Atty. Enrico M. Ingles

September 28, 2001 SEC OPINION Atty. Enrico M. Ingles The Law Firm of Ingles Laurel Salinas 7th Floor, Suite B, Valero Street Salcedo Village, Makati City Dear Atty. Ingles, This is in reply to your letter dated August 15, 2001 requesting confirmation that a 100% foreign owned local corporation is allowed to engage in the business of freight forwarding and that the same is not considered a public utility. Under the 4th Regular Investment Negative List, freight forwarding is not categorized as a public utility, hence, not a nationalized activity. Moreover, the Opinion of the Department of Justice dated December 12, 1975 , exempted international air freight forwarding from the coverage of the constitutional provision limiting foreign participation in the operation of public utilities. The pertinent portion of the opinion reads thus: "It is contended, however, that while air freight forwarding falls under air commerce or transportation, since it involves transportation of cargo, the citizenship requirement applies only to domestic air commerce and/or air transportation, and therefore does not apply to international air freight forwarding. I find merit in this view. International air freight forwarding, which is indirect air transportation of cargo between the Philippines and any foreign country, is not domestic air commerce and/or air transportation which refers to air commerce and/or air transportation "within the limits of the Philippine territory". Thus, in the same manner that foreign airlines, which are engaged in direct air transportation between the Philippines and other points outside the Philippines, are not subject to the nationality requirement, it is believed that air freight forwarders engaged in indirect international air transportation, are not covered by Section 12 abovequoted. This conclusion is in line with Opinion dated September 11, 1946, of the Secretary of Justice, to the effect that public utilities engaged exclusively in international commerce are beyond the purview of the constitutional provision limiting the operation of public utilities to citizens of the Philippines or to corporations or entities 60% of the capital of which is owned by citizens of the Philippines. (Sec. 5, Art. XIV)." We therefore confirm your position insofar as the international air freight forwarding operation of a domestic corporation is concerned. Very truly yours, (SGD.) FE ELOISA C. GLORIA Commissioner