Forex Code Revision PD 705 1975

Declaration of policy and purpose

The State orients the multiple uses of forest lands toward development and progress requirements of the country, the advancement of science and technology, and the public welfare.
Land classification and survey must be systematized and hastened.
Wood-processing plants must be encouraged and rationalized.
The protection, development and rehabilitation of forest lands must be emphasized to ensure continuity in their productive condition.

Key definitions and coverage rules

Public forest is mass of public domain lands not yet classified under the system for forest purposes and not.
Permanent forest/forest reserves are public domain lands already classified and determined needed for forest purposes.
Alienable and disposable lands are public domain lands classified as not needed for forest purposes.
Forest lands include public forest, permanent forest/forest reserves, and forest reservations.
Forest reservations are forest lands reserved by the President for specific purposes.
National parks are forest land reservations of essentially primitive/wilderness character, withdrawn from settlement or occupancy to preserve scenery, natural and historic objects, and wild animals or plants, and to provide enjoyment without impairment for future generations.
Game refuge or bird sanctuary is forest land designated for protection of game animals, birds and fish and closed to hunting and fishing so excess population may flow and restock surrounding areas.
Marine park covers off-shore areas inhabited by rare and unique marine flora and fauna.
Seashore park covers public shore areas delimited for outdoor recreation, sports fishing, water skiing and related healthful activities.
Watershed reservation is a forest land reservation established to protect/improve water yield conditions or reduce sedimentation.
Critical watershed is a drainage area of a river system supporting hydro-electric power and irrigation works needing immediate rehabilitation due to fast denudation causing accelerated erosion and destructive floods, and it is closed from logging until fully rehabilitated.
Kaingin refers to forest land subject to shifting and/or permanent slash-and-burn cultivation with little or no provision to prevent soil erosion.
Forest product includes timber, pulpwood, firewood, bark, tree top, resin, gum, wood, oil, honey, beeswax, nipa, rattan, and other forest growth, plus associated water, fish, game, scenic, historical, recreational and geologic resources in forest lands.
Multiple-use is harmonized utilization of beneficial uses of forest lands, including land, soil, water, wildlife, recreation value, grass and timber.
Selective logging is systematic removal of mature, over-mature and defective trees leaving adequate healthy residuals of desired species for future crop and forest cover for soil and water protection and conservation.
Seed tree system is partial clearcutting with seed trees left to regenerate the area.
Sustained-yield management means continuous or periodic production of forest products in a working unit achieving an approximate balance between growth and harvest/use, including application to renewable resources like water, grass, wildlife and other renewable resources.
Lease is a State privilege to occupy and possess forest land in consideration of a specified rental to undertake authorized activity.
License is a State privilege to utilize forest resources without right of occupation and possession to exclusion of others, or to establish and operate a wood-processing plant, or conduct any activity involving utilization of forest resources.
License agreement is a State privilege to utilize forest resources within forest land with the right of possession and occupation to exclusion of others (except government) with obligation to develop, protect and rehabilitate under stated terms.
Permit is a short-term State privilege to utilize limited forest resources or undertake limited activity within forest land without right of occupation and possession.
Annual allowable cut is volume of materials authorized to be cut regularly from a forest.
Cutting cycle is number of years between major harvests in the same working unit and/or region within a rotation.
Ecosystem means ecological community considered together with non-living factors and its environment as a unit.
Silviculture is establishment, development, reproduction and care of forest trees.
Forest officer means an official/employee of the Bureau delegated by law or competent authority to execute, implement or enforce this Code and related laws and implementing regulations.
Person includes natural and juridical person.
Private right refers to titled rights of ownership under existing laws, and for primitive tribes, to possession rights existing at the time a license is granted under the Code, including abode and worship places, burial grounds, and old clearings, but excluding production forest including logged-over areas, commercial forests and established plantations of forest trees and trees of economic value.

Administration: Bureau structure and authority

Section 4 merges the Bureau of Forestry, the Reforestation Administration, the Southern Cebu Reforestation Development Project, and the Parks and Wildlife Office into a single agency known as the Bureau of Forest Development (“Bureau”).
Section 5 gives the Bureau jurisdiction over all forest lands, grazing lands, and all forest reservations including watershed reservations administered by other government agencies or instrumentalities.
The Bureau must protect, develop, manage, regenerate and reforest forest lands, and regulate/supervise operations of licensees, lessees and permittees for taking or use of forest products and for occupancy or use.
The Bureau must implement multiple use and sustained yield management, protect/develop/preserve national parks, marine parks, game refuges and wildlife, and implement measures/programs to prevent kaingin and managed occupancy.
The Bureau must enforce forestry, reforestation, parks, game and wildlife laws, rules and regulations, and regulate establishment/operation of sawmills and wood-processing plants and conduct market studies of forest products.
Section 6 requires the Bureau Director and Assistant Directors to be natural born citizens, at least 30 years of age, holders of at least a Bachelor’s Degree in Forestry or equivalent, and registered foresters.
Section 7 places the Bureau directly under the control and supervision of the Secretary of the Department of Natural Resources (the “Department Head”).
Section 9 authorizes the Department Head, upon the recommendation of the Director, to promulgate the rules and regulations to implement the Code.

Land classification, boundaries, and reservations

Section 13 directs the Department Head to study, devise, determine and prescribe criteria, guidelines and methods to classify and survey all public domain lands into agricultural, industrial or commercial, residential, resettlement, mineral, timber or forest, and grazing lands, plus other classes provided by law, rules and regulations.
Pending full systemization, the Department Head must simplify inter-bureau action to determine which unclassified public domain lands are needed for forest purposes and declare them permanent forest to form part of forest reserves.
The Department Head must declare lands classified/determined not needed for forest purposes as alienable and disposable, with administration/management transferred to the Bureau of Lands, except that mangrove and other swamps not needed for shore protection and suitable for fishpond purposes must be released and placed under the Bureau of Fisheries and Aquatic Resources.
Lands still to be classified under the present system continue as part of the public forest.
Section 14 keeps forest lands subject to pasture leases/permits as forest lands until classified as grazing lands, while administration/management of grazing lands remains under the Bureau.
Section 15 bars classification of land of the public domain with slope of 18% or over as alienable and disposable, and bars classifying forest land with slope of 50% or over as grazing land.
Section 15 requires reverting lands already declared alienable and disposable that are 18% slope or over back to forest classification to form forest reserves, unless covered by existing titles/approved applications, or actually occupied openly, continuously, adversely and publicly for at least 30 years as of the Code effectivity by an occupant qualified for a free patent under the Public Land Act.
Section 15 requires such reverted lands not yet part of well-established communities to be kept in vegetative condition sufficient to prevent erosion and adverse effects on lowlands/streams.
When public interest requires, expropriation, cancellation of defective titles, rejection of public land applications, or ejection of occupants must be undertaken by appropriate steps.
Section 16 prohibits classification as alienable and disposable of specific forest-necessary areas even if below 18% slope, including:
- Areas less than 250 hectares far from or not contiguous with certified alienable/disposable land;
- Isolated forest patches of at least 5 hectares with rocky terrain or protecting communal springs;
- Areas already reforested;
- Areas within forest concessions timbered or with good residual stocking supporting existing or approved wood-processing plants;
- Ridge tops/plateaus regardless of size within/surrounded by forest lands where headwaters emanate;
- Appropriately located road rights-of-way;
- 20-meter strips along the edge of the normal high waterline of rivers/streams with channels at least 5 meters wide;
- 20-meter strips of mangrove or swamplands along shorelines facing oceans/lakes/other bodies of water, and 20-meter strips facing lakes;
- Areas needed for other purposes like national parks, national historical sites, game refuges and wildlife sanctuaries, forest station sites, and others of public interest;
- Areas previously proclaimed by the President as forest reserves, national parks, game refuge, bird sanctuaries, national shrines, national historic sites.
Section 16 requires cancellation/amendment of titled areas or expropriation if public interest requires for areas falling under those categories.
Section 17 requires boundaries between permanent forests and alienable/disposable lands to be clearly marked and maintained using infrastructure/roads, or concrete monuments at intervals of not more than 500 meters, or other visible/practicable signs.
Section 18 authorizes the President to establish/modify forest reserves/forest reservations within public domain for national park system, critical watersheds, or other purposes, and authorizes the Department Head to reserve and establish portions of public forest/forest reserve as site/experimental forests for the Forest Research Institute.
Section 18 requires establishment of needed offshore areas as marine parks when public interest requires for educational/scientific/historical/ecological/recreational values including marine life.

