Amendments to the Revised Forestry Code

Policy and purposes stated

The decree strengthens the forestry code to make it responsive to present realities and to new government policies and programs on forest development and conservation and on rationalization of the wood industry (Whereas clauses).
Forest development and wood industry programs must complement and enhance the government’s rural development program (Whereas clauses).
The decree provides sufficient incentives to expand private sector participation in forest management, protection, development, and wood processing activities under the concept of joint or co-management of forest resources (Whereas clauses).

Core definitions and terms

Section 3 defines the following terms for purposes of Presidential Decree No. 705 (as amended):
- “Public forest” is the mass of lands of the public domain not subject to the system of classification for forest purposes and not needed for forest purposes.
- “Permanent forest” or “forest reserves” refers to public domain lands classified as not needed for forest purposes.
- “Alienable or disposable lands” refers to public domain lands classified and declared not needed for forest purposes.
- “Forest lands” include public forest, permanent forest/forest reserves, and forest reservations.
- “Grazing land” is the portion of the public domain set aside for raising livestock based on suitability of topography and vegetation.
- “Mineral lands” are lands classified as such by the Secretary of Natural Resources using prescribed and approved criteria, guidelines, and procedure.
- “Forest reservations” are forest lands reserved by the President for any specific purpose or purposes.
- “National park” is a forest land reservation essentially of primitive or wilderness character withdrawn from settlement or occupancy and set aside to preserve scenery, natural/historic objects, and wild animals/plants for unimpaired enjoyment by future generations.
- “Game refuge or bird sanctuary” is a forest land designated for protection of game animals, birds and fish and closed to hunting and fishing to allow excess population to flow and restock surrounding areas.
- “Marine park” is any public offshore area delimited as habitat of rare and unique species of marine flora and fauna.
- “Seashore park” is any public shore area delimited for outdoor recreation, sports fishing, water skiing, and related healthful activities.
- “Watershed reservation” is a forest land reservation established to protect or improve water yield conditions or reduce sedimentation.
- “Watershed” is a land area drained by a stream or fixed body of water and its tributaries having a common outlet for surface run-off.
- “Critical watershed” is a drainage area of a river system supporting existing and proposed hydro-electric power, irrigation works, or domestic water facilities needing immediate protection or rehabilitation.
- “Mangrove” is forest occurring on tidal flats along the sea coast, extending along streams where water is brackish.
- “Kaingin” refers to a portion of forest land subjected to shifting and/or permanent slash-and-burn cultivation.
- “Forest product” includes timber, pulpwood, firewood, bark, tree top, resin, gum, wood oil, honey, beeswax, nipa, rattan, and other forest growth such as grass, shrub, and flowering plants, and also the associated water, fish, game, scenic, historical, recreational and geologic resources in forest lands.
- “Dipterocarp forest” is a forest dominated by dipterocarp species such as listed species.
- “Pine forest” is predominantly pine trees.
- “Industrial tree plantation” is forest land extensively planted to tree crops primarily to supply raw material requirements of wood processing plants and related industries.
- “Tree farm” is a small forest land tract purposely planted to tree crops.
- “Agro-forestry” is sustainable management that increases overall production, combines agricultural crops, tree crops, and forest plants and/or animals simultaneously or sequentially, and applies management compatible with local cultural patterns.
- “Multiple-use” is harmonized utilization of land, soil, water, wildlife, recreation value, grass, and timber of forest lands.
- “Selective logging” is systematic removal of nature, over-mature and defective trees leaving adequate healthy residual trees of desired species to ensure future crop and forest cover for protection and conservation of soil, water, and wildlife.
- “Seed tree system” is characterized by partial clearcutting leaving seed trees to regenerate the area.
- “Healthy residual” is a sound or slightly injured tree of the commercial species left after logging.
- “Sustained-yield management” is continuous or periodic production of forest products in a working unit aiming at an approximate balance between growth and harvest or use at the earliest practicable time, including application to water, grass, wildlife, and other renewable forest resources.
- “Processing plant” is any mechanical setup/device/machine or combination converting logs and other forest raw materials into lumber, veneer, plywood, fiberboard, blackboard, paper board, pulp, paper, or other finished wood products.
- “Lease” is a state-granted privilege to occupy and possess forest land in consideration of specified rental to undertake any authorized activity therein.
- “License” is a state-granted privilege to utilize forest resources within forest land without right of occupation/possession to exclude others, or to establish and operate a wood-processing plant, or conduct any activity involving utilization of forest resources.
- “License agreement” is a state-granted privilege to utilize forest resources with right of possession and occupation to exclude others except the government, with obligation to develop, protect and rehabilitate in accordance with agreement terms and conditions.
- “Permit” is a short-term privilege/authority to utilize limited forest resources or undertake limited activity within forest land without right of occupation/possession.
- “Annual allowable cut” is the yearly volume of materials (wood or other forest products) authorized for cutting.
- “Cutting cycle” is the number of years between two major harvests in the same working unit and/or region.
- “Forest ecosystem” is living and non-living components of a forest and their interaction.
- “Silviculture” is establishment, development, reproduction and care of forest trees.
- “Rationalization” is organization of a business/industry using management principles/systems/procedures to attain stability, efficiency and profitability of operation.
- “Forest officer” is an appointed or delegated official/employee of the Bureau to execute, implement or enforce the Code and related laws and implementing regulations.
- “Private right” includes titled rights of ownership and, for national minorities, rights of possession existing at the time a license is granted, which may include places of abode and worship, burial grounds, and old clearings, but exclude productive forest including logged-over areas, commercial forests and established plantations of forest trees and trees of economic values.
- “Person” includes natural and juridical persons.

