Court ruling on FedEx alarms businesses

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Rulings that curtail the flow of commerce is not only counterproductive, but is destructive to the Philippine economy, businessmen said in reaction to the latest court ruling which nullified the license of FedEx to do business here.

 

American Chamber of Commerce of the Philippines senior adviser John Forbes said, “business competitiveness versus its regional peers may be eroded if potential foreign investors are scared off by FedEx legal setback before the Court of Appeals.”

Joey Roxas, president of Eagle Securities Inc. said the ruling “smacks of a shakedown.” Makati Business Club (MBC) chair Ramon Del expressed disgust saying it is “most unfortunate as it highlighted the risks that make foreign investors think twice about doing business here,” while Management Association of the Philippines (MAP president Melito Salazar Jr. said the decision is “adverse since it is a setback to broader efforts to bring in more foreign investments to the country.”

Forbes opined any court ruling banning FedEx local operations would serve only to hurt Philippine interests.

“The Philippines needs to be aware that its competitiveness is affected in a negative way when you don’t have as much competition as possible in [the industry facilitating] international trade,” he said, explaining that competition among both local and foreign freight firms is essential for keeping transport costs in check.

It should be recalled that CA ruled that FedEx should be barred from operating in the Philippines because foreign-owned utility firms are prohibited from doing business quoting 1987 Constitution. The decision was in response to the complaint filed by two local forwarders, Merit Freight International, Inc. and Ace Logistics, Inc.

FedEx 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 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. 776and other existing laws.“ But Ace and Merit claimed that they would be greatly injured by the CAB’s decision. FedEx is appealing the decision before the Supreme Court.

“What FedEx is engaged in is international freight activity,” Amcham’s Forbes said. “It moves freight into and out of the country. That is a pretty standard practice around the world. It would be quite rare for that to be interrupted in the way the Court of Appeals is sugesting.”

Forbes, Del Rosario Salazar and Roxas conceded that there have been a number of legal decisions involving foreign firms that have worried foreign investors.

The Foreign Chambers of which Amcham is a member likewise expressed its deep concern vis-a-vis the perceived lack of a level playing field whenever foreign firms engage in legal disputes with local parties. Forbes said that the court is very important and it needs to be objective, informed and deliberate in a fairly expeditious way in these decisions. “In the case of the Philipoines, there is a history of rather surprising decisions coming fron the courts at all levels over the years,” Forbes noted.

“FedEx was given a license to operate by the government,” Forbes stressed. “That license should be respected by all branches of the government.”

The Judiciary has time and again come under fire over decisions on business operations in the Philippines.

The court decision on FedEx comes at a time when the country badly needs foreign monies to fund many of the public-private partnership projects of the government. Businessmen see this decision to affect the country’s competitiveness ranking globally. Manila Bulletin