Court voids permit of freight forwarder

THE COURT of Appeals (CA) has voided a Civil Aeronautics Board’s (CAB) resolution allowing a local subsidiary of US-based FedEx Corp. from operating as an international freight forwarder for violating the constitutional limit on foreign ownership.

In a resolution dated June 6, the appellate court’s fourth division upheld its January ruling that nullified and voided CAB Resolution No. 26, or the permit issued to Federal Express Pacific, Inc. (FedEx Pacific) to operate as an international freight forwarding service from May 2, 2011 to May 1, 2016.

“This court... finds no cogent reason to revise, amend, much less reverse, the decision dated January 23, 2013,” read the decision on the logistic provider’s appeal.

In its ruling last January, the CA said the regulator has adopted a policy as early as 1990 that only Filipino citizens can be granted a permit for international freight forwarding.

Further, the court said freight forwarding is considered a public utility and subject to the constitutional requirement of 60% Filipino ownership.

The ruling cited an earlier CA case whereby the CAB instructed Royal Cargo Corp. to appoint a Filipino president instead of a German national.

The Supreme Court (SC) rendered the case “moot and academic” in 2004 as Royal Cargo’s permit had been renewed at the time the decision was released. However, the CA cited “moot and academic” cases whereby the Supreme Court “still took time to address the issues raised therein.”

“Furthermore, if the case is not really what we think it is, then the High Court itself would have mentioned, even in passing, that the airfreight forwarding business is open to all without regard to citizenship,” the CA decision further read.

The CA ruling stemmed from a consolidated petition filed by Merit Freight International, Inc. and Ace Logistics, Inc. questioning the CAB’s issuance of a permit to FedEx Pacific.

According to records from the Securities and Exchange Commission, FedEx Pacific has been registered as a “foreign stock” and applied to establish a “branch office” in the country.

The CAB on March 14, 2011 issued the company a one-year provisional permit to operate as an international freight forwarder, and after less than two months granted a regular license on May 2, 2011.

Officials of FedEx Pacific and CAB were not immediately available for comment on the freight forwarder’s operations before and after the CA ruling, and on whether the case will be haled to the SC.

FedEx closed in 2009 its Asian hub in Subic and moved its operations to Guangzhou, China after 14 years of operating in the free port northwest of Luzon.

Airfreight 2100, Inc., popularly known as Air21, has been FedEx’s sole licensee in the Philippines since 1984.

source:  Businessworld