Forestry management and multiple use rules

Section 14 classifies existing pasture leases in forest lands:
- Forest lands that are not reservations and are subject of pasture leases are classified as grazing lands.
- Areas covered by pasture permits remain forest lands until reclassified under criteria, guidelines, and methods prescribed by the Department Head.
- Administration, management, and disposition of grazing lands remain under the Bureau.
Section 17 requires boundary protection between forest types:
- Boundaries between permanent forests and alienable/disposable lands must be clearly marked and maintained on the ground with infrastructure/roads or concrete monuments at intervals of not more than five hundred (500) meters, or other visible and practicable signs, to insure forest protection.
- In boundary conflicts, reference must be made to the Philippine Coast and Geodetic Survey Topo map.
Section 19 mandates multiple-use evaluation and limits:
- Beneficial uses of timber, land, soil, water, wildlife, grass, and recreation/aesthetic value of forest and grazing lands must be evaluated and weighted before allowing utilization, exploitation, occupation/possession, or any activity.
- Only uses producing optimum benefits for national development and public welfare without impairment or with least injury to resources may be allowed.
- All forest reservations may be opened to development or uses not inconsistent with their principal objectives.
- Critical watersheds, national parks, and established experimental forests may not be subject to commercial logging or grazing operations.
- Game refuges, bird sanctuaries, marine and seashore parks may not be subject to hunting, fishing, and other activities of commercial nature.
Section 22 requires sustainable silvicultural/harvesting systems for production forests:
- Dipterocarp forest: selective logging with enrichment or supplemental planting when necessary.
- Pine or mangrove forest: seed tree system with planting when necessary.
- Research-based alternative systems may be adopted only with Department Head approval upon recommendation of the Director.
- No authorized person may cut/harvest/gather any timber, pulpwood, or other products of logging unless planting three times of the same variety for every tree cut or destroyed.
- Any violation of the three-times planting requirement is sufficient ground for immediate cancellation of the license agreement, license, lease, or permit.

