Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILLNo. 4289

Introduced by HONORABLE ANGELO B. PALMONES

AN ACT.
TO RATIONALIZE THE REHABILITATION AND RESTORATION OF THE
NATURAL FORESTS OF THE COUNTRY AND THE ESTABLISHMENT OF
FOREST PLANTATIONS AND AGRO-FORESTRY AND FOR OTHER PURPOSES

EXPLANATORY NOTE

Forests and forest ecosystems are the anchors of the environment and by eXtension the life
support of agriculture including fisheries. They provide the habitat of diverse plants and
animals, protect the soil from erosion, mitigate flash floods by regulating the flow of water,
reduce the impacts of strong winds and provide protection of coastal communities from
strong waves and tsunamis, provide nurseries for fishes and crustaceans and other marine
organisms. The also mitigate the impacts of climate change.

In addition these forests also provide timber and non-timber forest products which are the raw
material base for forest industries for the production of construction materials and
manufactured products for export such as furniture and handicraft. Many plants provide
resources for food and for the manufacture of pharmaceuticals and medicines, fast expanding
industries,

‘The country’s forests which covered more than 17 million hectares of the country at the turn
of the 20" century were once a major pillar of national development contributing
significantly to GNP and to economic growth, However, unmitigated use and abuse of the
forest through unsustainable logging including illegal logging and the practice of slash-and-
bum agriculture, conversion of forestlands to settlement areas plus damages brought about by
pests and diseases have reduced forest cover at an alarming rate. The estimated forest cover
of the country at present is only about 7.2 million hectares.

“There is therefore an urgent need to rehabilitate our denuded forestlands to bring back the
forests so that they can continue to provide environmental services,

“The reduced forest cover resulted in the importation of logs and lumber as well as other wood
products such as plywood and fiberboards, The total estimated demand for raw logs in the
Philippines is about 2.5 million cubic meters. Local production is only about 1.1 million cu


m, 80 percent of which comes from forest plantations. To be self-sufficient in wood, the
Philippines has to embarked in a rigorous plantation development program.

‘There have been forest restoration and rehabilitation programs in the late 1980 and up to the
middle 1990s. The 2003 forest assessment conducted by the DENR showed that there are
about 390,000 ha of forest plantations. This area was not disaggregated into commercial and
protection plantations.

‘The 2003 Master Plan for Forestry Development by the DENR indicated that the country
needs about 650,000 commercial plantations to meet the country’s need for wood.

‘The Philippines is located in the typhoon belt where about 20 such weather events occur in a
year. Many of these typhoons are of such intensity that agricultural crops as well as forest
plantations, including major infrastructures are damaged. It is only reasonable that investors
are protected from such natural calamities by making insurance available to them

Plantation development efforts have been hobbled by deficient funding. The government
alone does not have sufficient funds to support forest rehabilitation and plantation
development, Commercial forest plantation would be through investments from the private
sector. There is need for innovative means to finance government reforestation efforts such as
the Payment for Environmental Services (PES).

This Act is needed to spur government and private sector efforts to rehabilitate our natural
forest and develop commercial plantations. Its passage is urgently needed.

ANGELO B. PALMONES
Reprebentative, AGHAM Party List


Republic of the Philippines
HOUSE OF REPRESENTATIVES.
Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILLNo. 4289

Introduced by HONORABLE ANGELO B. PALMONES

AN ACT.
‘TO RATIONALIZE THE REHABILITATION AND RESTORATION OF THE,
NATURAL FORESTS OF THE COUNTRY AND THE ESTABLISHMENT OF
FOREST PLANTATIONS AND AGRO-FORESTRY AND FOR OTHER PURPOSES

Be enacted by the Senate and the House of Representatives of the Philippines in
Congress Assembled:

SECTION 1, Title - This Act shall be known as the “National Forest Rehabilitation,
Restoration and Plantation Development Act of 2011”.

SECTION 2, Basic Policy - It is the policy of the State as embodied in the Constitution to
“protect and advance the right of the people to a balanced and healthful ecology in accord
with the rhythm and harmony of nature”. As such the State shall provide opportunities and
support for the development of the environment through forest rehabilitation and restoration
of the natural forest. It shall also support the development of commercial plantations
including agro-forestry 10 meet the needs of the country for wood and non-wood forest
products in terms of supportive policies, institutions, regulations and incentives,

SECTION 3. Objectives ~ It is the objective of this Act to improve the ecosystems services
of the forests of the country and improve water resources through the rehabilitation and
restoration about 4 million hectares of natural forests in watersheds and protected areas. It is
also the objectives of this Act to make the Philippines self-sufficient in wood and forest
products resources by developing about 1 million hectares of forest plantations and agro-
forestry or a total of 5 million ha reforested areas in 6 years.

Itis also the objectives of this Act to:

1, Improve the country’s capability for climate change adaptation and mitigation;

2. Reduce risks of disasters from occurring: and

3. Reduce poverty and improve livelihood opportunities particularly the people in the
uplands

SECTION 4. Definition of Terms — The following terms shall have the medning as used in
this Act:


Agro-forestry - shall refer to a strategy for the sustainable management of lands by properly
combining agricultural crops and/or livestock with forest crops simultaneously or
sequentially through the application of management practices which are compatible with the
local climate, topography, slope, soil, as well as the cultural patterns or customary laws of the
Jocal population

Commercial forest plantations — are forest plantations established for the purpose of growing
trees or other forest crops mainly for commercial purposes

Community-based Forest management ~ refers to the strategy of placing a segment of the
forest under the management of upland communities

Certificate of Ancestral Domain Title (CADT) ~ title granted to an indigenous community of
the land they claimed to be their ancestral home

Certificate of Ancestral Land Claim (CALC) ~ Certificate issued by the DENR manifesting
recognition of the claim of the indigenous peoples to the land they occupy

Department — shall refer to the Department of Environment and Natural Respurces

Forest Charges - shall refer to the levy imposed and collected by the government on naturally
growing timber and other forest products cut, harvested, or gathered from the forest lands and
from Alienable and Disposable (A&D) lands

Natural Forest - shall refer to forests composed mainly of indigenous trees, which are largely
the result of natural succession processes.

Non-Timber Forest Products - shall refer to all biological materials and derivatives other than
timber, which are extracted from forests for human use.

Program — shall refer to the comprehensive and integrated national program on the
rehabilitation, restoration of the natural forests and commercial plantation and agro-forestry
development,

Rehabilitation — the method of bringing back a forest to its original or near its original state
before it was subjected to destruction activities, either from natural causes or human
activities.

Restoration — the method to establish a forest where it once existed prior to being subjected
for deforestation activities, mainly human activities

Watershed ~ shall refer to a land area drained by a stream or fixed body of water and its
tributaries having a common outlet for surface runoff.

SECTION 5. National Rehabilitation and Restoration of Natural Forests and Forest
Plantation and Agro-forestry Program — RA No, 9337 otherwise known as the Internal
Revenue Code, mandates the local government to allocate 15 percent of their 50 percent
share of the incremental revenues from the value-added-tax (VAT) to implement a
comprehensive national reforestation program. There is however, no such comprehensive
national reforestation program. For this purpose, there shall be established a national


rehabilitation and restoration of natural forests and forest plantation and agro-forestry
development program of the country, which from hereon shall be referred to as Program. The
Program shall take into consideration the watershed and forest protection areas that need
immediate rehabilitation and restoration as well as the total area of commercial plantation and
agro-forestry areas needed to meet the country’s needs for timber and other forest products.
In order to make the Program comprehensive it shall integrate and consolidate all existing
government and private sector, including those of non-govemment organizations (NGOs),
efforts in forest rehabilitation, restoration and commercial plantations and agro-forestry in
both government and private lands.

‘The Program shall be formulated within 1 year from the approval of this Act.

SECTION 6, Area and Duration of the Program ~ At least 5 million hectares shall be
covered by the Program in its first 6 years of implementation Priority areas for this program
will be identified from approved land use and/or management plans (ie., protected area
management plan, watershed management plan, forest land use plan) to ensure site suitability
and maximum impacts of development interventions. ‘The Program shall include mangrove
areas. . Atleast 1 million ha of the total target area shall be commercial plantations and agro-
forestry plantations in both government and private lands to be developed by the private
sector,

SECTION 7. Priority Areas for Forest Restoration and Rehabilitation — This shall
include degraded areas within protection zones of all NIPAS areas including critical and
priority watersheds with completed land use and management plans

SECTION 8. Priority Areas for Plantation Development - CBFM and CADT/CALC areas
identified within the production zones (including areas within multiple use zones inside
NIPAS areas) shall be the priority areas for commercial plantation and agro-forestry
development in government lands, Private lands intended for plantation and agro-forestry
development shall form part of priority areas for development under the Program,

