THE CLA AIR TRANSPORT PERMIT EXTENSION:
BETRAYAL OF NATIONAL INTEREST FOR A ‘PHANTOM’ AIRLINE‘’
 

A Privilege Speech Delivered on November 2002

BETRAYAL of the national interest best describes the grant and the extension of the permit to operate for CLA Air Transport, a Japanese company manned by Filipino dummies.

This airline does not own a single plane. Has no pilots. Has no operations whatsoever, to speak of, since Day One. 

All it has is a temporary operating permit (TOP) as a common carrier which expired last Nov. 6. And the distinction of being designated a national flag carrier of the Republic of the Philippines by no less than Her Excellency President Gloria Macapagal Arroyo.

This “phantom airline”  has robbed precious runway slots for Philippine carriers in Narita Airport, Japan.

Because it has been accorded the dubious distinction of being a Philippine flag carrier, is has arrogated unto itself, with the support of CAB and other government officials, the right to participate in the discussions on bilateral air rights with the government of Japan.

The existence of CLA Air Transport betrays the depths to which our purported guardians of national civil aviation have sunk.

They have turned into active conspirators in flouting the Constitution and other laws of the land. They have even resorted to duplicity and deceit to advance their nefarious, if not, totally reprehensible agenda and interests.
All these machinations of the conspirators behind the phantom CLA Air Transport Corporation span three administrations.

It was approved under strange circumstances by President Fidel V.  Ramos in the latter part of April 1998, barely two to three weeks before he bowed out of office.

This indecent haste in approving the application for a TOP made it a “midnight” approval. If it wasn’t so, why didn’t President Ramos have enough decency to just let the incoming administration approve or disapprove the CLA TOP?

There must have been a million reasons behind such a hasty “midnight” approval.

Ironically, the Estrada administration which was toppled by EDSA DOS for alleged corruption, incompetence and misadministration, rejected CLA’s application for a temporary operating permit for violating the Constitution. The incorporation documents had unmistakably disclosed the dummy status of the Filipino partners of CLA. Their sloppy legal work simply did them in.

Then, wonder of all wonders, the CLA TO was resurrected and again was approved by the Arroyo government that was installed to replace the allegedly corrupt and crooked Estrada administration.

President Gloria Macapagal Arroyo did not only approve the extension of the CLA TOP from May 6 to Nov. 6, 2002. She even rewarded the company with official national flag carrier status! But, in fairness to President Arroyo, the sequence and records of the events leading to the Malacañang approval of this “phantom” airline’s TOP, revealed that this was obtained under false pretenses.

The President and her staff were duped by the conspirators behind CLA Air Transport. Their audacity and gall to set-up the Presidency of the Republic is awesome, to say the least. In the vernacular, there’s a most appropriate and popular phrase that describes the bravura of the conspirators: Ang tapang ng apog, pati Malacañang niyari nila!”

How this all started and to what extent this “Phantom of the Airways” has caused irreparable damage to civil aviation is worth looking into.
This firm organized in 1997 and was granted a “midnight” temporary operating permit or TOP in the last days of the Ramos administration.
No less than President Fidel V. Ramos himself is signatory to the joint venture agreement between the Japanese investors and their Filipino dummies who not only brings to the fore ethical questions but propriety as well.

My esteemed colleagues, any corporate lawyer worth his salt will tell you that there is no cogent nor plausible reason for the signature of President Ramos to appear in the joint venture agreement forged by the Japanese and Filipino investors behind CLA. All that is required under the law is the registration, compliance of the company with the laws of the Republic and the approval the Securities and Exchange Commission (SEC).

Why President Ramos is involved in the joint venture document is perhaps, best explained, by his “midnight” approval of its TOP.

However, CLA’s ploy was not a guarantee for a smooth corporate flight at all. It was subsequently discovered during the Estrada administration that the company violated the provisions of the Constitution mandating 60 percent ownership by Filipinos in any flag carrier.

The discovery prompted the CAB in 1999 to dismiss the petition of the cargo carrier for an extension of its permit to operate.

CLA Air Transport was found by the Department of Justice to have flagrantly violated the Constitution and other laws since the ownership structure of the company was 51 percent Filipino and 49 percent Japanese.
Post haste, the officials of the company tried to vainly correct the error by amending the offending provisions on its ownership structure. This time its bumbling and sloppy lawyers resorted to the simple expedient of adding more dummies to its stable of frontmen. This damage control operation was so sloppily done that Philippine Airlines, Grand Air and PAC opposed the application for extension in spite of the remedies employed by the CLA Air Transport plumbers.