Multiple use, licensing framework, and sustained yield

Section 19 mandates evaluating and weighting beneficial uses of timber, land, soil, water, wildlife, recreation value and grass before allowing utilization/occupation/possession or any activity.
Section 19 allows only utilization/occupation/possession or activities producing optimum benefits for national development/public welfare without impairment or with least injury to other resources.
Section 19 allows forest reservations to be open to uses not inconsistent with principal reservation objectives, but requires that critical watersheds and national parks shall not be subject to logging operations.
Section 20 prohibits any person from utilizing, exploiting, occupying, possessing or conducting any activity within forest land, or establishing/operating a wood-processing plant, unless authorized by a license agreement, lease, license or permit.
Section 21 requires measures to achieve approximate balance between growth and harvest/use of forest products.
Section 22 requires that logging operations in production forests practice proper silvicultural and harvesting systems promoting optimum sustained yield, including:
- Dipterocarp forests: selective logging;
- Pine forests: seed tree system with planting when necessary;
- Other forest types: system found suitable by research, and initially observation-based systems abroad may be adopted; practiced systems must be modified with research findings.
Section 23 requires the Bureau to conduct progressive inventories of harvestable timber and young trees in all forest lands, whether covered by authorization or not, until 100% inventory is achieved.
Section 24 prohibits timber harvest unless it has been subject to at least a 5% timber inventory (or any statistically sound timber estimate) made not earlier than 5 years prior to issuance of the license agreement or license authorizing utilization.
Section 25 directs application of scientific cutting cycle and rotation, considering age/volume/kind of healthy residual trees to remain undisturbed and undamaged for future harvest and forest cover, including specific consideration for seed trees and reproduction in pine areas.
Section 26 requires annual allowable cut to be determined based on established rotation/cutting cycle and the volume/kind of harvestable timber and healthy residuals, seed trees and reproduction.
Section 27 sets the privilege duration for timber harvest fixed by annual allowable cut, cutting cycle, yield capacity and healthy residuals for second growth.
Section 27 requires automatic termination even before license expiration when harvestable timber have been utilized without leaving any logged-over area capable of commercial utilization.
Section 27 caps maximum privilege period at 25 years, renewable for another period not exceeding 25 years to utilize remaining commercial quantity from unlogged or logged-over areas.
Section 27 makes reforestation of areas determined by the Bureau a condition for continued timber-harvesting privilege.
Section 28 prohibits holding forest lands in perpetuity.
Section 28 limits forest concession size to what a person can effectively utilize and develop for 50 years, considering cutting cycle, applicant past performance and capacity to utilize and protect/manage the whole area, and local processing plant requirements.
Section 28 requires review/re-evaluation of consolidated forest concessions for implementation of protection, reforestation and management under multiple use and sustained yield concepts and for local processing of timber resources.

Wood industry incentives, processing regulation, and forest waste

Section 29 directs the Department Head to evolve incentives for establishment of integrated wood industry in designated centers/economic areas in collaboration with agencies and wood industry associations/private entities.
Section 29 authorizes the President, upon recommendations of the National Economic Development Authority and the Department Head, to establish wood industry import-export centers in selected locations.
Section 29 requires precaution for imported logs at such centers, imposed by the Bureau in collaboration with proper government agencies, to prevent introduction of pests/insects/diseases detrimental to forests.
Section 30 requires rationalization of wood-processing plants by regulating locations/operations, and prohibits establishment of any new processing plant unless adequate raw material is available on a sustained-yield basis in the area where raw materials come from.
Section 30 requires all existing and future processing plants to obtain operating licenses from the Bureau and submit to related regulations on operation.
Section 30 authorizes the Department Head to cancel, suspend or phase out uneconomical processing plants not responsive to the rationalization program.
Section 31 encourages timber licensees to gather/save wood wastes and weed trees in their concessions, and wood residues from processing plants, for utilization/conversion into wood by-products/derivatives.
Section 32 requires that, unless otherwise decreed by the President, upon recommendation of the National Economic Development Authority, the entire production of logs by all licensees be processed locally beginning January 1, 1976.
Section 32 permits a licensee without a processing plant, subject to Director approval, to contract with a wood processor for processing of logs.
Section 32 limits wood processors to accept for processing only logs cut by or purchased from licensees of good standing at the time of log cutting.

