted by the MMT and affirmed/approved
by the DENR.
What are the requirements for disbursement?
The EMF shall be disbursed based on the following
guidelines:
� Prior to disbursement, the DENR shall review and
affirm/approve the monitoring plan and fund adopted by the
MMT.
� Based on the approved monitoring plan and fund, the
proponent shall establish a special bank account in the
amount mutually agreed upon with the DENR and the proponent
as designated signatories. Actual disbursement shall follow
procedures as agreed upon by the MMT.
� Accounting of all expenses by the MMT shall be
undertaken by the proponent.
� Auditing shall be undertaken and/or supervised by the
Executive Management Committee who may commission an
independent auditor for the task. Financial reports are
public documents that shall be provided to legitimate
stakeholders upon request.
Section 4.0 of Article V: Environmental Guarantee Fund
An Environmental Guarantee Fund (EGF) shall be
established for all projects or undertakings that have been
determined by the DENR to pose a significant public risk as
herein defined or where the project or undertaking requires
rehabilitation or restoration.
What is an Environmental Guarantee Fund?
The EGF is a fund that proponents, required or opting to
submit an EIS, shall commit to establish when an ECC is
issued for projects or undertakings determined by DENR to
pose significant risk to answer for damage to life, health,
property, and the environment caused by such risk, or
requiring rehabilitation or restoration measures. It shall
also be used to implement damage prevention measures,
environmental education, scientific or research studies,
IEC, training including social equity programs. But
whatever activities or programs are already provided in the
EMP, should no longer be caused over the EGF.
Section 5.0 of Article V: Presumption of Public Risk
A significant public risk may be presumed by the DENR
if any of the following condition exists:
a. Presence of toxic chemicals and hazardous wastes as
defined in Republic Act No. 6969;
b. Extraction of natural resources that requires
rehabilitation or restoration;
c. Presence of structures that could endanger life,
property, and the environment in case of failure; or
d. Presence of processes that may cause pollution as
defined under Pres. Decree No. 984, or other related
pollution laws.
What is the purpose of the EGF?
The EGF shall be established and used exclusively for the
following purposes:
� the immediate rehabilitation of areas affected by
damages in the environment and the resulting deterioration
of environmental quality as a direct consequence of project
construction, operation and abandonment;
� the just compensation of parties and communities
affected by the negative impacts of the project;
� as fund source for contingency clean-up activities,
damage prevention and social equity measures; and
� to undertake programs or projects that are not
incorporated in the EMP.
How do you determine the need for an EGF?
An EGF may be required to be established for environmentally
critical projects or projects within environmentally
critical areas. Based on the environmental risk assessment
of projects identified as likely to pose significant public
risks (as discussed in Chapter 4), DENR evaluates and makes
the recommendation to impose an EGF as a condition of an
ECC. The imposition of EGF may be determined during the EIA
study particularly risk assessment.
How do you determine/negotiate the amount to be set-up for
the EGF?
There is no explicit provision (must requirement) under DAO
96-37 requiring valuation of potential impacts that may
arise as a result of changes in the use of natural and
environmental resources. In some large scale projects
however (such as power projects), estimation of the value of
environmental impacts are already included in the EIA costs
and benefits. Impact valuation is particularly crucial in
estimating the EGF to establish the following:
� derive estimates on the potential damage that may
occur, and the corresponding amount to be set aside through
the EGF for such purpose;
� to tie together the results of the EIA and risk
assessment into the social acceptability requirement and
capacitate various stakeholders with numbers that they
understand better than biophysical and other environmental
information.
Procedures for arriving at such estimates in a more rational
and systematic manner will have to be based on experiences
that shall have been generated on Philippine examples and
other less developed countries similar to the Philippine
setting. This would require incorporation of environmental
costs and benefits in the EIA of ECPs and those located in
ECAs.
In the absence of such information, more recent experiences
of projects of similar nature with provisions for EGF may be
utilized. The amount to be allocated for the EGF shall be
determined through negotiations between the proponent, EMB,
DENR-RO and other stakeholders. It should take into
consideration the following factors in determining the
appropriate amount for specific projects:
� the EIS committed programs
� the degree of environmental risk involved (based on
number and extent of potential damage)
� valuation of resources that would most likely to be
affected
� the proponent's ability to provide funds for the EGF
The EGF amount should be determined in such a manner
ensuring that adequate fund is available at the end of the
project life to take care of rehabilitation, restoration and
decommissioning or abandonment.
In general, the EGF shall have 2 major components as
follows:
a) Trust Fund
The trust fund is a form of guarantee instrument which
will be used to compensate aggrieved parties for any
damages to life or property, undertake community-based
environmental programs, conduct environmental research
that lead to strengthening measures to prevent
environmental damage and to finance restoration and
rehabilitation of environmental quality caused by the
project. This could be in the form of insurance, surety
bond and ensure guarantees, trust fund, financial
mechanism and other similar guarantee instruments.
b) Environmental Guarantee Cash Fund
This component of the EGF shall be earmarked for
immediate rehabilitation and compensation of affected
communities in case of damages. It shall also be used
to cover costs of the operationalization of the EGF
Committee.
The cash fund can be placed by the proponent in an
interest-bearing account and such interest shall accrue
to the cash fund. The funds shall be replenished when
it reaches a certain level agreed upon by the
Committee.
Section 6.0 of Article V: Recovery from the EGF
The manner of recovery from the EGF and the amounts to
be paid out shall be set forth in the EIS Procedural Manual
and incorporated as part of the MOA referred to in Section
11.0, Article IV.
