Home » 3PL/4PL, Aviation » FedEx can’t operate in PH, court rules

INTERNATIONAL freight forwarder Federal Express Pacific Inc cannot operate in the Philippines due to restrictions on foreign ownership, according to the Court of Appeals.

The court ruled Section 11, Article XII of the 1987 Constitution clearly states that “operation of a public utility shall be granted to Filipino citizens or to corporations or associations organized under the laws of the Philippines.”

In the process, the CA declared “null, void and of no further force and effect” the May 2, 2011 resolution of the Civil Aeronautics Board (CAB) granting Federal Express Pacific Inc a regular permit to operate international airfreight forwarding.

The decision dismisses FedEx’s motion for reconsideration of an earlier ruling issued by the same court.

The issue arose from the case filed by Merit Freight International Inc. and Ace Logistics Inc. questioning the CAB’s decision to grant FedEx a regular permit to operate international airfreight forwarding.

Merit Freight International maintained that international airfreight forwarding is a public utility reserved for qualified Filipino individuals.

Ace Logistics said the CAB erred in granting Federal Express Pacific a permit to operate despite it being a 100% foreign-owned and a foreign-based corporation.


FedEx statement

But in a statement, FedEx said it is “operating under the international freight forwarder license issued by the CAB as an independent entity in the Philippines.”

It added that “pending the final decision of the Supreme Court, the CAB has confirmed that FedEx (together with all of the 30 plus other foreign airfreight forwarders) can continue to operate under the license.”

The company noted it has increased “investment commitment to support economic growth in the Philippines and its customers.”

Last year it said more than P500 million was allocated to the construction of its new Manila and Cebu gateway facilities, Clark customer service offices and Manila district headquarters.

“We have created 350 million new jobs in FedEx Philippines,” the company said. “We’ve also contracted with Filipino companies who have added 350 new jobs to support our brokerage, pickup and delivery services.

“We are the mainstay of Mail and More in their 218 locations.

“In total, FedEx has added close to 700 jobs in partnering with Filipino companies.”

The CAB based its decision on an opinion issued by the Department of Justice 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.”

The appellate court, however, 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 interpreting the law.

In a 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 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% 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 to a Filipino 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.

 Image courtesy of Artur84 /FreeDigitalPhotos.net

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