Licensing, leases, permits, and industry rationalization

Section 20 prohibits unlicensed forest use and processing:
- No person may utilize, exploit, occupy, possess, or conduct any activity within any forest and grazing land, or establish/install/add/operate any wood or forest products processing plant, unless authorized under a license agreement, license, lease, or permit.
- When national interest requires, the President may amend, modify, replace, or rescind any contract, concession, permit, license, or other privilege granted under the decree.
- Upon recommendation of the appropriate government agency, the President may order summary suspension, pending a hearing, of any such privilege for violation of conditions, including conditions on reforestation, pollution, environmental protection, export limitation, or conditions prescribed by the Minister of Natural Resources in daily issued regulations.
Section 26 sets rules on annual allowable cut:
- Annual allowable cut for a forest land under a license agreement/license/lease/permit must be determined based on area size, volume and kind of harvestable timber or forest products and healthy residuals, seed trees and reproduction, and established cutting cycle/rotation.
- No person may cut/harvest/gather timber, pulpwood, firewood, or other forest products unless authorized under Section 20 and unless the relevant annual allowable cut level has been granted.
- The Department Head must review existing annual allowable cut and prescribe levels for common dipterocarp timber, softwood and hardwood timber cutting not prohibited, pulpwood, firewood and other forest products, using factors including updated aerial photographs and field inventories.
- Pending completion of review and appropriate amendment, existing annual allowable cut that does not sufficiently support a processing plant or that supports a duly approved processing expansion/new projects may continue without change.
- No additional or adjustment in annual allowable cut may be made until after the review is conducted.
Section 30 regulates wood or forest products processing industry rationalization:
- Expansion/integration of existing processing plants and establishment of new processing plants is encouraged, but locations and operations must be regulated to rationalize the whole industry.
- No expansion/integration or new processing plant establishment may proceed unless environmental considerations are accounted for and adequate raw material supply on a sustained-yield basis is assured.
- Long-term assurance of raw material sources from forest concessions and/or industrial tree plantations, tree farms, or agro-forest farms—with annual allowable cut/harvest deemed sufficient to meet requirements—governs, among others, grant of privilege to establish/install additional capacity or operate.
- Within one year from the date of this law, processors without forest concessions/areas that may be developed into industrial tree plantations/tree farms/agro-forest farms, and licensees/lessees/permittees without processing plants, must jointly adopt feasible schemes (other than log supply contracts) for Department Head approval.
- No license agreement, license, lease or permit (including processing plant permit) may be granted or renewed unless the schemes are submitted to and approved by the Department Head.
- All processing plants existing for expansion, integration, or establishment must obtain operating permits/licenses and/or approval from the Bureau or the Department (as the case may be), and must submit to other regulations related to operation.
- The Department Head may cancel, suspend, or phase out inefficient, wasteful, uneconomical, or perennially short-in-raw-material processing plants not responsive to the rationalization program.
Section 32 (as amended) mandates local log processing and limits log exports:
- Unless otherwise directed by the President, the entire production of logs by all timber licensees must be processed locally starting January 1, 1976.
- Timber licensees may export a portion of their log production as determined by the Department Head, but total log export by these timber licensees must not exceed twenty-five percent (25%) of the total national allowable cut.
- Export is allowed only for timber licensees that meet one of the following:
  1. Have existing viable processing plants;
  2. Have processing projects duly approved by the Department Head;
  3. Have acquired viable processing machinery/equipment installed and operational under the schedule approved by the Department Head; or
  4. Have log export support aligned with government-approved trade agreements.
- No permit to export is granted unless replanting and reforestation requirements are complied with.
- The President may, upon recommendation of the Department Head, cancel log exportation or reduce the maximum allowable proportion when log export prices fall to an unreasonably low level or when public interest so requires.
- Timber licensees with no processing plant and no plan to establish one must jointly, with wood processors, adopt processing schemes under Section 30.

