Tree Growing Agreement Act

Offer afte i clues TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES ) ) JUL 29 P1:10 First Regular Session SENATE RECEIVED S.B. No. _ Introduced by SENATOR IMEE R. MARCOS AN ACT TO PROMOTE REFORESTATION AND TO INCREASE WOOD PRODUCTION THROUGH THE ESTABLISHMENT OF TREE GROWING AGREEMENT EXPLANATORY NOTE

Section 16, Article Il of the Constitution provides that, "The State shall protect

and advance the right of the people to a balanced and healthful ecology in accord with the rhythm and harmony of nature." According to the Forest Management Bureau of the Department of Environment and Natural Resources, as of 2024, the Philippines has an annual domestic production of 825,000 cubic meters of wood, and an annual importation of 1,309,671 cubic meters of wood. As such, the Philippines import more than 60% of its wood demand. The Philippines currently has ten (10) million hectares (ha) of land for timber. As a tropical country, studies show that it has the capacity to produce at least 100 cubic meters per hectare of wood annually with a reasonable return on investment. With the logging moratorium that banned the harvest and transport of trees from natural and residual forests for protection and preservation purposes, there is a need to promote tree plantations as a dominant source of local timber. However, existing regulations premised on the protection of natural and residual forests has the unintended outcome of discouraging investments in tree plantations and wood processing. Promoting tree plantations can help meet the country's local wood demand to support the government's infrastructure projects and develop downstream wood industries such as furniture and housing construction. It can also decrease the country's reliance on imports and increase the contribution of the forestry sector to GDP. Jobs can be generated especially in the uplands where around 25 million Filipinos reside in poverty.

In order to address the concerns raised above, this bill aims to promote the development of tree farms nationwide by providing clear, simple, and investment- conducive policies and guidelines to the industry. It also establishes a tree plantation certification system for the registry and ease of implementation of the initiatives of this bill. In view of the foregoing, the approval of this bill is earnestly sought. IMEER. MARCOS

Cind TWENTIETH CONGRESS OF THE ) 25 JUL 29 REPUBLIC OF THE PHILIPPINES, First Regular Session P1:10 SENATE S.B. No. _ 753 RECEN.! Introduced by SENATOR IMEE R. MARCOS AN ACT TO PROMOTE REFORESTATION AND TO INCREASE WOOD PRODUCTION THROUGH THE ESTABLISHMENT OF TREE GROWING AGREEMENT 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 "Tree Growing Agreement

Act"

Sec. 2. Establishment of Tree Farms and Tree Plantations. - The Department

of Environment and Natural Resources (DENR) shall identify, survey, and map areas suitable for the establishment of tree farms and tree plantations in forest lands. Such areas shall be called Tree Growing Agreement (TGA) Areas or TGA areas. TGA areas for establishment shall be denuded and/or underutilized areas within forestlands whether tenured or not, including ancestral lands/domains, identified as suitable for tree farming, tree plantation development, agroforestry, and other forestry and agroforestry-related economic activities. TGA establishment may be initiated by the DENR or through a request of interested parties.

Sec. 3. Criteria for the Determination of Tree Growing Agreement Areas. - The

minimum requirements for suitability of the area for the TGA are: a) Soil quality should be suitable for tree plantation/tree farming, and agroforestry farming; Slope gradient should be below 50 percent, and elevation should be below 1000m above sea level (ast); c) Should not be prone to landslides or severe soil erosion; and d) Should not be identified as protected area.

Sec. 4. Identification and Delineation of Tree Growing Agreement Areas. - For

purposes of identification and delineation of area for TGA, the DENR shall identify denuded, idle, and/or underutilized public forest that are either tenured or untenured. These identified areas of public forest shall be divided into meridional forest blocks of fifteen (15) seconds of latitude and fifteen (15) seconds of longitude at approximately 20.7 hectares per block. Such forest blocks shall be indicated in the maps publicly available in the Tree Growing Agreement Registry.

Sec. 5. Tenured Lands. - Forest lands covered by existing tenurial instruments

may be covered by the Tree Growing Agreement. Existing tenurial instruments shall be automatically amended after a TGA has been executed between the DENR and the Agreement holder. Tenure holders who are no longer interested in their tenure may surrender their tenure to the DENR. They may also transfer such tenurial Instrument to an interested party for conversion to TGA. Tenure holders who refuse to utilize or abandon their tenurial area may be subjected to compulsory inclusion after being notified. A Notice of Inclusion under the TGA shall be issued by DENR to inform tenure holders of compulsory coverage of the whole or portion of their unutilized or abandoned tenured areas.

