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Decision vs FedEx a setback, says MAP official

Ruling highlights need to relax limits on foreign ownership

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Another influential business group has spoken out about the legal woes faced by Federal Express locally after the Court of Appeals recently voided its permit to operate in the country.

According to the head of the Management Association of the Philippines, the adverse decision handed down by the appellate court against the international freight forwarder is a setback to broader efforts to bring in more foreign investments to the country.

“The whole incident proves the need to amend the economic provisions of the Constitution to liberalize entry of foreign investors bringing funds, creating jobs and introducing greater competition benefiting consumers,” MAP president Melito Salazar Jr. said.

The statement of the MAP chief echoes a similar stand made last week by the head of the Makati Business Club, which raised long-standing concerns about the policy instability that the business community—both local and foreign—faces when doing business in the country.

FedEx,  one of the largest freight forwarding companies in the world,  holds a five-year permit to operate in the country granted by the Civil Aeronautics Board (CAB) in May 2011.

The CAB permit was backed by a Department of Justice opinion issued 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 CA said it was “not bound by the resolution of the justice secretary.” Siding with locally owned complainants Merit Freight International Inc. and Ace Logistics Inc., the court denied FedEx’s appeal in another decision dated June 6.

Salazar expressed optimism that the FedEx case would spur the Aquino administration to relax foreign ownership limits, as it had earlier indicated, through the creation of a shorter “negative list” of industries that are tightly regulated or “through legislation and administrative fiat.”

“The case shows that at the end of the day, the judiciary will go back to the foundation of our laws, the Constitution and decide accordingly,” the MAP chief said.

Meanwhile, FedEx has asked the Court of Appeals to review its earlier decision, arguing that the nature of its business activity puts it outside the ambit of the 1987 Constitution’s prohibition against foreign utilities.

In its petition filed late last month, FedEx pointed out that what the Constitution prohibits are foreign-owned or -controlled utility firms that do business domestically, not internationally.

FedEx argued that the nature of its freight forwarding business is international and, as such, is not covered by the Constitutional ban, similar to the current situation where foreign airlines are allowed to carry passengers to and from the Philippines.

FedEx lawyers cited a ruling made by the Secretary of Justice as far back as 1946 on a similar issue that said “public utilities engaged exclusively in international commerce are beyond the purview of the constitutional provision in question.”

“To hold otherwise would be to ascribe to the Constitutional Convention the intention of isolating the Philippines from the rest of the civilized world, as would—under the circumstances then and still prevailing—inevitably follow if all foreign public utilities engaged in international transportation and communication were to be banned from establishing terminals and offices in this jurisdiction,” the ruling said.

“The disastrous consequences of such a policy are too obvious as to need further elaboration,” it added.


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Tags: Business , economy , fedex , money , News , Shipping

  • Roland_F

    Another corrupt judge sells his verdict to the highest bidder ….

    Supermarkets are not allowed to operate and are kept out by crazy rules like max 500 sqm floor space but minimum investment of millions of $$$ — so a handful of local Oligarchs can corner the market and make filthy profits of the expense of millions consumers.

    European airlines were harassed out of the country with high landing fees, astronomical high terminal fees for rotten T1 where PAL didn’t have to pay a single Peso rent for the back then brand new T2.

    The original intention of the constitution to keep utility business (water, electricity, phone-landlines) in local hands — leads to the highest electricity prices in Asia for the lousy service (low Voltage, fluctuation, frequent brown outs…)

    And now an international express carrier is kicked out of the country to profit some dubious local company , which most likely provides an overpriced lousy service as usual.

    Transporting a balik bayan size box from one province to another cost >6000 Peso at 2Go (2-3 weeks delivery time for pick up in their office) , >7000 Peso JRS, and >8000 Peso LBC — which is almost double for transporting a BB-box around the world door to door.

    As so often a few business men earn a fortune by playing the hopeless corrupt Pinoy system — and the lawmakers getting handsome bribes (on top of pork) to provide a comfortable monopoly-like legal shelter for local businesses in reward for campaign funding — and the wide public suffers high cost and lousy service.

  • carlcid

    The left hand doesn’t know what the right hand is doing. That summarizes the dysfunction of Philippine government and Philippine laws.

  • delpillar

    Those foreign companies who use Fedex, UPS, DHL should go out of the Philippines like Mitsumi (20,000 employees), Hitachi-GST (several thousands employees), Yazaki-Torres (30,000) and sesveral hundreds other companies and let the unemployed do the the punishment for the corrsponding corrupt judges…. “SOBRA_NA/TAMA-NA”…. ala Nicolae Ceaușescu dahil sa sobrang corruption at pagpapahirap MISMO ng GOBYERNO ng PILIPINAS sa mga mamamayan in general. The government of the Philippines with the Corrupt Judges are just like SADISTIC animal, the more the citizens suffer the happier they become.

    you can watch in YOUTUBE how Nicolae Ceaușescu was shot by rapid fire of AK-47 by the angry populace in 1989.

    • Roland_F

      A more efficient strategy would be to retaliate the harassment of foreign corporations by banning all Philippine OFW in their countries.

      Taiwan banned OFW after Erap banned the Taiwan airline in the hope banning other airlines will help Lucio’s ailing notorious loss making PAL — so as to repay heavy campaign donation of his buddy Lucio Tan.

      Tan get a couple of hundred million US$ richer, but 50,000 or so OFW’s in Taiwan lost their earning.
      Now Dutch KLM/ Air France packed their coffers in the R of P as last European airline following suit after German Lufthansa, British Airways & Co were harassed out of the country to benefit the local airlines (who are not even flying to Europe at all). Of course local airlines are all owned (like the entire country) from a few tycoons.

  • eight_log

    Yan ang gusto ng LBC …. walang competition!!!! Guess who owns LBC????



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