Citing its "one China" policy, the Philippine side unilaterally declared the 1996 "Agreement on Exchange of Traffic Rights Between TECO and MECO" a technical, private agreement, and announced that it would rescind the agreement in 60 days. If Taiwan did not accept the Philippine terms, PAL would terminate Taiwanese air rights in the Philippines on September 30.
菲國見談判陷於僵局，以只承認一個中國為理由，片面認定一九九六年簽訂的「中菲交換航權協定」屬民間技術協定，得在六十天前通知我方撤銷對協定的承認，我方若不接受，我國航空公司飛航菲國之營運權將在九月三十日終止。