Home » Aviation » DOJ: Int’l air forwarders must follow 60/40 rule

INTERNATIONAL airfreight forwarding companies operating in the Philippines are considered public utilities and should therefore follow the 60/40 nationality requirement stated in the 1987 Constitution.

This was the gist of an opinion issued recently by acting Justice Secretary Ma. Merceditas N. Gutierrez in response to a Civil Aeronautics Board (CAB) query on whether it should allow international airfreight forwarders to operate with foreign equity of more than 40%. Department of Justice (DOJ) Opinion No. 49, series of 2004, said, “They (international airfreight forwarding companies) by the nature of their undertaking, will serve all those who wish to avail of their services and are, therefore, public utilities and should therefore comply withÉ constitutional and statutory provisions.”

CAB deputy executive director Carmelo Arcilla said the aviation board will soon come up with measures to implement the nationality requirement. He said currently operating airfreight forwarding firms whose foreign equity exceeds 40% will be given time to restructure their companies. “It might take a year or two but we will definitely implement this ruling,” he said.

The restructuring, he added, should ensure that “all executive and managing officers of such corporation or association must be citizens of the Philippines” as espoused in paragraph two of Section 11, Article XII of the 1987 Philippine Constitution. Earlier the Aircargo Forwarders of the Philippines, Inc. filed with the CAB an opposition to airfreight firms’ application to operate if they are majority owned by foreign nationals.

In turn, CAB sought a DOJ opinion, noting provisions of the 1987 Constitution which state that “No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens.” CAB was also compeled to seek a DOJ opinion to clarify earlier conflicting interpretations issued by the same agency, particularly DOJ opinion no. 218, series of 1975 and no. 20, series of 1999.

The first stressed airfreight forwarders are akin to international airlines and therefore not covered by the nationality requirement. The second, on the other hand, went against the first opinion and introduced the 60/40 rule as mandated by the 1987 Constitution.

A CAB source said many local freight forwarding firms have appealed to the CAB to act on the growing number of multinational freight forwarding corporations which threaten the operation of small ones.

“The locals are opposing it,” the source said, adding most local forwarding firms are threatened by the possibility of multinational companies predominating the international airfreight forwarding business in the Philippines.

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