LEGACY carrier Philippine Airlines (PAL) and state-run Philippine Amusement and Gaming Corp. (Pagcor) are currently at loggerheads over the lease of a portion of Nayong Pilipino in Pasay City, which PAL wants to develop.
PAL said it has the right to develop a 10-hectare lot inside the former Nayong Pilipino complex, located along Manila International Airport (MIA) Road in Pasay, across the Civil Aviation Authority of the Philippines. The flag carrier plans to build a P20-billion ($400-million) annex to the Ninoy Aquino International Airport (Naia) which is adjacent to Terminal 2.
PAL’s proposed Naia 2 annex is designed to handle 12 million to 15 million passengers per year and would be able to serve 12 to 17 wide-bodied and single-aisle jets. It will also include multilevel 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.
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 regulator said.
Pagcor said PAL was only paying a monthly rental fee of P40 per square meter for the 10-hectare lot, and the carrier’s contract is due to expire on July 11, 2033.
The property was sold by the Philippine Reclamation Authority (PRA) to Pagcor on May
12, 2009.
Pagcor said the current management’s review of the lease contract with PAL showed that the “lessor is 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 of enjoyment thereof, notwithstanding the contract of lease executed between the two parties,” it said.
“The previous board caused the acceptance of P21 million as down payment from PAL but later issued an order to Pagcor’s Treasury Department not to accept the lease payment from PAL since it deemed the lease price of P40 per square meter was grossly disadvantageous to the government,” Pagcor added.
The issue arose when PAL, on September 7, revived its proposal for the 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.
Pagcor said it has requested the Office of the Solicitor General to issue a legal opinion on the matter. But PAL President and CEO Jaime J. Bautista said: “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 the claim by Pagcor that it was “not yet the absolute and registered owner of the property”, was inconsistent with covenants under the contract signed in 2014.
Bautista added the company submitted an unsolicited proposal to build a P20-billion passenger terminal at Nayong Pilipino complex. On July 30, 2014, it entered into a contract of lease in good faith with Pagcor covering the said property at P40 per square meter, effective until July 11, 2033. PAL said it paid an advance rental and security deposit equivalent to five months’ rental, or P24 million.
Nayong Pilipino’s history
MIAA General Manager Ed Monreal provided the BusinessMirror copies of its transaction with the Nayong Pilipino Foundation (NPF) in an attempt by the premier airport to get back portions of the property for its proposed new cargo terminal.
On May 20, 2011, then-Miaa General Manager Jose Angel Honrado wrote Malacañang, pleading to get back Nayong Pilipino. He said he wanted to establish a New International Cargo Terminal in the area.
Honrado cited the growing need for more cargo space supported by a feasibility study by the Ministry of Economy Trade and Industry of Japan, and endorsed by the Department of Trade and Industry.
Honrado said the nine existing cargo terminals, which could handle half a million tons annually, would be insufficient in 2035, when cargo volume would have grown to a high of 1.3 million tons annually.
The Miaa also dismissed the complaint of the NPF that the premier airport should be at least 50 kilometers away from the central business districts of Makati and Fort Bonifacio.
“While we acknowledge that major airports today should be located at the far outskirts of cities, the travel time to get there should also be considered. Transport infrastructure facilities, such as improved roads and/or fast railway system, should be provided to decrease the travel time to acceptable standard,” it said.
The Miaa also disparaged the “urban forest” that Nayong Pilipino has become through the years. The agency said the forest “is not favorable, especially if these forests are just beside the runway and becomes the breeding grounds for birds that are basically hazardous to aircraft in flight.”
Bird strikes are common among commercial and general airplanes taking off on runway 13-31. Bodies of dead birds could be found on the runway and taxiways, victims of bird strikes from airplanes. The roosting fowls on Nayong Pilipino would sometimes suddenly fly, alarmed by the noise of propeller engines and then running smack into the fuselage, wings, or propellers of airplanes.
On September 29, 2011, then-President Benigno S. Aquino III signed Executive Order (EO) 58 and ordered the NPF “to transfer its remaining 22.3 hectares in Pasay City to the Manila International Airport Authority”.
The executive director of NPF, Apolonio B. Anota Jr., did not take the EO 58 sitting down. On October 17, 2011, he wrote Malacañang to say that the transfer of Nayong Pilipino to the Miaa would impact on the government’s environmental conservation policy.
