FedEx can’t operate in PH, appellate court rules

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05:02 AM July 22nd, 2013

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July 22nd, 2013 05:02 AM

The Court of Appeals has cancelled a government-issued permit that allowed the giant international freight forwarding company FedEx to operate in the Philippines. PHOTO FROM FEDEX’S FACEBOOK ACCOUNT

MANILA, Philippines—Stressing that the court was not bound by the resolutions of the justice secretary, the Court of Appeals cancelled a government-issued permit that allowed the giant international freight forwarding company FedEx to operate in the Philippines.

Contrary to an opinion of the Department of Justice (DOJ), the appellate court said international freight forwarding was a public utility. It upheld its earlier ruling declaring FedEx (Federal Express Pacific Inc.), a foreign corporation, disqualified by the Constitution from involvement in public utilities in the Philippines.

The Civil Aeronautics Board (CAB) in May 2011 had granted FedEx, one of the largest freight forwarding companies in the world, a permit to operate in the country for five years. The CAB decision was backed by an opinion issued by the DOJ in 2004 stating that “international air freight forwarders are not covered by the nationality requirement under the 1987 Constitution, hence, may be issued a certificate of public convenience subject to the CAB’s pertinent rules and regulations set forth under Republic Act No. 776 and other existing laws.”

However, in its decision first issued on Jan. 23, 2013, the appellate court said it was “not bound by the resolution of the justice secretary” and that like other courts, it takes its bearings from the decisions of the Supreme Court, which has the last word on what the law is.

In its more recent two-page decision dated June 6, the appellate court’s Fourth Division denied the motion for reconsideration filed by FedEx.

“This court, after a meticulous study of the arguments set forth in the motion for reconsideration … finds no cogent reason to revise, amend, much less reverse, the decision dated January 23, 2013,” said the ruling penned by Associate Justice Danton Bueser. Associate Justices Amelita Tolentino and Ramon Garcia concurred.

The appellate court had acted in favor of Merit Freight International Inc. (Merit) and Ace Logistics Inc. (Ace), which had questioned the decision of the CAB to grant FedEx a regular permit to operate from May 2, 2011, up to  May 1, 2016.

Merit and Ace went to the appeals court to contend that FedEx was a foreign corporation and therefore could not conduct business in the Philippines because air freight forwarding was a public utility reserved for Filipinos.

The court noted the case of Royal Cargo Corp., which had been allowed by the CAB to operate as an air freight forwarder because the company was 70 percent owned by Filipinos and its president, while a foreigner, was married to a Filipino.

When Royal Cargo sought a renewal of its permit, it reported it had a new president, a German national. This prompted the CAB in 1990 to approve the renewal on condition that the position of president was transferred in 30 days or the permit would be cancelled.

Royal Cargo appealed the decision but this was denied by the CAB, which stated that it was the board’s policy “to grant a permit to engage in international air freight forwarding only to citizens of the Philippines as defined in RA 776.”

The Court of Appeals upheld the CAB decision in the Royal Cargo case in September 1991. The case was elevated to the Supreme Court but because the appellate court had yet to resolve an instant petition, the permit of Royal Cargo expired in 1995. The high court then dismissed the petition for being moot and academic.—Christine O. Avendaño

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