PHILIPPINE Amusement and Gaming Corp. (PAGCOR) on Tuesday said flag carrier Philippine Airlines (PAL) cannot build its proposed P20-billion ($400-million) annex to the Ninoy Aquino International Airport (NAIA) on the property adjacent to Terminal 2 since it does not own it.

In a statement, the gaming industry regulator said PAL has been only leasing the 10-hectare property from PAGCOR and does not have a right to use it for any purpose other than as “an aircraft parking ramp/apron facility,” as stipulated under the contract.

“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 government corporation said.

PAGCOR said its previous management and the flag carrier in 2014 signed the lease agreement for the 10-hectare property inside the former Nayong Pilipino complex, along Manila International Airport (MIA) Road in Pasay City.

The lease contract expires on July 11, 2033.

Last week, PAL revived its proposal for a NAIA Terminal 2 annex, which will be built on a 16-hectare area that includes the now-defunct Philippine Village Hotel, the former Nayong Pilipino complex and the PAGCOR property.

‘DISADVANTAGEOUS’
PAGCOR also noted the previous board had accepted a P21-million downpayment from PAL, but later ordered the PAGCOR’s Treasury Department not to accept this.

“This led the present PAGCOR Board to look deeply into the lease contract. It found the lease price of P40 per square meter grossly disadvantageous to the government,” it added.

Further, PAGCOR’s review of the contract showed 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 government corporation added.

PAGCOR said it has requested the Office of the Solicitor General to issue a legal opinion on the matter.

In May 2009, PAGCOR acquired the 15-hectare property, located along MIA Road, after it entered a contract to sell with the Philippine Reclamation Authority.

PAL’s planned NAIA-2 annex is designed to handle 12-15 million passengers per year and would be able to serve 12 to 17 wide-bodied and single-aisle jets. It will also include multi-level parking for 1,000 vehicles, a new cargo terminal and ground service facilities.

PAL President Jaime J. Bautista has said that once the project is approved by the government, the groundbreaking is targeted for February 2018, completion of construction by December 2020 and start of operations in July 2021. The new facility will then be used for international flights and Terminal 2 will be used for domestic flights. — Patrizia Paola C. Marcelo

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