BIR Ruling

September 9, 1969 Mr. Ramon Rondilla Forestry Consultant 133 Heroes del 96 St. Caloocan City S i r : This refers to your letter dated June 10, 1969 requesting information as to which of the two charges (regular forest charges and/or surcharge of 300% of the regular charge) is collectible on forest products cut, collected and removed from unregistered private woodland without license from the Bureau of Forestry. You requested for an answer to your query in the light of the decision of the Supreme Court in the case of Santiago vs. Basilan Lumber Co., G.R. No. L-15532, dated October 31, 1963, part of which have been cited by you and reproduced below: LibLex "Of course, the land which had been registered or titled in the name of the plaintiff under the Land Registration Act could no longer be the object of a forest license issued by the Director of Forestry because ownership of everything found on its surface (Art. 427, New Civil Code)." In reply, I have the honor to inform you as follows: While it is true that ownership of land registered or titled under the Land Registration Act includes ownership of everything found on its surface (Art. 427, New Civil Code), the manner by which timber are cut, gathered and removed from private or public land is governed by the provisions of the Tax Code and Revised Internal Revenue Forest Regulations No. 85 dated December 28, 1934. Every owner of a private land, whether agricultural or forest land must register his title to the land in order to entitle him to the exemption from the payment of regular forest charges under Section 266 of the Tax Code, as amended, the pertinent provisions of which are quoted hereunder for ready reference: "The charges above prescribed shall be collected in all forest products cut, gathered and removed from any private land the title to which is not registered by the Forest Law: Provided, however , That in the absence of such registration, the owner who desires to cut, gather and remove timber and other forest products from such land shall secure a license from the Director of Forestry in accordance with the Forest Law and regulations. The cutting, and the removing of timber and other forest products from said private lands without license shall be considered as unlawful cutting, gathering and removing of forest products from public forests and shall be subject to the charges prescribed in such cases in this chapter. (As amended by Rep. Act No. 173)." The imposition of the 300% surcharge is provided for by Section 267 of the Tax Code, quoted below: "Where forest products are unlawfully cut or gathered in any public forest without license or, if under license, in violation of the terms thereof, the charges on such products shall be increased by three hundred per centum. . . ." The said 300% surcharge is a penalty imposed on the illegal cutting, gathering and removing of timber from public forest. Sound public policy demands that timber from either public or private land should be conserved or wisely exploited in order that the patrimony of the nation may not be impaired. (Collector of Internal Revenue vs. Baretto Sons, Inc., G.R. No. L-11805, May 31, 1960). Pursuant to the decision of the Supreme Court in the abovecited decision, the charges collectible on forest products which are illegally cut or removed refers not only to the regular forest charges but to the 300% surcharge as well, which are provided for in Sections 266 and 267 of the Tax Code. In other words, regular forest charges and surcharges of 300% of the regular charge are collectible on forest products cut, collected and removed from unregistered private woodland without license from the Bureau of Forestry. cdll Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue