BIR Ruling [DA-227-98]

June 9, 1998 BIR RULING [DA-227-98] Director Jose D. Malvas, Jr. Forest Management Bureau Visayas Avenue, Diliman Quezon City S i r : This refers to your letter dated September 5, 1997 which is a follow-up to your letter dated March 19, 1997, requesting the opinion of this Office on the following questions, viz: "1. Definition of Actual FOB market price; "2. Does the opinion of the private sector (PWPA) on the non-removal of the existing forest charges to the present actual forest FOB market price is taxing the existing tax; cdtech "3. Where do we base our computation of forest charges? In the prevailing market price which we interpreted as also the FOB market price or to the FOB market price less the existing forest charges?' You stated that in accordance with the provisions of Section 72 of Presidential Decree No. 705, as amended by Republic Act No. 7161, otherwise known as the Revised Forestry Code of the Philippines, an inter-agency Committee composed of representatives from the Department of Environment and Natural Resources, National Economic and Development Authority, Department of Trade and Industry, Bureau of Internal Revenue and the wood and furniture industry and consumers sector met in November, 1991 and agreed on the procedures to be followed in getting market price information of forest products; that the Agreement which was embodied under DENR Administrative Order No. 65, Series of 1991, prescribes the guidelines in the determination of the actual FOB market price of timber and other forest products as basis for assessing forest charges; that the private sector, represented by the Philippine Wood Producers Association (PWPA) is of the opinion that your present practice of computing the rate of forest charges based on the actual FOB market price is like "taxing the existing tax" or "double taxation" since the price survey includes not just the real value or price of the products but also the forest charges imposed on the product; and that PWPA is insisting that the actual FOB market price to be used in the computation of forest charges should be the market price based on price survey less the existing forest charges. In reply, please be informed that the questions raised by you are not within the jurisdiction of this office to decide. Since the assessment and collection of forest charges are lodged with the Forest Management Bureau, this Office has no authority to issue rulings interpreting the provisions of Section 70 of the Revised Forestry Code of the Philippines which prescribes the rates and basis of forest charges to be collected on timber, pulp wood and matchwood cut in forestland. Moreover, under Section 73 of the said Revised Forestry Code which you correctly cited in your letter, it is the Secretary of DENR and the members of the committee created for that purpose who shall determine justly the actual FOB market price of forest products once a year. Accordingly, any question concerning the basis of assessing the correct rate of forest charges due on forest products should be decided collectively by the members of the committee and not by this Office alone. Accordingly, it is suggested that the committee be convened in order that the issues raised by you may be threshed out. Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue