WATCH | PAL to propose compromise deal as DOTr breaks down airline’s debt

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(Reuters file)

MANILA, Philippines — Philippine Airlines said Thursday, September 28, it is ready to submit a proposed compromise agreement on P6.63 billion in unpaid navigational charges “to settle this issue once and for all” but the Department of Transportation said the flag carrier owes government P7.3 billion.

Two days earlier, President Rodrigo Duterte had threatened to shut down the Ninoy Aquino International Airport Terminal 2, which PAL uses exclusively, unless tycoon Lucio Tan, the airline’s CEO, settles its arrears within 10 days.

“‘I will give you 10 days. Bayaran mo, ‘pag hindi mo bayaran, eh ‘di sarhan ko (Pay it, if you don’t pay, I’ll shut it down)’,” Duterte said he told Tan. “Wala nang (No more) airport. So what?”

The DOTr, in a statement Thursday, said PAL owed a total of P7,287,258,534.63 in navigational fees and other charges as of September 26, broken down as follows:

Civil Aviation Authority of the Philippines:

  • Current – PHP 370,583,588.96 for Jan-July 2017
  • Arrears – PHP 6,594,562,560.67 for Dec 2015 and prior
  • Total Collectible – PHP 6,965,146,149.63 as of 30 July 2017

Manila International Airport Authority:

  • Current – PHP 322,112,385.00 as of 26 September 2017



The DOTr said letters were sent to PAL, on instructions of Secretary Arturo Tugade, from August last year “demanding full payment of all unpaid charges.”

But PAL acknowledged only receiving letters from CAAP for the navigational charges.

The agency said discussions with PAL led to the payment of P370 million to CAAP but requests by the airline to “discuss the possibility of paying its arrears” over seven years were denied.

“Thus, final demand for full payment of all unpaid charges has been sent to PAL, preparatory to the filing of appropriate legal action in order to protect the interest of government,” the DOTr said.

In its own statement, the airline said the matter of its arrears “involves complex legal issues which PAL has been trying to thresh out with the Authority for years.”

“For the past months, both CAAP and PAL have been working together to validate these claims in their mutual and collaborative effort to settle this obligation,” it said. “PAL has fully cooperated and will continue to cooperate with any and all agencies to resolve this concern.”

The airline also said “the same legal issues were the subject of a court case between PAL and the MIAA years back where the court ruled in favor of PAL” but that “despite the favorable ruling, PAL then opted to settle amicably with the MIAA as a manifestation of its full support of the government.”

It also claimed it had “formally submitted its offer to CAAP which is more than the amount covered by the CAAP supporting invoices received by PAL. To date however, PAL has not received any official response from CAAP on its offer.”

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