Reforestation lands and industrial tree plantations

Section 33 enumerates lands to be reforested and/or afforested:
- Public forest lands include: bare/grass-covered tracts; brushlands/brush-covered tracts needing development; open tracts interspersed with forest patches; denuded/inadequately timbered areas proclaimed by the President as forest reserves/reservations as critical watersheds, national parks, game refuge, bird sanctuaries, national shrines, national historic sites; inadequately-stock forest lands within forest concessions; portions of areas covered by pasture leases or permits needing immediate reforestation; and river banks, easements, road right-of-ways, deltas, swamps, former river beds, and beaches.
- Private lands include portions required to be reforested or planted to trees pursuant to Presidential Decree Nos. 953 and 1153 and other existing laws.
Section 34 creates industrial tree plantation/tree farm/agro-forestry farm leasing:
- A lease for fifty (50) years for industrial tree plantations, tree farms, or agro-forestry farms may be granted by the Department Head upon recommendation of the Director to qualified persons to develop and exploit natural resources over timber/forest lands of the public domain categorized in Section 33(1), except those under paragraphs (d) and (g), with minimum areas of one hundred (100) hectares for industrial tree plantations/agro-forestry farms and ten (10) hectares for tree farms.
- Area size depends on lessee capability to develop or convert the area into productive condition within the lease term.
- The Department Head sets terms/conditions considering raw material needs of forest-based and other industries and maintenance of a wholesome ecological balance.
- Trees/products raised belong to the lessee, who has the right to sell, contract, convey, or dispose of planted trees and products in any manner permitted by existing laws/rules/regulations.
- Government reforestation projects, or portions, that field evaluation finds more suitable for or better as industrial tree plantations/tree farms/agro-forestry farms in terms of benefits to government and surrounding area may be leased under Section 34.
Section 35 grants priority to establish plantations/farms:
- Over suitable areas covered by a timber license agreement or permit, priority to establish industrial tree plantation/tree farms/agro-forestry farms is given to the holder after the Bureau determines suitability and sets the area aside for that purpose.
- The priority must be availed of within a reasonable period, otherwise the area becomes open to any qualified person and is segregated from the licensee’s/permittee’s area.
- Priority also applies to establishment of communal industrial tree plantations by barangays, municipalities or cities and provinces.
Section 36 provides incentives to qualifying lessees:
- Filing fee: P0.50 per hectare nominal fee.
- Rentals:
  - No rental for the first five (5) years from lease date.
  - Sixth year to tenth year: annual rental P0.50 per hectare.
  - Thereafter: annual rental P1.00 per hectare.
  - Long-denuded areas (certified by the Director and approved by the Department Head): exempt from rental for full term, not exceeding twenty-five (25) years; during the first five (5) years following renewal: P0.50 per hectare; thereafter: P1.00 per hectare.
  - No rental is collected when Bureau verification shows the lessee substantially meets the development schedule in the approved development plan.
- Forest charges on timber/forest products grown and cut/gathered in industrial tree plantations/tree farms/agro-forestry farms are 25% of the regular forest charges prescribed in the National Internal Revenue Code.
- Percentage tax exemption under Title V of the National Internal Revenue Code when products are sold, bartered, or exchanged in original or processed state, and exemption from all sales tax (local/municipal) and from real property tax under Presidential Decree No. 853.
- No obligation under National Internal Revenue Code provisions on withholding of tax at source upon interest paid on borrowings for development/operation of industrial tree plantation/tree farm/agro-forestry farm.
- Unless public interest demands, boundaries of the leased area established on the ground may not be altered/modified.
- Development/operation expenses prior to production state may be treated as ordinary and necessary business expenses or capital expenditures at lessee option.
- Board of Investments must classify industrial tree plantations/tree farms/agro-forestry farms as pioneer areas under its annual priority plan, governed by its rules.
- Priority in securing credit assistance from government and government-supported financing institutions at reasonable interest rates with adequate funds for lending to lessees/investors.
- Lessees and their field employees/workers are exempted from Presidential Decree No. 1153 provisions.
- Wood material purchasing agencies must specify purchase of, or utilize when possible, manufactured products derived from trees grown/harvested from these plantations/farms.
- No importation of wood/wood products/wood-derived products (including pulp, paper, paperboard) is allowed if available in retired quantities and reasonable prices from artificial or man-made forests or local processing plants, certified by the Department Head.
- No processing plant using wood as primary materials may be established, expanded, integrated, or operated without long-term raw material source assurance from forest concessions and/or these plantations/farms under Section 30.
- Timber grown and harvested from these plantations/farms may be exported without restriction in quantity/volume if exporter is qualified and allowed to export logs under the decree; such export is exclusive of quantities authorized under Section 32.
- Export requires forest land and forest plantation timber rentals being paid.
- Export requires a yearly certificate to export issued by the Department Head.
- The Department Head may review exports and reduce or totally suspend export whenever public interest requires.
- Free technical advice from government foresters and farm technicians.
- The Department Head may provide additional incentives for special areas such as no roads, inadequate roads, rough topography, and remote areas far from processing plants.