CLA Air Transport documents indubitably showed that the company was controlled by Japanese investors, not by Filipinos, even it counted on the presence in its board of former military and CAB officials under the Ramos administration.

The CLA board was manned or dummied by the likes of General Antonio Lukban, formerly DND undersecretary; Leopoldo Acot of the CAB and former Air Transportation Office (ATO) chief Panfilo Villaruel.

They revised the “Phantom Airline’s” ownership structure by installing a nine-man board that was still controlled by the Japanese investors.
From an earlier revised structure of seven board members, CLA Air Transport reorganized the board to include four Filipinos, four Japanese and one Filipino board member who would be exclusively or solely selected by IASS, a Japanese company.

Even if it took on a new structure, how could CLA Air Transport be a Filipino controlled corporation when the Japanese investors controlled five out of nine members of the board of directors?

The claim made by the company that it is 61.03 percent controlled by Filipinos and 39.997 percent by the Japanese investors is thus a pure and unadulterated lie. CLA Air Transport documents confirm this duplicity and deceit.

As outlined earlier, events overtook the eventual demise of this Japanese-controlled corporation during the Estrada administration when the Justice Department ordered the cancellation of its TOP after it was discovered by the DOJ that CLA Air Transport violated the Constitution.

However, fortuitous events in particular, EDSA DOS, enabled the company to rise from the dead with the installation of the Arroyo government.
Given a new lease on life, CLA Air Transport was able to maneuver under the new dispensation to secure a favorable ruling from the CAB.

It was then Transportation and Communications Secretary Pantaleon “Bebot” Alvarez, as chairman of the CAB with the concurrence of all its members save for one, who approved the extension of the permit to operate of CLA Air Transport from May 6 to Nov. 6, 2002, subject to its ratification in a succeeding meeting of the Civil Aeronautics Board (CAB).
Alvarez, CAB vice chairman Adelberto Yap and Alberto Lim, private sector representative to the CAB, signed the board resolution.

The CAB never issued a ratification. Thus, the operations of the “Phantom of the Airways”, if there were any, especially its the existence was illegal ab initio.

Why is this so? There was nothing to extend to begin with. Not a single legal right or privilege existed for the CAB to take up the CLA application.
Pressed for time and owing to its fervent desire to control 4 1/2 slot at the Narita runway that is reserved for a Philippine flag carrier, CLA Air Transport resorted to backroom operations, leading to the strange submission by CAB Executive Director Manuel San Jose of the company’s application for another extension to Malacañang and the Department of Foreign Affairs without the CAB ratification.

Thus, the CAB, through San Jose’s highly questionable unilateral action, instead of keeping true to its mandate as the sentinel and protector of civil aviation in the country, became an “agent” of CLA Air Transport.

Evidently, San Jose wanted to spare CLA Air Transport of the trouble attendant to the issuance of such an extension from the board given the legal infirmities of its very corporate existence and the opposition lodged by other air carriers and operators who would be adversely affected by the grant of such an extension to this “Phantom Airline” by the CAB.

San Jose argued that the extension could be granted by the Office of the President, which retains control and supervision of the CAB, as part of the executive department.

The President unaware that there was a pre-condition to the grant of an extension to CLA Air Transport, approved their extension from May 6 to Nov. 6, 2002. This extension flustered local airlines and aviation experts who had opposed the extension of the permit of this “Phantom Cargo Airline.”

Why the CAB under the Arroyo administration had taken pains to provide CLA Air Transport an easy way to earn certification as a Philippine official flag carrier and secure exclusive control of the lucrative Japanese air cargo route escapes civil aviation authorities and competitor airlines.
There may be millions, maybe billions, of reasons for this strange twist of fate, and the CAB executives past and present, must be held responsible for the glaring assaults on the nation’s aviation policy, sovereignty and even air space.

But I am most apprehensive about reports reaching me from very reliable sources that elements of the dreaded Japanese underworld -- the YAKUZA -- are actually involved in CLA Air Transport as investors. Sources revealed that the Japanese investors listed in CLA wear with pride the colorful but dreaded tattoos of the Yakuza. Burdado daw po ng tattoo ang mga katawan ng Japanese investors na ito.

This is a very serious matter that should see the light of day.

This is more than just a permit approval or extension whose infirmities could be conveniently swept under the rug because it was a “done” deal, so to speak. 