“The transfer of 22.3 hectares of Nayong Pilipino land to the Miaa will mean cutting down of the 2,800 grown trees aged 40 years old, disregarding the declared policy of the government on forest conservation,” Anota’s letter read.
Anota said Nayong Pilipino in Pasay is a marshland and has water underneath the soil surface. He added that there are five lagoons with an area of 4.8 hectares with underground springs carved from this marshland and should be left untouched and maintained as eco-tourism prospect.
“Marsh by nature does not provide firm foundation and cannot support heavy buildings like an international cargo terminal,” he said, adding that massive pilings for foundation “will not guarantee that buildings on marshland will not sink.”
“The Folk Arts Theater, Manila International Film Festival and at least a high-rise building under construction in Manila Bay reclamation are sinking,” Anota said.
According to Anota, the NPF plans to set up an orchid propagation program “that will ‘orchidize’ Intramuros, Luneta and the Cultural Center of the Philippines”.
He added that building over the marshes would prevent the water runoff from the runways 13-31 during rainy seasons to go nowhere. This would result in flooding.
“The flooding will also affect thousands of residents in Maricaban, Malibay, Pildira-Villamor areas, Multinational Village, Moonwalk Village, Doña Soledad Avenue and Airport subdivision in Parañaque City,” Anota said.
“Nayong Pilipino still exists as a corporation and has not been dissolved,” he added.
The NPF’s lengthy appeal to President Aquino was signed by Anota and NPF Chairman Grace P. Quevedo Pangasagan.
On December 20, 2011, in reply to the NPF argument, the government’s corporate counsel (GCC), Raoul C. Creencia, wrote to Eduardo V. de Mesa, then chief presidential legal counsel, to say that EO 58 “appears to be confiscatory” and that NPF “stands to be deprived of its property without due process of law”.
Creencia said the NPF and the GCC are willing to meet de Mesa to resolve and expedite the concerns raised by the NPF. The BusinessMirror was unable to find out what transpired during their meeting or whether it was held at all.
Former First Lady Imelda Marcos is cited by Miaa documents as having initiated the construction of the Nayong Pilipino.
On May 21, 1960, the NPF was formed, and initially registered with the Securities and
Exchange Commission (SEC) as a nonstock, nonprofit institution.
On November 6, 1972, NPF was formalized as a government-owned and -controlled corporation by virtue of Presidential Decree (PD) 37. It was also at that time that Mrs. Marcos conceived the “Philippine Village” with the help of a committee of Filipino planners and architects “to promote Philippine art and culture”. Subsequently, on December 16, 1991, under EO 497, the NPF was made an attached agency of the Department of Tourism (DOT) for policy coordination.
The Pasay Park operations of the Nayong Pilipino ceased in 2002, while Nayong Pilipino sa Clark Expo, established at the Clark Expo Site in 2006, made NPF its manager and operator.
In 2007 President Gloria Macapagal-Arroyo signed EO 615 that mandated the transfer of the Pasay Park to the 15-hectare property of the Philippine Reclamation Authority area in Parañaque, and the transfer of the 15 hectares of the NPF property to the Philippine Reclamation Authority.
EO 58 followed in 2011, instructing the NPF to transfer its remaining 22.3 hectares in Pasay City to the Miaa.
The site of the original Nayong Pilipino was beside the domestic airport runway 13-31, which was then under the Civil Aeronautics Administration (CAA), the forerunner of the Civil Aviation Authority of the Philippines.
The CAA at that time administers a total land area of 110 hectares, encompassing the Manila International Airport and all the runways and taxiways, parking aprons and movement areas. Included are portions of what should have been the site of a second international runway now occupied by a subdivision.
On November 6, 1972, President Ferdinand E. Marcos issued PD 37, ordering the CAA to surrender 46 hectares, through a deed of conveyance, to the NPF.
In 1972 the MIA is but a department of the CAA, until it became an independent government agency, the Manila International Airport Authority, in 1982.
Marcos’s decree stipulates that the title to the land ceded to the NPF “shall not be transferred by the grantee [NPF] to another party without prior authorization of the President of the Philippines, or mortgage it.”
In case the NPF ceases to exist or dissolved, or ceases to need the land for any reason, the 46 hectares shall revert to the national government.
In May 2009 Pagcor acquired 15 hectares of the 46 property, after it entered a contract to sell with the PRA. At present, parks in operation under the foundation are Nayong Pilipino Clark Expo and Nayong Pilipino Rizal.