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Decision vs FedEx a setback, says MAP official

Ruling highlights need to relax limits on foreign ownership

By: Daxim L. Lucas, August 18th, 2013 07:39 PM

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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