Reforestation obligations and industrial tree plantations

Section 33 requires reforestation and coverage with suitable/sufficient trees for enumerated categories including:
- Bare/grass-covered forest lands with at least 50% slope;
- Bare/grass-covered forest lands with less than 50% slope but soil so highly erodible that grass cover is inadequate;
- Brushlands/forest tracts generally covered with brush needing development to increase productivity;
- Open tracts with slopes/gradients generally exceeding 50%, interspersed with patches of forest each less than 250 hectares;
- Denuded/inadequately-timbered areas proclaimed by the President as forest reserves and reservations as critical watersheds, national parks, game refuge, bird sanctuaries, national shrines and national historic sites;
- Inadequately-stocked forest lands within forest concessions;
- Pasture lease/permit areas with slope at least 50%;
- River banks, easements, road rights-of-way, deltas, swamps, former river beds and beaches.
Section 34 authorizes the Department Head, upon Director recommendation, to grant a 25-year lease (renewable not exceeding another 25 years) for industrial tree plantations or tree farms on public domain forest lands categorized under Section 33.
Section 34 sets minimum areas: 1,000 hectares for industrial tree plantation and 100 hectares for tree farm.
Section 34 bars granting such lease within critical watersheds.
Section 34 allows scattered areas less than 100 hectares each to be leased for tree farms to different qualified persons if they show that, developed as an integrated unit, the areas can be economically exploited, with a lease condition that lessees organize into a cooperative for orderly management.
Section 34 requires the lease to be granted under terms/conditions prescribed by the Department Head, considering raw material needs of forest-based industries and maintenance of wholesome ecological balance.
Section 34 allows government reforestation projects (or portions) found by field evaluation to be more suitable/better developed as industrial tree plantations or tree farms to be leased under this section.
Section 35 grants priority over any suitable area covered by a timber license agreement or pasture lease agreement/permit to the holder for establishing industrial forest plantation or tree farm.
Section 35 requires that priority be availed within a reasonable period determined by the Department Head; otherwise the area must be declared open to any qualified person and segregated from the holder’s area.
Section 36 grants incentives including:
- A nominal filing fee of P0.50 per hectare;
- No rental for the first 5 years; rental P0.50 per hectare from the 6th to the 10th year; annual rental P1.00 per hectare thereafter.
Section 36 exempts lessees of areas long denuded as certified by the Director and approved by the Department Head from rental for the full term (not exceeding 25 years), with rental P0.50 per hectare during the first 5 years following renewal and P1.00 per hectare thereafter.
Section 36 requires forest charges on timber and other forest products grown and cut/gathered in industrial tree plantations/tree farms equivalent to 6% of current market value.
Section 36 provides seedlings sold at cost and free technical advice/assistance for persons developing private lands into industrial tree plantations/tree farms.
Section 36 exempts payment of the percentage tax under Title V of the National Internal Revenue Code when products are sold, bartered or exchanged by the lessee, whether in original state or not.
Section 36 directs the Board of Investments to classify industrial tree plantations and tree farms as pioneer areas of investment under its annual priority plan, governed by Board rules.
Section 36 allows a lessee to apply for tax/other benefits from the Board of Investments or avail benefits stated in Section 36, including:
- Development/operation expenditures prior to production state may be treated as either ordinary and necessary business expenses or as capital expenditures (at lessee option);
- An annual investment allowance equivalent to 33-1/3% of actual investment for the year in an enterprise engaged in industrial tree plantations/tree farms, with a condition that such investment is not withdrawn for at least 10 years; if withdrawn within that period, a tax equivalent to double the amount of the total income tax rebate resulting from the investment allowance must be paid as a lump sum in addition to income tax due from the taxpayer for the year of withdrawal.
Section 36 prohibits alteration/modification of boundaries of an industrial tree plantation/tree farm once established on the ground except when public interest demands alteration/modification.
Section 36 relieves the lessee from obligations under National Internal Revenue Code provisions on withholding of tax at source on interests paid on borrowing incurred for development/operation of the industrial tree plantation/tree farm.
Section 36 allows the Department Head to provide other incentives for special areas such as where there are no roads or inadequate roads, rough topography and remote areas far from processing plants.
Section 36 directs that all amounts collected under this section accrue to a special deposit of the Bureau for reforestation of critical watersheds or degraded areas and other development activities, over and above the general appropriation of the Bureau.

