Philippine Circular Economy Promotion Act

TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session 2 J-9 94:06 SENATE S. No._ Introduced by: Senator Loren Legarda AN ACT ESTABLISHING A COMPREHENSIVE FRAMEWORK FOR CIRCULAR ECONOMY IN THE PHILIPPINES, PROVIDING MECHANISMS FOR WASTE MINIMIZATION, EXTENDED PRODUCER RESPONSIBILITY, CIRCULAR PROCUREMENT, AND COMMUNITY PARTICIPATION IN SUSTAINABLE RESOURCE USE EXPLANATORY NOTE The Philippines is in the midst of an escalating resource and pollution crisis. The Philippines generates over 21 million metric tons of solid waste annually. I Every day, this translates to a staggering 61,000 metric tons of waste, including 163 million plastic sachet packets, 48 million shopping bags, and 45 million thin-film bags.? This pervasive plastic use not only overwhelms local waste systems but also spills into our rivers and seas, making the country a global focal point for ocean pollution. In 2019, the Philippines contributed the highest share of piastic waste discharged into the world's oceans, accounting for 36.38% of global oceanic plastic pollution.3 These figures reveal not only the scale of the problem, but the urgent need for a structural transformation of how we extract, use, and dispose of materials. The current linear economic model, take, make, and dispose, is simpiy no longer viable. It wastes resources, generates pollution, and burdens communities and ' Retrieved on 07 July 2025, from Ernesto M. Pernia, Waste management for renewable energy, https://ppp.gov.ph/in the news/waste-management-for-renewable-energy/, https://opinion.inguirer.net/157304/waste-management-for-renewable-energy ~ Retrieved on 07 July 2025, from Ateneo de Manila University - News, "Refill Revolution Returns Ateneo," https://www.ateneo.edu/news/2025/03/11/refill-revolution-returns-ateneo 3 Retrieved on 07 July 2025, from earth.org, "How Did the Philippines Become the World's Biggest Ocean Plastic Polluter?," https://earth.org/philippines-plastic/

local governments with mounting environmental and fiscal costs. In fact, 78% of the material value of plastics in the Philippines estimated at nearly USD $890 million annually-is lost because recyclable materials are not recovered but discarded. 4 Simultaneously, the economic cost of plastic pollution, including impacts on fisheries, tourism, and health, has been estimated at over USD $1.2 billion per year.5 This bill proposes the establishment of a comprehensive legal framework for transitioning to a circular economy-an economic model that keeps resources in use for as long as possible, extracts the maximum value from them while in use, and recovers and regenerates products and materials at the end of their service life. According to the United Nations Development Programme, shifting to this model could yield US$4.5 trillion in benefits by 2030, lower emissions, create stable jobs, and expand green markets. The International Labour Organization estimates that the circular economy is projected to unlock seven to eight million job opportunities? Better estimates are placed in the Southeast Asian context, with sufficient programs and funding, adopting circular strategies could create 6.6 million additional jobs by 2030, especially in recycling, repair, remanufacturing, and secondary material processing. 8 Our legal foundation for sustainable production and waste management already exists but remains fragmented and under-implemented. Republic Act No. 9003 or the Ecological Solid Waste Management Act of 2000 remains under-enforced. As of early 2025, the Philippine Institute for Development Studies (PIDS) reported that only 11,625 materials recovery facilities (MRFs) have been established across the country- * Retrieved on 07 July 2025, from World Bank, Market Study for the Philippines: Plastics Circularity Opportunities and Barriers, https://www.worldbank.org/en/country/philippines/publication/market- study-for-philippines-plastics-circularity-opportunities-and-barriers-report-landing-page • Retrieved on 07 July 2025, from Climate Impacts Tracker, Plastic Pollution in the Philippines, https://www.climateimpactstracker.com/plastic-pollution-in-the-philippines/ * Retrieved on 07 July 2025, from UNDP Climate Promise, "Transitioning to a circular economy: The future we cannot afford to delay," https://climatepromise.undp.org/news-and-stories/transitioning- circular-economy-future-we-cannot-afford-delay ^ Retrieved on 07 July 2025, from International Labour Organization, "Global South circular economy could generate millions of job opportunities," https://www.ilo.org/resource/news/global-south circular-economy-could-generate-millions-job-opportunities & Retrieved on 07 July 2025, from Xueling Lee, Chris Addy, Roger Thompson, and Rose Farah, Promoting Equitable and Inclusive Green Job Growth in Southeast Asia, The Bridgespan Group, https://www.bridgespan.org/getmedia/9ab68ac6-6baa-47d6-a2c3-9f0dd3e786f5/promoting- equitable-inclusive-green-job-growth-in-southeast-asia-2023.pdf