Transitional, special protections, and compliance duties

Section 53 provides limited non-prosecution and management obligations for certain forest occupants:
- Kaingin-ereros, squatters, cultural minorities, and other occupants who entered forest lands and grazing lands before May 19, 1975 without permit/authority are not to be prosecuted if they do not increase clearings.
- They must undertake, within two (2) months from notice, activities imposed by the Bureau under a management plan calculated to conserve and protect forest resources in the area.
- Whenever best land use demands as determined by the Director, they must be ejected and relocated to the nearest accessible government resettlement area.
Section 55 mandates wildlife conservation:
- Measures must be adopted to conserve wildlife.
- The Director must regulate hunting in forest lands to maintain ecological balance of flora and fauna.
Section 61 restricts transfer, exchange, sale, or conveyance of forestry rights:
- No license, license agreement, lease, or permit may be transferred, exchanged, sold, conveyed, or used to transfer rights/interests or assets used in connection, unless authorized by the Department Head.
- Transfer/conveyance is allowed only if all conditions are met:
  - The license/lease/permit has been in existence for at least three (3) years;
  - No violation of any forestry law/rule/regulation and faithful compliance with terms/conditions;
  - Transferee has all qualifications and none of the disqualifications;
  - No evidence of speculation purpose;
  - Transferee assumes all obligations of transferor.
- “Assets” for this section excludes cattle and other livestock/animals raised in grazing lands and forest lands, and planted trees and other products raised in industrial tree plantations/tree farms/agro-forestry farms.
Section 63 imposes equity sharing on corporations holding forestry/processing privileges:
- A corporation holding a license agreement/license/lease/permit to utilize/exploit/occupy/possess forest land or conduct activity therein, or to establish and operate a wood-processing plant, must within one (1) year after effectivity of the amendatory decree formulate and submit for approval a plan to sell at least ten percent (10%) of subscribed capital stock to employees, laborers, and the general public.
- Share sale must be effected not later than the sixth year of operation, or the first year of effectivity if the corporation had operated for more than five (5) years prior to effectivity.
- No corporation may be issued any license agreement/license/lease/permit after effectivity unless it submits such plan and it is approved for implementation within the sixth year of operation.
- The Department Head promulgates rules on payment manner, factors affecting selling price, purchase priorities, and establishment of a fund ensuring financial capability of deserving employees and laborers.
- Industries concerned must extend assistance in promulgation, including submission of data/information on operation, personnel management, and asset evaluation.

Criminal offenses, penalties, and forfeitures

Section 68 penalizes cutting/gathering/removal without authority:
- Any person who cuts/gathers/collects/removes timber or other forest products from forest land, or timber from alienable/disposable public land or private land with unlimited disposition of forest products, without authority under a license agreement/lease/license/permit is punished with the penalty imposed under Articles 309 and 310 of the Revised Penal Code.
- For partnerships/associations/corporations, the officers who ordered the cutting/gathering/collection are liable.
- If such officers are aliens, they are deported in addition to the penalty without further proceedings by the Commission on Immigration and Deportation.
- The Court must order confiscation in favor of the government of the timber/forest products cut/gathered/collected/removed and confiscation of machinery/equipment/implements/tools used, and forfeiture of improvements in the area.
- Timber/forest products cut/gathered/collected/removed from a license area must be delivered to the licensee/lessee/permittee whose area the products were cut/gathered/collected, free from claims of the illegal cutter, but subject to payment of corresponding forest charges.
- If the licensee refuses to accept, the products may be confiscated in favor of the government for disposition according to law/regulation/policy.
Section 69 penalizes unlawful occupation and destruction of forest lands and grazing lands:
- Any person who enters and occupies or possesses forest land/grazing land without authority; makes kaingin for private use or for others; destroys oat land or grazing land or parts; damages timber stand and other forest products/growth; assists/abets such acts; sets fire or negligently permits fire; or refuses to vacate when ordered pursuant to Section 53 is punished upon conviction with:
  - Fine: not less than PHP 500.00 nor more than PHP 20,000.00 for each offense; and
  - Imprisonment: not less than six (6) months nor more than two (2) years for each such offense.
- Liability includes payment of ten (10) times the rental fees and other charges that would have accrued had occupation and use been authorized.
- For offenders found guilty of making kaingin:
  - Imprisonment: not less than two (2) years nor more than four (4) years; and
  - Fine: equal to eight (8) times the regular forest charges due on forest products destroyed,
  - Without prejudice to payment of full cost of production of the occupied area as determined by the Bureau.
- Maximum penalty applies for repeat offenses and double the maximum for the third offense.
- The Court must order eviction of the offender, forfeiture to government of all improvements made, and forfeiture of vehicles, domestic animals, and equipment used in commission.
- If vehicles/animals/equipment/improvements are not suitable for Bureau use, they are sold at public auction and proceeds accrue to the Development Fund of the Bureau.
- If the offender is a government official or employee, the offender is automatically dismissed from office and permanently disqualified from holding any elective or appointive position in addition to penalties.
Section 71 penalizes illegal occupation of national parks/recreation areas and vandalism:
- Any person who, without permit, occupies any portion of the national parks system for any length of time, or cuts/destroys/damages/removes timber or any species of vegetation or forest cover or natural resources within