Sec. 6. Tree Growing Agreement Registry. - Forest lands that had been

established by the DENR as TGA area shall be recorded and made available in a public registry to be maintained at the Provincial Environment and Natural Resources Office (PENRO) and supervised by the Forest Management Bureau (FMB). Such registry shall be accessible to the public through the internet and shall contain maps showing the location of all forest lands under TGA and shall also indicate forest lands that are already under an agreement as well as those still available for application of investors.

Sec. 7. Allowable Activities for the Tree Growing Agreement. - Activities within

the Tree Growing Agreement area shall be limited to: a) Tree Plantation/Farming b) Wood Processing/Establishment of Wood Processing Plants c) Agroforestry d) Forestry/Agroforestry-Based Ecotourism

Sec. 8. Tree Growing Agreement, - Interested parties whether natural or

juridical, may enter into a Tree Growing Agreement for the development, sustainable utilization, and management of TGA areas and forest resources within the allotted TGA area.

The Agreement shali be for a minimum of two production cycles depending on the project as proposed in the development plan to be submitted to the DENR upon application for a TGA. The duration of the production cycle shall depend on the species intended to be planted as a main crop. The Agreement may be renewed automatically at the option of the TGA holder for another minimum of two production cycles if the TGA holder has complied with the terms and conditions of the Agreement and with existing laws. The TGA is transferrable to qualified transferees for value. The agreement may not be cancelled except for cause and with due process by the DENR. The Agreement holder shall develop at least 30% of the area applied for in the first three (3) years and utilize seventy-five (75%) of the area within five (5) years upon issuance of the TGA. Eighty percent (80%) of the TGA area must be devoted to the primary timber crop. Changes in tenure arrangements on the forest land shall not affect the status of the TGA unless the consent of the TGA holder is granted. Processing of applications and awarding and issuance of TGA shall be accomplished at the Provincial Environment and Natural Resources Office (PENRO) of the DENR and completed within 120 days from the time the complete application Is submitted. Tree Growing Agreements shall be limited to a maximum of 25 forest blocks for Individuals/families, 50 forest blocks, for partnerships and cooperatives, and 250 forest blocks for private and public corporations Including local government units (LGUs) and government owned and controlled corporations (GOCCs).

Sec. 9. Qualifications of Applicants. - Any natural or juridical person may apply

for a Tree Growing Agreement. LGUs and GOCCs may also apply for the said Agreement. Likewise, Agreement shall be awarded transparently and equitably to both foreign and domestic investors.

Sec. 10. Certifications/ Permits and Licenses. - Within sixty (60) days after the

award of the Tree Growing Agreement, the DENR PENRO shall also coordinate with the Environmental Management Bureau (EMB), LGUs, and the National Commission on Indigenous Peoples (NCIP) for assistance in the expedited issuance of environmental 39 permits, local permits, and the Certification Precondition (CP).

Sec. 11. Property Rights of TGA Holders. - All timber, trees, and other forestry

and agroforestry products produced within TGA area shall be considered as personal property even if they are still attached to the soil. They shall also be considered as personal property of the holder within the purview of Republic Act No. 11057, otherwise known as the "Personal Property Security Act", and thus maybe traded or may be a subject to commodity contract, mortgage contract, and other security arrangement.

Sec. 12. Relaxation of Restrictions and Regulations. - In order to promote

investments and generate interest in forest related activities within the TGA areas, existing laws, executive issuances, local ordinances, rules and regulations are hereby repealed, amended, and modified accordingly for holders in order to: a) Allow only a one-time inspection by the DENR PENRO prior to harvest of trees leading to a single clearance for harvest, processing, transport and sale both local and international; b) Exempt from any clearance, the cutting, harvesting, gathering, collection and transport of non-timber forest products from the TGA area; c) Exempt established tree farms and plantations from logging bans for the duration of the agreement; d) Allow logs, lumber and other finished wood products from TGA area to be exported without restrictions in volume; e) Allow the acceptance of planted trees in TGA areas as collateral for loans in all banks and non-bank financial institutions; f) Allow insurance coverage of planted trees in TGA areas; g) Allow the issuance of an Environmental Compliance Certificate by the DENR for the entire TGA area even prior to the issuance of the TGA; h) Allow the Issuance of the Certification Precondition by the NCIP for the entire TGA area even prior to the issuance of the TGA; 1) Allow exemption from payment of Advanced Value Added Tax (VAT). The VAT shall be paid only after logs have been delivered and payment received by plantation owners; j) Include tree farming and plantation development as pioneer areas of Investment under the Strategic Investments Priority Plan of the government; k) Include tree farming and plantation development in tax incentives as may be provided by existing rules and regulations of different government agencies including but not limited the Department of Finance and Department of Trade and Industry; and 1) Include tree farming and plantation development in other investment incentive packages available for agriculture and agroforestry-related Industries. Provided