covering just around 27.7% of the 42,011 barangays. The study also noted that only 237 sanitary landfills are currently in operation to serve the waste disposal requirements of 1,634 cities and municipalities nationwide. Waste segregation at source, mandated by law for two decades, remains inconsistently implemented. Meanwhile, Republic Act No. 11898 or the Extended Producer Responsibility Act of 2022, while a landmark for plastic accountability, remains limited in reach and currently covers only large corporations. The need for integration and coherence is clear. This bill addresses that gap by mandating the formulation of a Philippine Circular Economy Roadmap anchored in measurable goals, sectoral transition pathways, and localization strategies. It institutionalizes the Circular Economy Inter-Agency Council (CE-IAC) to ensure policy harmonization and to evaluate coherence across fiscal, environmental, industrial, and development agendas. A key feature is the creation of a Circular Economy Incentive Code, in collaboration with the Department of Finance and the Board of Investments, to harmonize existing fiscal and non-fiscal incentives for circular enterprises, cooperatives, innovators, and LGUs. Circularity cannot thrive without enabling investments, and this bill ensures the alignment of capital, enterprise development, and innovation support. To promote innovation, the bill also mandates the establishment of Circular Economy Innovation Sandboxes, where regulatory flexibility may be applied to test and scale circular business models. These sandboxes will provide real-world testing grounds for alternative packaging, reverse logistics systems, refill/reuse platforms, and biomaterial-based manufacturing, among others. Recognizing that environmental transformation is also a local and community- led process, this measure supports the development of Local Circular Economy Action Plans to be integrated into existing local development plans. Rather than impose a new bureaucracy, Local Circular Economy Advisory Committees may be embedded as * Retrieved on 07 July 2025, from Philippine Institute for Development Studies, "Waste management is a collective responsibility: contribute your share for a healthier environment," https://www.pids.gov.ph/details/news/in-the-news/waste-management-is-a-collective-responsibility- contribute-your-share-for-a-healthier- environment#:~:text=Despite%20the%20mandates%20of%20Republic, the%20financial%20and %2 Otechnical%20aspects.

sub-committees within Local Development Councils, ensuring coherence while maintaining participation by communities and key sectors. This bill also builds on existing national policies. The Philippine Development Plan (PDP) 2023-2028 already identifies circular economy and sustainable consumption and production as strategic goals for inclusive and climate-resilient development. The National Climate Change Action Plan (NCCAP) recognizes circularity in waste and industry as resilience-building strategies. And Republic Act No. 11995 or the Philippine Ecosystem and Natural Capital Accounting System (PENCAS) Act of 2024 provides the data infrastructure to track resource flows, environmental degradation, and ecosystem services, allowing circular economy strategies to be guided by evidence and adjusted for impact. Importantly, this bill also seeks to update the nation's single-use plastic policies by mandating a transition plan within one (1) year of effectivity and a phase-out of non-recyclable, non-compostable SUPs within five (5) years, in line with local capability assessments and global best practices. The shift away from sachet-based and low- value plastics must be matched by support for local manufacturers, MSMEs, and consumers through public procurement, education, and innovation grants. We must act decisively. Our current trajectory is environmentally and economically unsustainable. This bill provides a clear framework, a strong institutional mechanism, and coherent incentives for circular transformation. If implemented with vigor and foresight, the Philippines can turn from being a leading plastic polluter into a regional leader in circular economy innovation, job creation, and sustainable development. Let this be our national commitment-to design out waste, regenerate our ecosystems, and build an economy where nothing is wasted, and no one is left behind. LOREN LEGARDA

TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session 25 JUL- 74,106 SENATE S. No. 306 Introduced by: Senator Loren Legarda AN ACT ESTABLISHING A COMPREHENSIVE FRAMEWORK FOR CIRCULAR ECONOMY IN THE PHILIPPINES, PROVIDING MECHANISMS FOR WASTE MINIMIZATION, EXTENDED PRODUCER RESPONSIBILITY, CIRCULAR PROCUREMENT, AND COMMUNITY PARTICIPATION IN SUSTAINABLE RESOURCE USE Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title. - This Act shall be known as the "Philippine Circular

Economy Promotion Act."

Sec. 2. Declaration of Policy. - It is the policy of the State to protect and

advance the right of the people to a balanced and healthful ecology in accord with the 5 rhythm and harmony of nature and promote sustainable development. In line with the 6 2030 Sustainable Development Agenda, the Philippines adopts the goals of making cities and human settlements inclusive, resilient, and sustainable; ensuring sustainable production and consumption patterns; taking urgent action to combat climate change and its impacts; and restoring natural ecosystems, in line with national development priorities and capacities. Towards this end, the State shall prevent and reduce the impact of certain plastic products, particularly marine litter, on the environment and human health, as well as promote the transition to a circular economy with innovative and sustainable business models, products, and materials.

