PAGCOR raises legal issues on PAL lease contract covering Nayong Pilipino property

The Philippine Amusement and Gaming Corp. (PAGCOR) on Tuesday raised legal issues regarding the lease contract to a sizeable piece of land it entered into with flag carrier Philippine Airlines (PAL).

PAGCOR said it reviewed the lease contract with PAL and found out that it was "not yet the absolute and registered owner of the property."

"Therefore, since PAGCOR has no absolute authority to lease out the property, PAL does not acquire any right to the possession or enjoyment thereof, notwithstanding the contract of lease executed between the two parties," the gaming regulator said in a statement.

Last week, PAL president Jaime Bautista told the Management Association of the Philippines the airline had proposed to build a P20-billion passenger terminal at the former Nayong Pilipino complex.

"PAGCOR has already requested an opinion recommendation from the Office of the Solicitor General regarding this matter," the gaming regulator said.

The property was sold by the Philippine Reclamation Authority to PAGCOR by virtue of a contract to sell on May 12, 2009.

According to PAGCOR, its previous management leased 10 hectares of the 15-hectare land to PAL under a term contract that will expire on July 11, 2033. The gaming regulator said the airline pays only P40 per square meter in monthly rent for the property.

"Upon the current PAGCOR's management's review of the lease contract with PAL, it was revealed that 'the lessor is not yet the absolute and registered owner of the property'," it added.

"The previous board caused the acceptance of P21,000,000.00 as down payment from PAL but later issued an order to PAGCOR's treasury department not to accept the lease payments from PAL," the gaming regulator said.

"This led the present PAGCOR board to look deeply into the lease contract. It found that the lease price of P40 per square meter is grossly disadvantageous to the government," it said.

"As stipulated in the contract, PAL will use the rented property as 'an aircraft parking ramp/apron facility'. Hence, it is prohibited from using the leased premises for any other business or purpose, including the construction of a new terminal, without prior written consent from PAGCOR," the regulator said.

"The ultimate aim of PAGCOR's current management is to ensure that all dealings entered into by the agency will be advantageous to the government," the gaming regulator said.

In a separate statement last week, the Manila International Airport Authority said the proposal by PAL can be explored but the progress of any discussion on the matter would be remote because the property is embroiled in a long standing legal case.

As of this posting, GMA News Online has not received a reply from PAL officials after requesting for a comment on this development. — Ted Cordero/VDS, GMA News