New NAIA hub hits snag over PAL, Pagcor row

Flag carrier Philippine Airlines found itself on the defensive yesterday, insisting that a lease deal it signed for a 10-hectare parcel of land in Manila’s Ninoy Aquino International Airport complex in 2014 was “valid and binding” after Philippine Amusement and Gaming Corp. (Pagcor) called for a review.

The issue is part of an emerging row between PAL and the gaming regulator. It comes a week after PAL announced plans to lease additional land from Pagcor around the country’s main air gateway, on which it would build a P20-billion passenger terminal to help address congestion.

“The existing contract between PAL and Pagcor is legal, valid and binding based on the terms negotiated and finalized by both parties three years ago,” PAL said in a statement. The flag carrier, controlled by taipan Lucio Tan, said it expected Pagcor to respect the terms of the deal.

The contract between PAL and Pagcor was signed in 2014—under the previous administration—while PAL was still under the management of San Miguel Corp.

Among the issues raised by Pagcor, whose leadership changed when the Duterte administration took over in July 2016, was the P40-per-square-meter lease fee, which it said was “grossly disadvantageous to the government.” The lease deal will expire in 2033.

Pagcor, in a statement, said it had requested an opinion from the Office of the Solicitor General on the matter. Just days prior, PAL said it wanted to lease an additional 16 hectares—the site of the old Nayong Pilipino complex—for a new terminal.

PAL leased the property to house its growing fleet, saying the land would be used for aircraft parking and as an apron facility. It can use the property for other purposes with “prior written consent from Pagcor.”

“PAL recognizes the role of Pagcor and reiterates its willingness to engage with Pagcor and other stakeholders in pursuit of its goal to work with government in building, developing, enhancing and upgrading airport infrastructure,” PAL said.

PAL also debunked Pagcor’s stance that it was “not yet the absolute and registered owner” of the property.

“Pagcor carried out succeeding actions in line with its authority as owner of the leased premises such as acceptance of PAL’s initial payments, permission to conduct tests, and issuance of statement of account,” PAL added.

Citing its contract, PAL said: “Pagcor covenants and warrants it is the lawful owner of the leased premises; that is free from all encumbrances; that it has a right and has been duly authorized to lease the same as aforesaid and that it will warrant and defend the same against the lawful claims and demands of all persons.”

Pagcor said it acquired the land from the Philippine Reclamation Authority in 2009 after entering into a “contract to sell” agreement.

PAL and Pagcor officials did not immediately respond to requests for additional comments on Thursday.