DOF demands unpaid charges from PAL

Finance Secretary Carlos G. Dominguez III has directed the Department of Transportation to collect at least half a billion pesos in remaining charges that flag-carrier Philippines Airlines still owed to the government.

Philippine Airlines

Dominguez immediately asked the DOTr to “intensify collection efforts” from PAL’s accounts receivable after PAL was granted consent from a US court to begin drawing bankruptcy loan..

Based on the DOTr report submitted to Dominguez last Friday. Sept. 10, PAL and budget arm Air Philippines Corp., known as PAL Express, owed the Civil Aviation Authority of the Philippines (CAAP) about P570 million.

Breaking down, PAL and PAL Express’ outstanding obligations as of August 31 stood at P373 million and P197 million, respectively.

Transportation Secretary Arthur P. Tugade told Dominguez that these unpaid obligations represent charges for air navigation, rentals, utilities and check in counters. Moreover, PAL has unremitted terminal fee collections amounting to P114.2 million.

Based on the CAAP documents provided by Dominguez to reporters, the charges have been incurred since 1996.

“All obligations prior to July 2021 shall be subject to reconciliation and immediate payment, the terms of which to be agreed between CAAP and PAL (subject to final Board approval),” Tugade told Dominguez.

The DOTr, however, assured the finance chief that “moving forward, PAL and PAL Express committed to make current all their obligations to CAAP, incurred from July 2021 onwards.”

Last Friday, a New York judge granted PAL’s request to access the first $20 million of its debtor-in-possession (DIP) financing worth $505 million, marking the initial phase of the airline’s bankruptcy proceedings in the US.

According to Dominguez, the ongoing rehabilitation proceedings in the US will not affect the government’s plan to seek payment from PAL’s unpaid charges.

He quoted that the waiving of taxes and fees due to government would only take effect “upon issuance of the commencement order by the court, and until the approval of the rehabilitation plan or dismissal of the petition, whichever is earlier.”

But Dominguez clarified that “this provision does not apply to landing fees as these are not collected by the national government but by the CAAP or MIAA .”

“Also, it can be considered that landing fees are ordinary and regular expenses hence may be collectible even during the implementation of the rehabilitation plan,” he added.