SECTION 9. Species to be Used in the Program ~ For protection forest purposes, native
species shall be used. Fruit-bearing trees shall also be planted in protection forest areas as
food for birds and other mammals. For commercial plantation and agro-forestry purposes, the
species shall depend upon the choice of the plantation owner. The commercial plantation
developers including agro-forestry shall be encouraged 10 include fuelwood species in their
plantations. Bamboo, fruit trees, rattan and other non-wood forest products may be used in
agro-forestry areas,

SECTION 10. Capacity Building for Local Communities and Local Government Units
To ensure the success in the implementation of the Program it is imperative that
implementers be capacitated. The DENR shall identify the training needs of the local
‘communities and LGUs and develop the instruments for the training and cause the conduct
the training. The training implementation shall be in coordination with the Department of
Interior and Local Government (DILG), in particular the DILG Local Government Academy.

SECTION 11. Research and Development (R & D) ~ The latest technology in forest
rehabilitation, and restoration as well as plantation and agro-forestry development shall be
applied in the implementation of the Program. To continuously improve the technologies,
research and development shall form an important component of the Program. The


Ecosystems Research and Development Bureau (ERDB) of the DENR as well as state
universities and colleges (SUCs) with capabilities and competence for forestry research and
development shall be responsible for generating new technologies needed, by the Program.
The R & D components shall include policy, economic, social, cultural and marketing aspects
of the Program

SECTION 12. Production of High Quality Planting Materials — The DENR shall ensure
the production of high quality planting materials since the success of reforestation and
plantation development hinges among other things in the use of high quality planting
materials, R & D shall be directed to generate technologies that will improve the quality of
planting materials.

SECTION 13. Role of the Department of Environment and Natural Resources ~ The
Department of Environment and Natural Resources (DENR) shall be national and over-all
coordinator of the Program, It shall formulate the integrated national program on
rehabilitation and restoration of natural forests (in priority watersheds and protected areas)
and commercial forest plantations and agro-forestry within one year after the approval of this
Act. The program shall give priority to watersheds of existing hydro-electric, irrigation and
domestic water systems and protected areas. The Program shall include the rehabilitation and
restoration projects of other government agencies such as the National Power Corporation
(NPC), non-government organizations (NGOs) and local government units (LGUs)

‘The commercial tree plantations and agro-forestry shall cover those developed in community
based forest management (CBFM) areas, in Integrated Forest Management Agreement
(IFMA) areas, in Socialized Integrated Forest Management (SIFMA) areas, in Agro-forest
and Tree Farm Lease (AFTFL) areas and all other tenured areas as well as those in private
lands, Second growth forests in areas that are not proclaimed as Protected Areas are open for
the development of rattan plantations

‘The Community Environment and Natural Resources Office (CENRO) of DENR shall
be responsible for identifying areas that will be included in the Program, both for
rehabilitation and restoration of the natural forests in watersheds and those for commercial
and agro-forest plantations, For this purpose they shall coordinate with the Municipal LGUs
so that the forest land use plans of the latter can be incorporated in the Program.

‘The CENRO shall also be responsible for registering and issuing certificates of registration of
commercial plantations in private lands within 3 months from the date of application for
registration at no cost to the plantation owners. Failure of the CENRO to issue the certificate
of registration within 3 months to the owners shall make the CENRO liable for the offense of
negligence and punishable for such offense under the Civil Service Code. Repetition of the
offence for three times shall be reason for expulsion of the offender from the service.

SECTION 14. Role of Local Government Units — Except for those that do not have forest
lands and highly urbanized areas, Local Goverment Units (LGU) shall finalize the
preparation of their Comprehensive Land Use Plans (CLUP) that include a forestry land use
plan (FLUP) where areas for plantation development and for forest conservation as
implementation areas of RA No. 9337 are identified. For this purpose the MLGU shall
coordinate and work closely with the local offices CENRO of the DENR in the identification
of areas for inclusion in the Program.


SECTION 15. Role of Other Government Agencies — All other government agencies
(OGASs) undertaking forest rehabilitation and restoration shall coordinate with the DENR in
the identification of areas for inclusion in the Program.

