Policy framework and legal basis
- Section 1 invokes Executive Order No. 273, incorporating Sections 230 to 238 and 297 of the National Internal Revenue Code of 1977, as amended, into Presidential Decree No. 705, as amended.
- The incorporated tax-charge provisions are integrated into the Revised Forestry Code of the Philippines and renumbered within Presidential Decree No. 705.
Incorporated provisions and agency substitution
- Section 1 incorporates the following National Internal Revenue Code of 1977 provisions into Presidential Decree No. 705, as amended, renumbered as Sections 68 to 76:
- Section 230 → Section 68
- Section 231 → Section 69
- Section 232 → Section 70
- Section 233 → Section 71
- Section 234 → Section 72
- Section 235 → Section 73
- Section 236 → Section 74
- Section 237 → Section 75
- Section 238 → Section 76
- Section 297 → Section 77
- Section 1 redirects references in Sections 230 to 238 of the National Internal Revenue Code of 1977 so that:
- Bureau of Internal Revenue refers to the Forest Management Bureau.
- Commissioner of Internal Revenue refers to the Director of the Forest Management Bureau.
- Ministry of Finance refers to the Secretary of Environment and Natural Resources.
Placement within the Revised Forestry Code
- Section 2 places the incorporated and renumbered Sections 68 to 76 under a new subtitle of Chapter III (Utilization and Management), labeled Subtitle H.
- The operative forest charge provisions that matter for this Act are then specifically amended through Sections 3 to 6, and their system for effectivity, FOB price determination, and exemptions is set in Section 73.
Forest charge rates for timber and recoverables
- Section 3 amends Section 70 of Presidential Decree No. 705 and requires charges on each cubic meter of timber cut in forestland.
- Section 70 imposes twenty-five percent (25%) of the actual FOB market price based on species and grading for timber cut in forestland, whether the timber belongs to the first, second, third, or fourth group.
- Section 70 sets a reduced rate for pulpwood and matchwood cut in forestland, requiring ten percent (10%) of the actual FOB market price.
- Section 4 amends Section 71 and imposes forest charges on each cubic meter of:
- firewood cut in forestland; and
- branches and other recoverable wood wastes of timber, including timber ends, tops and stumps, when used as raw materials for the manufacture of finished products.
- Section 71 requires Ten pesos (P10.00) per cubic meter for the covered firewood and recoverable wood wastes.
- Section 71 bans cutting of all mangrove species for the firewood category.
- Section 71 limits firewood removal to third or fourth group wood, but allows first and second group woods to be removed for firewood purposes from land that is more valuable for agricultural than for forest purposes only when jointly authorized by the Secretaries of both the Departments of Environment and Natural Resources and Agriculture.
Charges for minor forest products; exemptions from charges
- Section 5 repeals Section 73 of Presidential Decree No. 705 (as numbered under the incorporation scheme).
- Section 5 amends Section 72 to require the following forest charge rule:
- All other forest products of forestland not covered by the preceding sections are exempt from any or all forest charges, except specified items.
- Section 72 imposes charges on specific minor forest products at ten percent (10%) of the actual FOB market price, covering:
- rattan
- gums and resins
- beeswax
- guta-percha
- almaciga resin
- bamboo
Effectivity, publication, FOB price determination, and in-lieu effect
- Section 6 adds Section 73 to Presidential Decree No. 705, establishing how forest charge rates operate and how the actual FOB market price is determined.
- Section 73 provides that the rates in Sections 70, 71, and 72 are effective upon approval of the Act, and mandates publication and posting:
- the new rates must be published in the Official Gazette or in two (2) newspapers of national circulation; and
- the new rates must also be posted in conspicuous places in the different Department of Environment and Natural Resources field offices.
- Section 73 requires the actual FOB market price of forest products to be justly determined once a year by the Secretary of Environment and Natural Resources.
- Section 73 requires the Secretary of Environment and Natural Resources to create a committee composed of representatives of:
- the Department of Environment and Natural Resources
- the National Economic and Development Authority
- the Department of Trade and Industry
- the Bureau of Internal Revenue
- the wood and furniture industry
- and the consumers sectors
- Section 73 requires the committee to formulate criteria and/or guidelines for determining the actual FOB market price for use as the basis for ad valorem tax assessment, taking into account:
- production cost (developing cost, contingencies and miscellaneous cost)
- species and grade of timber
- government share
- reforestation
- tariff duties
- taxes
- risk involved
- a reasonable margin of profit for domestic and export market prices for wood and wood products.
- Section 73 applies forest charges to forest products gathered from:
- naturally growing timber and forest products gathered within public forestlands
- alienable and disposable lands
- private lands
- Section 73 provides that forest charges collected are in lieu of the administrative charge on environment and other fees and charges imposed thereon.
- Section 73 exempts from forest charges:
- planted trees and other forest products harvested from industrial tree plantations
- private lands covered by existing tiller or by approved land application
Renumbering and repeals within the Forestry Code
- Section 7 repeals Section 77 of Presidential Decree No. 705, as amended, as numbered herein.
- Section 7 renumbers:
- Section 68 of Presidential Decree No. 705, as amended by Executive Order No. 277 dated July 25, 1987, as Section 77.
- Sections 68-A and 68-B of Presidential Decree No. 705 (as added by Executive Order No. 277) as Sections 77-A and 77-B, respectively.
- Section 7 renumbers the succeeding provisions of Presidential Decree No. 705 (as amended) so that Sections 69 to 80 become Sections 78 to 89, respectively, and so that Sections 80-A, 80-B to 83 become Sections 89-A, 89-B to 92, respectively.
Effect on earlier forest-charge numbering and approval
- Section 8 states the Act’s effectivity rule as fifteen (15) days after its publication in a newspaper of general circulation.
- The Act was approved on October 10, 1991 by Corazon C. Aquino as President of the Philippines.
- The Act notes passage dates: August 12, 1991 by the House of Representatives and August 8, 1991 by the Senate.