Sec. 3. Definition of Terms. - For purposes of this Act, the following terms are

defined:

a) Alternative delivery systems shall refer to sustainable eco-friendly apparatuses or processes for storing and dispensing different retail items, goods, and consumer products; b) Assimilating capacity assessment shall refer to an assessment of the assimilative capacity of a certain ecosystem, which is the ability to accommodate a particular activity or rate of an activity (usually pertaining to waste and residuals-producing activities such as the discharge of contaminants), without unacceptable impact; c) Biocapacity assessment shall refer to an assessment of the biocapacity, which is the ability of biologically productive ecosystems to provide the resources and services used by humanity; d) Business enterprises shall refer to establishments engaged in the production, manufacturing, processing, repacking, assembly, or sale of goods and/or services, including service-oriented enterprises. It shall include self-employed or own-account workers, micro, small and medium enterprises (MSMEs), and community-based business enterprises; e) Capacity assessment shall refer to the generic term for the following sub-classifications: carrying capacity assessment, biocapacity assessment, and assimilating capacity assessment. The assessments shall focus on ecosystem and environment-related systems of interest; f) Carrying capacity assessment shall refer to an assessment of the carrying capacity of a certain ecosystem, which is the maximum number of people, or individuals of a particular species, that a given area of the environment can sustain without causing environmental, economic or socio-cultural stress or damage; g) Circular economy shall refer to a system approach wherein products are designed for durability, reuse, and recyclability, and materials for new products come from old products. It minimizes waste and maximizes the use of natural resources; h) Collection shall refer to the act of gathering and/or removal of solid waste from a source or from a communal storage point and/or facility;

i) Consumer shall refer to a natural person who is a purchaser, lessee, recipient or prospective purchaser, lessor or recipient of consumer products, services or credit, pursuant to the defined terms under Republic Act No. 7394 or the Consumer Act of the Philippines; j) Ecological footprint shall refer to human demand/activity on the biosphere, the extent to which the regenerative capacity of the planet is being used by human activities, and related methods of assessing or computing the same; k) Incentives shall refer to incentives provided for under RA No. 9520 otherwise known as the Philippine Cooperative Code of 2008, RA No. 9178 otherwise known as the Barangay Micro-Business Enterprise Act of 2002, RA No. 9501 otherwise known as the Magna Carta for Micro, Small and Medium Enterprises, Executive Order No. 226 otherwise known as the Omnibus Investment Code of 1987, RA No. 10771 otherwise known as the Green Jobs Act of 2016 or incentives as defined by the local government unit through an ordinance specifically for the purpose of this Act, where applicable; 1) National Solid Waste Management Commission (NSWMC) refers to the inter-agency body created under RA No. 9003 responsible for solid waste management policymaking, coordination, and oversight; m) Natural Capital Accounting and Valuation or Environment and Natural Resource Accounting and Valuation shall refer to a process that provides a systematic way to measure and report on stocks and flows of natural capital, recognizing the environment as an asset that must be maintained and managed; n) Permaculture shall refer to an innovative framework for creating sustainable ways of living. It is a practical method of developing ecologically harmonious, efficient, and productive systems. The application of permaculture principles enables households, communities, and businesses to creatively re-design their environment with less energy and resources;

0) Producer shall also refer to a manufacturer which has been defined under RA No. 7394 as "any person who manufactures, assembles, or processes consumer products, except that if the goods are manufactured, assembled or processed for another person who attaches his own brand name to the consumer products, the latter shall be deemed the manufacturer. In case of imported products, the manufacturer's representative or, in his absence, the importer, shall be deemed the manufacturer"; P) Recovery or Resources recovery shall refer to the collection, extraction or recovery of recyclable materials from the waste stream for the purpose of recycling, generating energy or producing a product suitable for beneficial use; q) Recycling shall refer to the treatment of used or waste materials through a process of making them suitable for beneficial use and for other purposes, and includes any process by which solid waste materials are transformed into new products in such a manner that the original product may lose their identity, and which may be used as raw materials for the production of other goods or services; r) Single-use plastics shall refer to plastic products which are not conceived, designed and placed on the market to accomplish, within its life span/cycle, multiple usage or rotations such as being returned to the producer for refill or reused for the same purpose for which it was conceived. These include, but are not limited to, items such as grocery bags, food packaging films and bags, straws, stirrers, containers, styrofoam/styros, cups, sachets and plastic cutlery; 5) Sustainable Consumption and Production (SCP) shall refer to the use of services and related products, which respond to basic needs and bring a better quality of life while minimizing the use of natural resources and toxic materials as well as the emissions of waste and pollutants over the life cycle of the service or product so as not to jeopardize the needs of further generations; and

t) Source reduction refers to the reduction of solid waste before it enters the solid waste stream by methods such as product design, materials substitution, materials reuse, and packaging restrictions.

