PAL says PAGCOR’s claim inconsistent with lease contract

Flag carrier Philippine Airlines (PAL) on Thursday criticized the Philippine Amusement and Gaming Corp. (PAGCOR) for claiming that it was not the absolute owner of the property leased by the airline, a claim that does not reflect the provisions of their lease contract.

“PAGCOR stated that it is ‘not yet the absolute and registered owner of the property', a claim which is totally inconsistent with its covenants under the contract,” PAL said in a statement.

“At any rate, this statement of PAGCOR is immaterial and irrelevant,” the airline emphasized.

PAGCOR raised legal issues surrounding the lease contract to a 10-hectare property in the Nayong Pilipino Complex.

PAGCOR said it reviewed the lease contract with PAL and found that it was “not yet the absolute and registered owner of the property,” which means that the carrier “does not acquire any right to the possession or enjoyment thereof.”

PAL cited Article 12.8 of the lease contract which states:

“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.”

The airline said that PAGCOR carried out succeeding actions in line with its authority as owner of the leased premises such as accepting PAL's initial payments, permitting tests, and issuing a statement of account.

“The authority of PAGCOR to lease the 10-hectare property located at the old Nayong Pilipino premises to PAL is very clear in the contract itself,” the airline emphasized.

“Assuming for the sake of argument PAGCOR is not the absolute and registered owner of the property, it can still enter into a valid contract owing to the fact that it has control and/or possession over the area and has the legal personality to do so,” it added.

On July 30, 2014, PAL said it signed in good faith a contract of lease with PAGCOR. The monthly rent was pegged at P40.00 per square meter until July 11, 2033.

The airline said it paid a one month advance and security deposit equivalent to five months or P24,000,000.00.

“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.
 
“PAL expects PAGCOR to respect the terms of the contract,” the airline said.

On its plan to build a P20-billion passenger terminal within property, PAL noted it was allowed to use the land as aircraft parking, ramp, and apron facility, and that any other use would need “prior written consent from PAGCOR.”

Last week, PAL president Jaime Bautista told the Management Association of the Philippines the airline had proposed to build a passenger terminal at the former Nayong Pilipino complex.

The airline said it 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. — Ted Cordero/VDS, GMA News