This is more than just a “midnight approval” when the pen of the powerful is wielded under the shield of darkness.

Which leads me to ask these pertinent questions at this point.

Why should Japanese investors put in millions, if not billions of dollars or yen notes, in a capital-intensive business and allow Filipinos to control and run their business? Sounds strange indeed.

Even stranger, is the fact that the Japanese and the Filipino dummies at CLA are eyeing the bilateral air rights or privileges extended to Filipinos under these agreements. Already they have asserted their claims under the RP-Japan Bilateral Air Talks.

As Japanese nationals, their investments are better protected if they set up a Japanese carrier.  They can participate and possibly gain some of the routes and even runway slots in the Philippines under the bilateral treaty with Japan as Japanese carrier. In fact, there is only one Japanese airline flying in and out of the country to Japan, Japan Airlines.

So why, the subterfuge, the lust for the rights and privileges granted to local airlines?

Why should the Japanese investors spend millions in setting up a so-called Philippine cargo airline just to secure a right to be in business, and when they did get a permit to operate, they never operated at all?

On record, CLA never owned any cargo aircraft, never employed pilots and crew and never operated for a single minute that it had a permit to do so.
So many strange things are happening at CLA Air Transport yet no answers have been forthcoming.

Which now brings us to the core of the issue:
1. Is CLA Air Transport in the license or franchise acquisition and resale business only?

 

From the very start, is it their real agenda to turnaround and sell whatever privileges or franchises they acquire from the CAB and the Philippine government to the highest bidder?

 

2. Or, are the hidden but real investors of CLA Air Transport just lurking in the dark, and once, their TOP is approved, they would embark on very lucrative but highly illegal activities like gunrunning, cargo and human smuggling, illicit drug trafficking and other organized crime activities?
The fact remains that all the apprehensions being raised against CLA Air Transport are valid and should be seriously looked into by concerned authorities.

 

We ask the Arroyo government to immediately deny the petition for an extension of the CLA Air Transport TOP for being offensive to the Constitution and for being an insult to sovereignty and dignity of the Philippine government and the Filipino people.

 

The subterfuges and lies peddled to secure such an extension do not augur well, nor does it speak highly at all, of the kind of civil aviation regulatory body like the CAB and the country’s civil aviation policy, if we have any, at all.

 

This case illustrates the kind of willy-nilly policymaking that favors carpetbaggers and influence peddlers in the highest rungs of power who treat our civil aviation policy, sovereignty and even self-respect and dignity as a nation and a people, in a despicable and cavalier fashion. In very simple terms -- Binababoy po tayo.

In a nutshell, this monumental scam was a roundabout way of dealing a lethal blow on our local airlines and flag carriers that have been seeking more frequencies to and from Japan and other countries, and scrounging for more slots in Narita and in other highly competitive airports abroad.
Already, a taxpayers’ suit has been filed to stop CLA Air Transport from enjoying the privileges that had been denied deserving airlines who have plunked in millions of dollars of their own money; purchased or leased more aircraft for their operations; employed more crew to fly and maintain their aircraft and whose operations had ferried thousands upon thousands of tons of air cargo that have benefited people, industries and markets in countries where they operate.

 

CLA Air Transport along with its top executives like Jose Ch. Alvarez, have been supporting an enterprise that competes directly against Philippine air carriers and robs them of business that by law should be theirs. In truth and in fact, these Filipinos at the CLA board have been consorting with our competitors and help propagate the myth that they own, operate and manage a Philippine registered corporation.

 

In this connection, I urge this august body to conduct an investigation into the ownership structure and operations of CLA Air Transport in aid of legislation. Let the findings of this investigation guide us in setting forth a national aviation policy.

 

And, my dear colleagues in this chamber, I say the timing could not have been any better.

 

For years, our national coffers have been robbed or denied of precious revenues because of the despicable machinations of robber barons and their local satraps in the aviation industry.

 

It is now time for the country to put an end to this episode of treachery and betrayal in the airways, of thievery and treachery in the skies.
It is now time to put an end to this insanity and restore respect and decency in our aviation policy.

 

It is now time for our country’s civil aviation authorities and Congress to spell out our priorities and agenda on civil aviation with the end in view of firming up a national aviation policy at the soonest possible time.
It is now time to have a concrete national civil aviation policy that protects and upholds our national interest and sovereignty above all.

 

Let us bring CLA Transport back to its corporate grave.

 

Let CLA Air Transport remain to be what it is: “A Phantom of the Airways.”
Thank you and Good day to all.