Sec. 4. Scope. - This Act shall apply to producers and consumers involved in

value chains of all goods, products, services, and processes contributing to the Philippine economy, and to the mechanisms facilitating the policy, regulatory, and 7 advocacy measures to promote, implement, monitor, and evaluate the strategies on 8 circular economy, complementing thereby the goals and targets of sustainable 9 consumption and production. The activities contemplated in this Act cover the interplay between the public and private sectors, as well as national, subnational, regional, and global stakeholders, taking into consideration the trajectories under the better normal or green recovery directions consistent with the national economy and planet-people-nature nexus. In pursuing the circular economy, the following value creation principles, which underpin the transition from a value chain to a value circle perspective, shall be adhered to: a) The "inner circle" refers to minimizing comparative materials use vis-a- vis the linear production system. The tighter the circle, i.e., the less a product has to be changed in reuse, refurbishment, and remanufacturing and the faster it returns to use, the higher the potential savings on the shares of material, labor, energy, and capital still embedded in the product, and the associated externalities (such as greenhouse gas emissions, water, and toxicity); b) The "circling longer" refers to maximizing the number of consecutive cycles (be it repair, reuse, or full remanufacturing) and/or the time in each cycle. Each prolonged cycle avoids the material, energy, and labor of creating a new product or component; c) The "cascaded use" refers to diversifying reuse across the value chain or transforming materials across product categories to offset the need for virgin material inputs; d) The "pure inputs" postulates that uncontaminated material streams increase collection and redistribution efficiency while maintaining

quality, particularly of technical materials, which in turn extends product longevity and thus increases material productivity; e) The utmost need to remove the use of toxic chemicals and hazardous substances in the production of goods and products. The elimination of toxicity in the production line will protect workers' health and guarantee safe and clean recycling processes throughout the product's lifecycle; and f) All products are designed to avoid waste leakage into the oceans and environment and must meet the guaranteed minimum number of recycling cycles per material.

Sec. 5. Product or Process Design. - Any entity or individual engaging in the

12 design of process, equipment, product, and packing material shall, in accordance with the requirements of reducing resource consumption and waste generation, give priority to choosing designs and materials that are easy to be recovered, dismantled, and degraded; non-toxic or of low toxicity, with minimal environmental and health risks, in addition to complying with the mandatory requirements as prescribed in relevant industry standards. With respect to electric and electronic products that may pollute the environment in the processes of dismantling and handling, toxic and harmful substances as defined by law or treaty may not be used in the design. The design of product packing shall be subject to standards for product packing to avoid wasting resources and polluting the environment due to overpacking.

Sec. 6. Innovation in Products and Services. - Innovation contemplated in this

Act shall include the following, among others: a) Mobile technology which enables universal and low-cost access to data and applications and reduces the need for physical resources; b) Machine-to-Machine (M2M) Communication used in factory control systems and vehicle telematics, enabling critical mass to mainstream M2M use as wireless network coverage expands worldwide; c) Cloud Computing/Dematerialization, which enables the replacement of "something physical" with a digital alternative, transforming data and service industries;

d) Social technology which reduces the cost of setting up sharing platforms by tapping into existing networks and facilitating consumer feedback; e) Big Data Analytics that, consistent with the circular economy, enables organizations to generate revenues from product use instead of sales; f) Modular Design Technology which revolutionizes product functionality and extends product lifecycles by allowing only defective parts to be replaced or repaired; g) Advanced Recycling Technology which enhances recycling efficiency and returns on circular economy investments; h) Life and Material Sciences Technology which creates circular material input options at scale and enables outputs to be reused as inputs; i) Trace and Return Systems which support circular business models by making product collection for reuse, repair, recovery, refurbishment, or recycling more cost-effective; and j) 3-D Printing which facilitates repair and creates opportunities for circular inputs that are biodegradable or infinitely recyclable.