SECTION 16. Base Map of the Program — The DENR with the assistance of the National
Mapping and Resources Information Administration (NAMRIA) shall prepare the base map
of the Program under a Geographic Information System (GIS) using the latest satellite data
available. This base map shall be up-dated annually or often as satellite data become
available to monitor and assess the progress in the implementation of the Program

SECTION 17. Forestry Bank of the Philippines — There shall be established a national
bank, to be known as the Forestry Bank of the Philippines (FBP) that caters to the needs
and requirements for funds of commercial plantation developers as wells as those of the
forest industries, both the primary as down stream processing industries. For this purpose, the
Philippine Government shall allocate from the funds of the National ‘Treasury Fifty Billion
Pesos (P50 B) as seed capital

Loans shall be provided to CBFM people's organizations (PO) or to individual family
members of POs for the development of commercial plantations in CBFM areas. Such loans
shall also be provided to commercial plantation development in private lands.

The Bank shall develop lending strategies for CBFM POs in order to enable them to be able
to access development funds of the Bank. Such strategy shall include but not limited to
providing loans to forest plantation developers to develop forest plantation and agro-forestry
within CBFM areas. ‘The CBFM POs in tum are allowed access loans that will be used to pay
for the developed plantations from the developers. The developed plantations shall be used as
collateral for the loan. The developers can move on to develop other CBFM areas and the
process continues,

SECTION 18. Funds for the Program — The 4 million ha of forest rehabilitation and
restoration of the natural forests to be developed in 6 years include those that are being
implemented by government agencies such as the National Power Corporation (NPC), water
districts and other agencies as well as those by non-government organizations (NGO). It is
estimated that about 3.5 million ha will be developed by the national government. For those
that will be developed by the national government, there shall be allocated P90,000 for each
hectare to be developed or a total of P315 Billion. This includes formulation of the Program,
preparation of base maps, establishment of forest nurseries, and plantation establishment and
maintenance. From the total budget, P2,000 per hectare shall be allocated for capacity
building and research and development.

Other sources of funds for the Program are as follows:

1. The funds provided for under RA No. 9337 shall be fully utilized by the LGUs in
implementing the Program within their jurisdiction. This will be applied in the areas
identified in their FLUPs. These rehabilitation areas shall form part of the Program.

2. In the case of Maynilad and Manila Water which are authorized by the Manila Water
and Sewerage System (MWSS) to collect from their clients a fee for environmental
conservation shall utilize the same for the rehabilitation and restoration of watersheds
where they obtain their water supply. The rehabilitation program of Maynilad Water
and Manila Water shall form part of the Program.



6.

RA No. 9136 otherwise known as the Electric Power Industry Reform Act of 2001
(EPIRA) authorizes the National Power Corporation (NPC) to collect % of one
centavo per kilowatt hour (P0,0025/kwh) which shall accrue to an environmental fund
to be used solely for watershed rehabilitation and management and to be managed by
the NPC. The NPC shall continue to utilize that fund for the rehabilitation of their
watersheds. The watershed rehabilitation program of NPC shall form part of the
Program.

‘The forest charges collected by the DENR shall accrue to a Trust Fund that will be
used to implement the Program.

All fees collected by DENR which are due from but not limited to licensing permits,
government share in the implementation of joint ventures, co-production, or
production-sharing agreements on forestry shall likewise accrue to a Trust Fund
which shall be used in the implementation of the Program.

All export and import taxes on forest products shall accrue to a Trust Fund to
implement the Program.

Voluntary carbon markets will also be accessed

Mechanisms for the collection of Payment of Environmental Services (PES) through
the local water districts will be developed.

SECTION 19, Incentives for Private Plantation Development ~ The government shall
encourage the development of private plantations including agro-forestry especially those
established in private lands by providing incentives. Among the incentives to be provided are:

1. Free from payment of rent for the use of government lands for commercial
plantation and agro-forestry development for the first plantation rotation but
not longer than 12, which ever comes first;

Does not require a cutting permit for harvesting nor shall it need a transport

permit for as long as the plantation is registered with the nearest Community

Environment and Natural Resources Office (CENRO), all that is required is

for the plantation owner to inform the CENRO that the plantations will be

harvested in a given date including the estimated volume that will be
harvested

3. Free from payment of forest charges and other form of fees or taxes that local
government units may impose;

4. Plantation logs shall not be subjected to inspection in check points;

5. Developers can access development loans from the Forestry Bank of the
Philippines

6. Insurance coverage of plantations and plantation development equipment by
the Philippine Forest Plantations Insurance Corporation