Forest protection powers and restrictions

Section 37 mandates all measures to protect forest resources from destruction, impairment and depletion.
Section 38 prohibits utilization of timber in concession areas except through license agreements where holders have an exclusive privilege to cut all allowable harvestable timber in their concessions and exclusive right of occupation/possession/control (except government), coupled with obligations to adopt protection/conservation measures for continuity of productive condition under multiple use and sustained yield management.
Section 38 permits issuance of a license for harvest of softwood/hardwood/mangrove species if the license agreement holder expressly or impliedly waives the privilege for those species, while the second license holder must adopt protection/conservation consistent with the first holder’s measures.
Section 39 regulates utilization of timber in alienable and disposable lands, private lands, civil reservations and lands containing standing or felled timber, and requires licenses/leases/permits for such utilization and for establishment/operation of sawmills and wood-processing plants.
Section 40 requires the Bureau to conduct a 100% timber inventory in alienable and disposable lands and civil reservations immediately upon classification or reservation.
Section 40 prohibits harvest of standing/felled timber in alienable/disposable lands, private lands, civil reservations and other lands (including those under other agencies’ jurisdiction) unless a 100% timber inventory has been conducted.
Section 41 requires timber inventory reports to be subscribed and sworn by all forest officers who conducted the inventories.
Section 42 provides that privilege to harvest timber in alienable/disposable lands and civil reservations is given to those who best help in delineation and development in accordance with the management plan by exercising jurisdiction, and extent of participation is based on amount of timber that may be harvested.
Section 43 requires mangrove strips bordering islands that protect shorelines, shoreline roads and coastal communities to be maintained and not alienated, and to remain free from artificial obstruction to keep flood water flowing unimpeded to sea.
Section 43 prohibits clear-cutting operation of mangrove swamps set aside for coast-protection purposes.
Section 43 provides that mangrove and other swamps released to the Bureau of Fisheries and Aquatic Resources for fishpond purposes that are not utilized or abandoned for 5 years from release revert to the forest land category.
Section 44 grants the Department Head the visitorial power to investigate, inspect and examine records, books and documents relating to operations of holders and their subsidiary/affiliated companies to determine compliance with terms/conditions, the Code and pertinent laws/rules/regulations.
Section 45 authorizes forest officers to enter areas covered by authorizations during official duties, administer oaths, take acknowledgments, and take testimony in official investigations under authority of the Code and implementing rules/regulations.
Section 46 requires the Bureau, in collaboration with appropriate agencies, to establish control/scaling stations at suitably located outlets of timber and other forest products to ensure they were legally cut/harvested.
Section 47 regulates mining operations in forest lands, requiring due regard to protection, development and utilization of other surface resources.
Section 47 governs mineral prospecting/exploitation inside forest reservations by mining laws/rules/regulations, and prohibits inside forest concessions unless proper notice has been served on licensees and prior approval of the Director has been secured.
Section 47 requires tailings/pollutants affecting health/safety and water/fish/vegetation/animal life/surface resources be filtered in silt traps or other filtration devices, with only clean exhausts/liquids released.
Section 47 requires restoration of surface-mined areas to as near former natural configuration or as approved by the Director prior to abandonment.
Section 48 provides that mineral reservations not subject to mining operations, or where mining operations suspended for more than 5 years, are placed under forest management by the Bureau.
Section 48 requires that mineral reservations where mining operations are terminated due to exhaustion of minerals revert to forest land category unless otherwise reserved for other purposes.
Section 49 mandates that roads and infrastructure in forest lands be constructed with least impairment to resource values.
Section 49 requires government agencies undertaking road/bridge/communications and other infrastructure inside forest land to coordinate with the Bureau, especially when timber utilization/destruction or watershed disturbance is involved, to adopt measures to avoid or reduce damage/injury.
Section 49 prohibits holders of license agreements/licenses/leases/permits from undertaking road/infrastructure construction or installation in forest lands without prior Director approval, and in alienable/disposable lands, civil reservations and other government lands without approval of the agency with administrative jurisdiction.
Section 49 provides that roads and infrastructure constructed by authorization holders belong to the State and must have use/administration transferred to government immediately upon expiration/termination; prior to that, the Bureau may authorize public use if not detrimental to forest conservation.
Section 49 requires joint use terms when roads are utilized by more than one commercial forest user, including equitable sharing of construction/maintenance costs and fees as deemed necessary.
Section 50 prohibits indiscriminate construction of logging roads and requires strategic location and width regulation to minimize clear-cutting, unnecessary damage/injury to healthy residuals and erosion, saving as many healthy residuals as possible during cutting and hauling.
Section 51 requires management of forest occupancy: the Bureau must define which lands may be the subject of occupancy under an agro-forestry development program, and requires occupants to undertake measures to prevent/protect forest resources.
Section 51 prohibits occupancy that results in sedimentation, erosion, reduction in water yield and impairment of other resources to detriment of community and public interest.
Section 51 requires that in areas above 50% slope, occupation be conditioned upon planting desirable trees and/or other conservation measures.
Section 52 mandates that no person enters forest lands and cultivates them without lease or permit, and requires a complete census of kaingineros, squatters, cultural minorities and other occupants/residents in forest lands showing extent of occupation and resulting damage/impairment of forest resources; it also allows the Bureau to call upon other government agencies and holders to participate.
Section 53 provides that kaingineros, squatters, cultural minorities and other occupants who entered into forest lands before Code effectivity without permits/authority shall