Sec. 7. Role of National Government Agencies and Stakeholders. -

a) The Department of Economy, Planning, and Development (DEPDev) shall formulate and regularly update the Philippine Action Plan for Sustainable Consumption and Production (PAP4SCP), which shall serve as the anchor plan for mainstreaming the circular economy in development activities and ensuring its contribution to sustainable development. DEPDev shall lead in the implementation of this Act; and b) The Department of Environment and Natural Resources (DENR) and Philippine Statistics Authority (PSA) shall formulate the National Natural Capital Accounting or Environment and Natural Resource Accounting and Capacity Assessment Plan (NCACAP). The Plan shall institutionalize a comprehensive system for accounting, valuing, and assessing the quality and integrity of the country's natural capital, and support policy, technical, technological, administrative, and market-based interventions.

The NCACAP shall enable the following programs and activities: 1. Development of localized methodology for accounting and valuation of capital resources; 2. Development of implementing guidelines and methodology on capacity assessments; 3. Development of standards and indicators for calculating ecological footprints; 4. Development of circularity indicators and adequate metrics to assess circular economy performance; 5. Development of guidelines on damage compensation; 6. Design of finance modalities for payment for ecosystem services (PES) and user-fee systems; 7. Implementation of natural capital accounting and capacity assessment interventions; 8. Conduct of ecosystem loss and damage valuations; 9. Development of data transparency arrangements and reporting systems; and 10. Development of ICT infrastructure/platforms to support NCA and capacity assessment programs. The DENR and PSA shall lead the formulation and implementation of the NCACAP within one (1) year from the effectivity of this Act, in consultation with concerned agencies including DICT, DEPDeV, Department of Finance (DOF), Department of Agriculture (DA), Office of Civil Defense (OCD), Climate Change Commission (CCC), and relevant stakeholders. c) The DOF shall identify incentives and market interventions to mainstream circular economy principles, in line with harmonized incentives under existing laws; d) The DTI, in coordination with the Department of the Interior and Local Government (DILG), shall lead in developing standards for circular economy product or process design; and

e) Non-government organizations, civil society organizations, and academe working in marine ecosystems, healthcare, forest conservation, mining, and sustainable agriculture shall be consulted by DEPDev, DENR, and PSA in the formulation of PAP4SCP and NCACAP. The implementation of the NCACAP under this Act shall be aligned with the standards, institutional arrangements, and reporting mechanisms established under Republic Act No. 11995 or the PENCAS Act. All relevant data, indicators, and ecosystem accounts shall be consistent with those generated by the Philippine 9 Statistics Authority pursuant to the PENCAS Act.

Sec. 8. Creation of the Circular Economy Inter-Agency Council. - There is

hereby created a Circular Economy Inter-Agency Council (CE-IAC) to serve as the primary coordinating and oversight body for the implementation of this Act. It shall harmonize strategies, resolve conflicts among implementing agencies, monitor compliance, and ensure alignment with national development goals. The CE-IAC shall be composed of the following: 1) Chairperson: Secretary of DEPDev 2) Co-Chairs: Secretaries of the DENR, DTI, and DOF 3) Members: a) DOST b) DA c) DepEd d) TESDA e) DILG f) DICT g) CCC h) NSWMC i) PSA j) OCD k) Two (2) representatives from the private sector, to be appointed by the Council

1) Two (2) representatives from civil society organizations (CSOs) working on sustainable development, ecological governance, or waste management m) One (1) representative from local government units (LGUS), nominated through the League of Provinces of the Philippines The CE-IAC shall meet at least bi-annually and may convene special sessions 7 as necessary. It may create technical working groups (TWGs) or task forces to carry out specific functions, including monitoring, technical assessments, or conflict resolution. The CE-IAC shall be supported by the Economic Development Committee of 11 the DEPDev as its permanent Secretariat, which shall coordinate documentation, 12 stakeholder engagement, and inter-agency follow-through. The CE-IAC shall submit an annual Circular Economy Progress Report to the President and to both Houses of Congress, through the Committee on Sustainable Development Goals, Innovation, and Futures Thinking of the Senate and the Committee on Ecology of the House of Representatives. The report shall include: (a) updates on implementation milestones, (b) metrics on waste reduction and circularity performance, (c) identified challenges, and (d) policy and legislative recommendations to further advance the goals of this Act.

Sec. 9. Single-use Plastic Phase-Out and Extended Producer Responsibility

Measures - The phase-out of single-use plastics (SUPs) by business enterprises shall take full effect five (5) years after the effectivity of this Act. A transition plan shall be formulated within one (1) year after the effectivity of this Act, led by the DENR through the NSWMC, in coordination with DTI, DOST, DILG, DOF, DOLE, DEPDev, CCC, and other stakeholders. The phase-out and transition plan shall include: a. SUP Production and Consumption Reduction Program; b. Extended Producer Responsibility Schemes; c. Greener Plastic Product Standards; d. R&D for Alternatives to SUP Products; e. Regulatory Instruments and Incentives for Producers and Consumers; f. Collection, Recovery, and Recycling Plan;

g. Just Transition Plan for displaced workers; h. Support to businesses adopting zero-waste and sustainable delivery systems; i. Awareness-raising and Information, Education, and Communication (IEC) strategies. The Plan shall adopt a phased approach considering economic ripple effects, business model shifts, and worker livelihood transitions.

