MANILA, Philippines - The Court of Appeals (CA) has effectively stopped the operations in the country of international forwarding firm Federal Express (FedEx).

The fourth division of the appellate court last week voided the permit granted in 2011 by the Civil Aeronautics Board (CAB) to Federal Express Pacific Inc.

The CA ruled with finality that FedEx’s operations in the country violate the constitutional ban on foreign ownership of firms delivering public utility services.

In a two-page resolution released last week, the CA denied the motion for reconsideration filed by FedEx.

Instead, it affirmed its decision last Jan. 23 which held that FedEx is a foreign corporation and could not engage in public utility services such as international airfreight forwarding.

The court reiterated that FedEx’s operations are detrimental to the interest of local competitors and of the Philippine economy as a whole.

“We hereby declare respondent Federal Express Pacific, Inc., a ‘foreign corporation,’ disqualified in our country from operating as an ‘international airfreight forwarder’ which is clearly a public utility,” read the ruling penned by Associate Justice Danton Bueser.

Associate Justices Amelita Tolentino and Ramon Garcia concurred in this decision.

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

As basis, the CA cited Article XII Section 11 of the Constitution, which provides that “operation of a public utility shall be granted to Filipino citizens or to corporations or associations organized under the laws of the Philippines.”

The CA was ruling on petitions filed by Merit Freight International Inc. and Ace Logistics Inc., questioning CAB’s decision to grant FedEx a regular permit to operate international airfreight forwarding.

In questioning CAB’s decision, Merit argued that international airfreight forwarding is a public utility reserved for qualified Filipino individuals and corporations as embodied in the 1987 Constitution.

Ace, for its part, said CAB erred in granting permit to operate to Federal Express Pacific Inc. despite the fact that it is a 100 percent foreign-owned and foreign-based corporation.

In granting the petitions, the CA also cited a previous resolution by the CAB dated June 1, 1990, directing Royal Cargo Corp., a company whose president then was a foreigner, to relinquish its top position to a Filipino national in accordance with Article XII Section 11 of the 1987 Constitution.

Royal Cargo questioned CAB’s resolution before the Court of Appeals, which ruled that the petitioner is covered by restrictions embodied in the 1987 Constitution.

The court also rejected Federal Express’ argument in its appeal that Merit has no legal standing to question its application for a regular permit and no personal stake in the outcome of the case.

The CA ruled that Merit, as a citizen, has the requisite locus standi – or the right to bring an action to be heard in court – to question the matter.