How do you negotiate for the establishment of the EGF?
Once it is determined that an EGF is necessary, the
following procedures for the negotiation and establishment
of the EGF shall be followed:
1. The proponent shall prepare a Memorandum of Agreement
(MOA) for the establishment of the EGF that shall be
negotiated and agreed upon by the following the
proponent, DENR, LGUs (province, municipality,
barangay) and NGO/PO representatives. The proposed MOA
shall be part of the submitted EIS.
2. The MOA should contain agreements on the following:
� the specific amount of the fund to be set-up and in
what form
� the mode of distribution, allocation and disbursement
of funds
� the terms of reference for fund operationalization with
respect to the implementation of environmental programs
� terms and conditions for the payment of relevant
parties
3. Establishment of the EGF Committee
An EGF committee shall be established as part of the
MOA to manage the EGF. The Committee shall include, but
not limited to, the following:
� DENR Regional Executive Director as Chair
� Project Proponent as Vice Chairman
� Members:
� LGUs
� Provincial representative designated by the Sangguniang
Panlalawigan and duly appointed by the Governor
� Municipal representatives (one from the municipality
and the other from the barangay) to be appointed by the
Mayor
� Barangay representative
� representatives from duly accredited NGOs/people�s
organization
The Chairman of the EGF shall not vote on any matters
except to break a tie. Any determination or approval by
the EGF Committee shall require a majority vote,
provided there is a quorum. A quorum shall require the
presence of more than half of the members, two of whom
shall be the representative of DENR and the proponent.
Elected officials shall serve in the Committee only
during their terms of office. Other government agencies
may be invited as members of the Committee, as deemed
necessary.
4. Functions of the EGF Committee
The Committee shall undertake the following functions:
� manage, control and operate the EGF in accordance with
agreed internal procedures established regarding the
mechanisms for fund disbursement, processing, validation,
accounting and documentation.
� resolve issues involving rehabilitation and similar
damages that may be brought before it.
� decide issues on complaints/questions involving the
implementation of the rehabilitation program between the
proponent and the aggrieved party.
� designate entities or individuals in the event that the
issues and cases must be resolved by an independent body.
� hire credible experts to conduct independent studies
and research on the environmental and socio-cultural impacts
of the project in order to assist the EGF in making
judicious decisions about environmental issues related to
the project.
� undertake damage preventive and social equity measures.
Claims/Withdrawals to the EGF
Claims to the EGF shall be classified into:
� emergency;
� compensatory; and/or
� operating cost.
What is an emergency claim?
A claim is considered for emergency purposes if it is
intended to:
� prevent loss of life or serious damage to property and
environment;
� immediate rehabilitation of affected areas;
� provide immediate correction for or prevention against
the spread of accident or disaster or the effect thereof;
� evacuate and temporarily relocate affected residents.
The causes of the above should be due to the pollution
and/or environmental degradation arising from the violation
by the project of environmental laws and regulations, or the
failure of the project to comply with obligations set forth
in the EIS and the ECC.
What is a compensatory claim?
A claim is considered compensatory if it is intended to pay
for pecuniary loss or damage suffered by a party, person or
entity as a consequence of the project.
The EGF Committee should come out with guidelines to be
approved by its members on how to access the EGF for
compensatory claims. The guidelines should specify the
following:
1. How do you file a claim for compensatory damages?
2. What valid proofs or evidence should be submitted to
claim for compensation?
3. What is the basis for computation of compensatory
damages?
What is a claim for operating costs?
This is a claim whose purpose is to support the
operationalization of the EGF Committee.
When can the Proponent withdraw from the Environmental
Guarantee Cash Fund?
The cash fund may be drawn in the following instances:
� respond to an event of emergency in accordance with the
guidelines to be approved by all members of the EGF
Committee;
� claims for compensatory damages subject to written
approval by the EGF Committee and concurrence of the
proponent; or
� operating costs incurred by the EGF Committee.
When can the proponent draw from the Trust/Guarantee Fund?
The trust fund can only be drawn upon:
� approval in writing by the EGF Committee for emergency
claims that can no longer be accommodated by the cash fund;
� in cases where the cash fund is insufficient to pay for
duly approved/concurred compensatory claims by the EGF
Committee;
� in cases were preventive or control measures have to be
done by the proponent that were not identified in the EMP.
Processing of Claims
Written complaints must be filed with the EMB or DENR
regional office with accompanying evidence within a period
of one (1) month after damages have occurred, after which no
other complaints are entertained.
Written complaints must be filed with accompanying evidence.
Complaints for compensation filed with the EMB are subject
to verification and certification by EMB, in conjunction
with the DENR regional office, project proponent and MMT.
The claimant's request for compensation must include the
following:
� evidence of livelihood source;
� evidence of ownership or stewardship and location of
the property;
� nature/extent of the damages based on an honest
assessment by the owner to include concerns on social
equity, health, etc. and as certified by the evaluation and
investigation conducted by the DENR regional office or the
EMB if necessary.
Any claims approved by the EGF committee and certified by
the EMB or DENR regional office are paid to the claimant
within thirty (30) days after the receipt of notice by the
proponent.
Interest charges are assessed, as agreed in the MOA, for
late payment. Failure to make payments could result in the
revocation of the ECC.
The EGF committee arbitrates any dispute between the
claimant and the proponent. The decision is final and
executory.