Sec. 10. Circular Public Procurement Program. - All government agencies shall

establish Circular Public Procurement Programs incorporating circular economy standards and set annual targets. Submissions to the Government Procurement Policy Board (GPPB) are due six (6) months from the effectivity of this Act. The GPPB shall submit annual compliance reports to Congress. The GPPB, in coordination with the Department of Budget and Management (DBM), Department of Trade and Industry (DTT), and Commission on Audit (COA), shall issue guidelines within thirty (30) days of effectivity to promote sustainable government procurement. It shall also lead capacity-building for circular procurement professionals. The Public-Private Partnership Center and DTI's Bureau of Product Standards shall ensure vital infrastructure procurement and product sales comply with this Act. LGUs shall also integrate circular economy criteria in their procurement planning and may adopt localized Circular Public Procurement Programs aligned with national guidelines, subject to capacity-building support from the DILG and GPPB.

Sec. 11. Integration of Permaculture Principles and Practices. - NGAS, GOCCS,

SUCs, and LGUs shall integrate permaculture into programs, services, and operations. The DepEd shall integrate permaculture education into the K-12 curriculum, covering agrobiodiversity, sustainable mobility, seed saving, food gardens, and ecological waste management. The DILG-Local Government Academy shall develop training for LGUs on permaculture. TESDA shall offer permaculture-related skills and entrepreneurship training. Permaculture integration shall be monitored as part of circularity indicators under the Circular Economy Monitoring and Accountability Framework (CEMAF).

Sec. 12. Local Circular Economy Action Plans and Incentives for Local

2 Government Units. - All provinces, cities, and municipalities shall prepare and implement a Local Circular Economy Action Plan (LCEAP) within two (2) years from the effectivity of this Act. These plans shall be aligned with the PAP4SCP and shall include, at a minimum: 1. Targets and timelines for waste reduction, reuse, and circular business models; 2. Local ordinances supporting circular practices and the phase-out of single-use plastics; 3. Partnerships with communities, MSMEs, cooperatives, and civil society; and 4. Integration into the Local Development Plan and Annual Investment Program (AIP). The DILG, in coordination with DEPDev, DENR, and DTI, shall provide capacity- building programs to assist LGUs in formulating and implementing their LCEAPs. LGUS that demonstrate measurable outcomes in implementing their LCEAPs may access the following incentives: 1. Priority access to circular economy project funding from the General Appropriations Act and the Circular Economy Implementation Fund (CEIF); 2. Eligibility for performance-based grants or awards from DILG and DBM; 3. Technical and logistical support for scaling up high-impact circular initiatives. The DILG shall jointly monitor LGU compliance and performance, with annual reporting to the CE-IAC.

Sec. 13. Incentives and Rewards for the Public Sector. - The DBM, with relevant

agencies, shall implement an incentives system for NGAs, GOCCS, SUCS, and LGUs choosing circular economy standards. Up to 25% of savings from such measures may be used for additional performance incentives.

Sec. 14. Capacity-building for Government and Sectors. - Government agencies

shall promote and invest in capacity building to implement circular economy programs. DOLE, TESDA, DICT, and DENR shall provide technical assistance to their sectors.

Sec. 15. Strategic Communications Plan. - The PIA shall lead the creation and

2 implementation of a strategic communications plan for sustainable consumption and production, aligned with RA No. 9512 (National Environmental Awareness and Education Act of 2008).

Sec. 16. Mainstreaming Circular Economy in the National Budget. - The DBM

6 shall align the annual national budget with circular economy goals and sustainable 7 production and consumption practices.

Sec. 17. Monitoring and Evaluation Framework. - To ensure effective

9 implementation, transparency, and continuous improvement of this Act, the following 10 shall be undertaken: a) The DEPDev, in coordination with the PSA, shall develop and maintain a Circular Economy Monitoring and Accountability Framework (CEMAF). This framework shall: 1. Establish key performance indicators (KPIs) for circularity, waste reduction, resource use, and innovation uptake; 2. Establish standardized protocols for data collection and submission for all implementing agencies and LGUs; 3. Provide for independent data verification, audits, and third-party assessments; 4. Align with the PAPSCP, Natural Capital Accounting plans, and SDG indicators. b) All implementing agencies and LGUs shall submit annual progress reports to DEPDev and PSA, based on prescribed templates and metrics under the CEMAF. Results from the CEMAF shall be used to inform national and local planning, investment prioritization, and performance-based budgeting.

