http://www.businessmirror.com.

ph/nationalizing-freightforwarding/
As we move toward globalization, investment across the
borders is now becoming a trend. Foreign investments in the
country continue to soar. Many see foreign investment in a
country as a positive sign and as a source for future economic
growth. It is actually beneficial to our economy that foreigners
believe in the Philippines as a lucrative venue to place their
money by establishing profitable businesses and, at the same
time, serving the general public. One of the many industries
that is appealing to foreign investment is the business of freight
forwarding, which is also a much-needed service for efficient
and effective transportation of goods and commodities.
It may be unknown to many that the operation of freight
forwarding in the Philippines is considered under Philippine laws
as operation of a public utility. A public utility is defined as a
business or service engaged in regularly supplying the public
with some commodity or service of public consequence, or
essential to the general public. As its name indicates, the term
implies public use and service to the public. A public utility
under the Constitution and the Public Service Law is one
organized for hire or compensation to serve the public, which
is given the right to demand its service. In one opinion rendered
by the Securities and Exchange Commission, air freight
forwarding is tantamount to engaging in domestic air
commerce and/or transportation.
As an operator of a public utility, the corporation must adhere
to the requirements found under Article XII, Section 11 of the
Philippine Constitution which provides that the operation of a
public utility shall be granted only to citizens of the Philippines
or to corporations organized under the laws of the Philippines,
at least 60 per centum of whose capital is owned by Filipino
citizens.

The participation of foreign investors in the governing body of

any public-utility enterprise shall be limited to their
proportionate share in its capital, and all the executive and
managing officers of such corporation must be citizens of the
Philippines. Notably, one of the requisites is that at least 60
percent of the shareholdings of a public-utility corporation must
be owned by citizens of the Philippines. Conversely, foreign
equity participation in public utility is limited to 40 percent.

Generally, there is the same set of requirements for the

incorporation of a domestic corporation, may it be wholly or
partially foreign-owned. A corporation with more than 40percent foreign equity shall have to comply with the
requirements set forth in the Foreign Investments Act of the
Philippines. In the case of a freight forwarder, which, again, is
considered a public utility, what is most important is to comply
with the 60/40 ownership requirement as mentioned above.
This equity requirement is further reinforced in Executive Order
184, Series of 2015, which promulgated the most recent
foreign-investment negative list.
Considering that a freight forwarder shall operate as a public
utility through air-transport services, an endorsement/clearance
from the Civil Aeronautics Board (CAB) is an additional
requirement for incorporation. A Letter of Authority shall have
to be secured from CAB. It is an approval issued by the CAB
authorizing a person or entity to engage in airfreight forwarder,
general sales agent, cargo sales agent and off-line carrier.
For freight forwarders that will exclusively operate domestically,
the minimum paid-up capital is P250,000, while those that will
have international operations, the minimum paid-up capital
required is P2,000,000.

It is interesting to note that in one case decided by the Court of

Appeals in 2013, involving one of the largest freight forwarding
companies in the world, it ruled that such company was a
foreign corporation and, therefore, could not conduct business
in the Philippines because air freight forwarding was a public
utility reserved for Filipinos.
While foreign investments help boost our economic growth, our
laws significantly protect our citizens by setting limitation for
foreigners who want to set foot in the countrys most indemand industries.
Indeed, doing business in the Philippines by foreigners is not a
right granted to them, but a mere privilege regulated by our
laws. Such regulation, especially in public utilities, is not merely
intended to prioritize Filipinos to engage in business in the
country, but most important, to protect the consuming public of
the products and services they avail.
The State is bound to protect its citizens, more so, to keep an
eye on matters imbued with public interest. Salus populi est
suprema lex.