that, relevant incentives shall also apply to private tree plantations registered with the DENR.

Sec. 13. Royalties and Government Share. - Royalties and government share

shall be based on the stumpage value of planted trees. Stumpage value shall be computed by the DENR using a formula developed with the approval of the Tree Plantation Promotion and Policy Board. Royalties and government share shall be based on the 70% of gross revenues of the Agreement holder. The national government shall get five percent (5%) royalty, the tenure holder for tenured lands shall get one percent (1%), the concerned LGU where the TGA area is located shall get five percent (5%), if there are indigenous peoples in the area, two percent (2%) shall be allotted to them, and the remaining two percent (2%) shall go to DENR's tree plantation development programs and projects and carbon trading activities. Provided that, in the absence of IPs or tenure holders, the share allotted for them shall accrue to the DENR's account.

Sec. 14. Dispute Resolution Mechanism. - Disputes arising from conflicting

claims and other controversies related to the issuance and the implementation of the TGA shall be resolved administratively in the first instance at the DENR. Any and all disputes arising from the Implementation of TGA may be submitted to arbitration in the Philippines, in accordance with the relevant laws and policies. The process of arbitration shall be incorporated as a provision in the TGA that will be executed pursuant to the provisions of this Act, Provided that, upon consent of both parties, alternative modes of dispute resolution may be agreed upon.

Sec. 15. Premature Termination of the Agreement. - 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 DENR and the agreement holder, and in case of disagreement between them, by arbitration through a mutually acceptable and impartial third-party adjudicator.

Sec. 16. Tree Plantation Promotion and Policy Board. - The Tree Planation

Promotion and Policy Board, referred to as the Board, is hereby created which shall be the overall policy-development body for all forest lands identified for TGA. It shall be

responsible for setting the strategic direction of programs and projects and in creating an enabling policy and institutional environment TGA areas. The Board shall be composed of the following: 1) Secretary of Environment and Natural Resources as Chairperson; 2) Secretary of Trade and Industry as Co-Chairperson; 3) One representative from the wood producers; 4) One representative from the tree farmers; 5) One representative from the wood processors; 6) One representative from the furniture industry; 7) One representative from the construction industry; and 8) One representative from the professional organization of foresters. The principal members of the Board may designate their respective alternates, who shall be the officials next-In-rank to them, and whose acts shall be considered the acts of their principals. The presence of the Chairperson with four (4) other members of the Board shall constitute a quorum and a majority vote of the members present shall be necessary for the adoption of any issuance, order, resolution, decision or other act of the Board in the exercise of its functions. The Board shall act as a collegial body. In the conduct of meetings, the Chairperson shall not vote except to break a tie. The Board shall act on any matter for its consideration not later than thirty (30) days from the date of submission thereof. The members of the Board shall be entitled to honoraria based on existing government accounting and auditing rules and regulations. The DENR shall act as Secretariat to the Board.

Sec. 17. Appropriation. — The amount needed for the implementation of this

Act shall be included in the General Appropriations Act (GAA).

Sec. 18. Implementing Rules and Regulations. - The FMB shall promulgate the

necessary rules and regulations to carry out the provisions of this Act within ninety (90) days from approval hereof.

Sec. 19. Separability Clause. - If any provision, or part hereof, is held invalid or

unconstitutional, the remainder of the law or the provision not otherwise affected shall remain valid and subsisting.

Sec. 20. Repealing Clause. - Any law, presidential decree or issuance, executive

order, letter of instruction, administrative order, rule or regulation contrary to or inconsistent with, the provisions of this Act is hereby repealed, modified, or amended accordingly.

Sec. 21. Effectivity Clause. - This Act shall take effect fifteen (15) days after its

publication in at least two (2) newspapers of general circulation. Approved,