Sec. 18. Citizen Participation and Community Engagement. - To ensure broad

public involvement in the implementation of this Act, the following shall be undertaken: (a) Local Circular Economy Advisory Committees shall be established by all provinces, cities, and municipalities, composed of representatives from civil society, community organizations, and key local sectors. These

Committees shall assist in planning, monitoring, and recommending programs under the Local Circular Economy Action Plans. The Local Circular Economy Advisory Committee may be constituted as a functional sub-committee or technical working group under the Local Development Council, Local Special Bodies, or similar mechanisms established by the LGU, to streamline implementation and avoid redundancy; (b) The CE-IAC, in coordination with the DILG, shall convene annual multi- stakeholder consultations to gather public input and review progress on national circular economy programs; (c) LGUs shall integrate circular economy initiatives in their Annual Investment Plans through participatory planning and budgeting processes; and (d) A public feedback mechanism, including an online portal, shall be developed by the CE-IAC to enable citizens to suggest solutions, report violations, and access information related to this Act.

Sec. 19. Circular Economy Implementation Fund. - To support the

implementation of this Act, particularly the operations of the CE-IAC and its technical working groups, a Circular Economy Implementation Fund (CEIF) is hereby established. The Fund shall be administered by the DEPDev and sourced from the following: a. Agency savings allocated for environmental, innovation, or sustainability programs; b. Appropriations under the annual General Appropriations Act (GAA) for DEPDev and CE-IAC member agencies; c. A portion of proceeds from Extended Producer Responsibility (EPR) schemes, as may be determined in the Implementing Rules and Regulations (IRR); d. Official development assistance, climate finance instruments, and donations from domestic or international sources. The CEIF shall be used to support capacity-building programs, technical working groups, monitoring and evaluation systems, circular innovation pilots,

stakeholder consultations, and other operational or implementation needs as determined by the CE-IAC.

Sec. 20. Appropriations. - The initial implementation of this Act shall be funded

from the current budgets of concerned agencies. Thereafter, the necessary funds for the operations of the CE-IAC and the Circular Economy Implementation Fund (CEIF) shall be included in the annual General Appropriations Act. Not less than three percent (3%) of the total appropriations for the implementation of this Act shall be allocated exclusively for monitoring and evaluation (M&E) activities, including the development and operation of the CEMAF, third-party audits, and data reporting systems.

Sec. 21. Implementing Rules and Regulations. - The Implementing Rules and

Regulations of this Act shall be drafted jointly by DEPDev, DENR, DTI, DOF and the CE-IAC. It shall ensure that all member agencies, private sector representatives, civil society organizations, and LGU networks are adequately consulted during the IRR development process. The IRR shall include operational details for multi-agency coordination, funding mechanisms, reporting standards, and monitoring systems in support of this Act. The IRR shall be issued within one hundred twenty (120) days from the effectivity of this Act

Sec. 22. Enforcement and Penalties. - To ensure compliance with this Act, the

following shall apply: Any producer, retailer, importer, service provider, or other covered entity that fails to comply with the requirements of this Act, including the submission of transition plans, adherence to single-use plastic phase-out schedules, or circular procurement rules, may face the following: 1. Written warnings and compliance orders; 2. Fines ranging from P50,000 to P500,000, based on a matrix of severity, frequency, environmental impact, and economic benefit from non- compliance, as defined in the IRR; 3. Suspension or cancellation of business permits or relevant licenses; 4. Disqualification from government incentives and procurement programs; 5. Escalating penalties for repeat or willful violations.

Violations may be detected through the CEMAF, third-party audits, or public feedback mechanisms established under this Act. Affected entities may appeal such penalties through a grievance mechanism to be established in the Implementing Rules and Regulations (IRR), consistent with due process requirements LGUs that fail to prepare or implement their LCEAPs within the prescribed period may face administrative sanctions from the DILG, including the suspension of 7 budget support or exclusion from performance-based circular economy incentives, subject to due process. The CE-IAC, in coordination with concerned agencies, shall issue detailed rules on enforcement, appeals, and penalties within ninety (90) days from the effectivity of 11 this Act.

Sec. 23. Circular Economy Regulatory Sandbox. - To encourage innovation and

support the development of new business models, technologies, and systems aligned with circular economy principles, a Circular Economy Regulatory Sandbox Program is hereby established. The sandbox shall provide a controlled environment for eligible participants to test circular solutions-such as sustainable packaging, waste-to-resource platforms, reverse logistics, and modular product systems-under temporary regulatory relaxations or exemptions. The DTI and DEPDev shall issue the implementing guidelines for the sandbox within six (6) months from the effectivity of the Implementing Rules and Regulations (IRR), including: (a) Application procedures and eligibility requirements; (b) Criteria for sandbox participation, including environmental, economic, or social benefit; (c) Incentives for sandbox participants, which may include technical assistance, regulatory exemptions, fiscal or non-fiscal support, or access to pilot funding under the Circular Economy Implementation Fund (CEIF); (d) Mechanisms for periodic monitoring, reporting, and evaluation of sandbox initiatives;

(e) Procedures for scaling and integrating successful sandbox outcomes into formal policy or regulation; and (f) A grievance and appeals mechanism for rejected or disqualified applications. Sandbox participation shall be granted for a period of up to two (2) years, 6 subject to periodic review. Participants must: 1. Demonstrate potential environmental, social, or economic benefit; 2. Submit monitoring data and implementation reports; 3. Comply with safety, health, and consumer protection laws. Upon successful completion, sandbox innovations may be recommended for wider adoption, supported by formal regulatory integration, incentives, or funding under this Act or related programs.

Sec. 24. Phased Implementation. - The implementation of this Act shall be

carried out in phases, as shall be defined in the Implementing Rules and Regulations (IRR), taking into account the readiness of sectors, availability and maturity of technologies, institutional and administrative capacities, and the outcomes of circular economy pilot programs, including those implemented under the regulatory sandbox mechanism. The phased implementation schedule in the IRR shall include clear milestones, transition pathways, and indicative timelines for government agencies, LGUs, business sectors, and other stakeholders, ensuring a just and practical transition toward a circular economy. The IRR may provide differentiated compliance periods for specific industries or local government units, particularly those in resource-constrained, geographically isolated, or climate-vulnerable areas, provided that such differentiation shall not prejudice the attainment of national targets under this Act. All phases shall be aligned with the PAPSCP, the National Circular Economy Roadmap, the National Climate Change Action Plan, and the Philippine Development Plan or its successor frameworks. The phased implementation schedule shall include, among others, the five-year transition to single-use plastic (SUP) phase-out as outlined in Section 9 of this Act.

Sec. 25. Circular Economy Incentive Code. - To support the transition to a

2 circular economy, the CE-IAC, in coordination with the DOF, DTI, and other concerned 3 agencies, shall develop a Circular Economy Incentive Code as part of the IRR of this Act. The Incentive Code shall identify and harmonize existing fiscal and non-fiscal 6 incentives under current laws, regulations, and programs, and provide guidelines for 7 their effective application to circular economy enterprises, LGUs, cooperatives, 8 startups, and innovators. It shall establish criteria for eligibility, priority sectors and 9 technologies, application procedures, and performance monitoring mechanisms. The Incentive Code shall also include provisions for regular review, update, and rationalization of incentive instruments to ensure continued relevance and impact. The CE-IAC shall serve as the primary harmonization and evaluation body to ensure that all incentive mechanisms under this Act are aligned with national development goals, sustainable fiscal policies, and the key performance indicators established under the CEMAF. The DOF, in coordination with the Board of Investments (BOI), shall be responsible for the technical design, cost-benefit assessment, and implementation of fiscal and non-fiscal incentives under the Circular Economy Incentive Code. All incentive proposals shall be reviewed and endorsed by the CE-TAC prior to approval to ensure policy coherence and alignment with circular economy principles.

Sec. 26. Circular Innovation Hub. - To accelerate the development and

adoption of circular economy solutions, a Circular Innovation Hub shall be established under the DOST, in coordination with the DICT, DTI, and the DEPDev. The Hub shall serve as a platform for supporting research, development, and innovation in circular design, materials recovery, waste reduction technologies, and circular business models. It shall operate in partnership with higher education institutions (HEIs), startups, MSMEs, and local governments. The IRR shall define the structure, funding sources, and operational guidelines of the Hub, including pilot programs, grant support, and collaborative research initiatives.

Sec. 27. Repealing Clause. - All laws, decrees, executive orders, rules, and

2 regulations or parts thereof inconsistent with this Act are hereby repealed, amended, 3 or modified accordingly.

Sec. 28. Separability Clause. - If any provision of this Act is declared

unconstitutional, the rest shall remain valid and effective.

Sec. 29. Effectivity. - This Act shall take effect fifteen (15) days after full

7 publication in the Official Gazette or in two (2) newspapers of general circulation. Approved,