7. Tax free importation of plantation development equipment

8. Expenses incurred shall be allowed as deductible expenses for income tax
purposes subject to the provisions of the National Internal Revenue Code of
1997, as amended. Provided, That the deduction shall only apply to the taxable
period when the expenses were incurred;

9, Expenses incurred in the development and operation of a forest plantation
prior to the commercial harvest shall be regarded as ordinary and necessary
expenses or as capital expenditure:

10, The Board of Investments (BO!) shall classify forest plantations and agro-
forestry as pioneer and preferred areas of investment under its annual priority
plan subject to the pertinent rules and regulations:

v


Mt

11 The plantation developer shall be given priority to access credit assistance
being granted by Government-owned, controlled and/or -supported financial
institutions;

12. For tenured-developer, upon the premature termination of the agreement at no
fault of the holder, all depreciable permanent and semi-permanent
improvements such as roads, buildings, and nurseries including the planted
and standing trees and other forest crops introduced and to be retained in the
area shall be properly evaluated and the holder shall be entitled to a fair
compensation thereof, the amount of which shall be mutually agreed upon by
both the Department and the tenure-holder and in case of disagreement
between them, by arbitration through a mutually acceptable and impartial third
party adjudicator;

SECTION 20, Tax on Commercial Plantation Timber and Other Forest Products —
Section 129 of the Local Government Code (RA 7160, 1991) provides that “each local
government unit shall exercise its power to create its own sources of revenue and levy taxes,
fees, and charges subject to the provisions herein, consistent with the basic policy of local
autonomy”. Many provinces have been imposing fees and charges on plantation timber
under the guise of environmental fees and other kinds of fees. This practice negates the
incentives provided to plantation developers where plantation logs are free from payment of
forest charges, an incentive provided to investors. Because of this imposition by LGUs, many
developers have switched from planting forest trees to agricultural crops.

‘To encourage investors in plantation development to continue to invest in the sector, LGUs
are hereby banned from imposing fees and charges in whatever form or name on plantation
logs and other planted forest products.

SECTION 21. Payment for Environmental Services (PES) — Forests provide
environmental/ecological services in addition to the material benefits derived from them
Among the major services they provide are sustainable supply of water, absorption of carbon
dioxide (one of the major green houses gases responsible for the rise in temperature of the
earth) and the emission of oxygen into the atmosphere, and reduction of soil erosion, These
benefits will drastically decline or even cease if the forests are not managed well. Such
management incurs costs that equitably must come from the beneficiaries of the
environmental services. For this purpose, and line with the collection of environmental fees
by Maynilad and Manila Water, water districts outside of Metro Manila are mandated to
collect reasonable environmental fees, if they are not yet collecting such fees. The fees shall
likewise accrue to the Trust Fund for the implementation of the Program

SECTION 22. Trust Fund — There shall be established a Trust Fund for the implementation
of the national rehabilitation, restoration of natural forests and comnietcial plantation
program. Fees and other collections from fores/forestry activities shall be deposited in the
‘Trust Fund. The Trust Fund shall be opened in the Forestry Bank of the Philippines that will
be established under this Act or in other government banks.

SECTION 23. Philippine Forest Plantations Insurance Corporation — There shall be
established a Philippine Forest Plantations Insurance Corporation that will provide insurance
protection to plantation developers and investors. The Corporation shall establish its rules and
procedures on insuring forest plantations, including agro-forest plantations, The Corporation


shall be under the DENR for administrative and supervision purposes. The Corporation shall
be appropriated P50 Billion pesos from the national treasury as start-up capital

SECTION 24. Oversight Committee — There shall be established a joint Oversight
Committee in Congress to monitor and assess the accomplishments and progress in the
implementation of the Program. DENR shall provide yearly reports on the progress of the
Program, or as often as the Oversight Committee requires.

SECTION 25. Implementing Rules and Regulations — The DENR in consultation with
concerned agencies of government and the private sector shall formulate the implementing
rules and regulations within 180 day after the approval of this Act.

SECTION 26. Separability clause — If any section or provision of this Act shall be declared
invalid or unconstitutional, such shall not invalidate any other section or provision of this
Act.

SECTION 27. Repealing Clause ~ All laws, decrees, executive orders, rules and
regulations or parts thereof which are in conflict or inconsistent with the provisions of this
Act are hereby repealed or modified accordingly

SECTION 28. Effectivity ~ This Act shall take effect thirty (30) days following its full
publication in the Official Gazette or two (2) major daily newspaper of general circulation

Approved