Megaworld’s legal woes spread to PSE
More Megaworld banks are set to be provided with the attachment notice.
Megaworld Corp.’s Uptown Parksuites Towers 1 and 2
Daily TribuneMore Megaworld banks are set to be provided with the attachment notice.
Megaworld Corp.’s Uptown Parksuites Towers 1 and 2
Property contractor Datem Inc. has brought before the stock exchange and the Securities and Exchange Commission its legal tussle with property giant Megaworld — a move that the construction firm said was necessary to finally settle P873 million in unpaid projects.
Datem told reporters that it has "actively adhered to court procedures to oblige Megaworld to honor a mutual agreement, yet the developer only tried to gain possession of the projects without settling its debts."
A lawyer for Datem said the purpose of the action is to inform the regulator and the Philippine Stock Exchange of the claim suit as it involved the public interest since Megaworld is a listed corporation.
Acting on the writ of preliminary attachment or WPA issued by the Quezon City Regional Trial Court, Court Sheriff IV Ferdinand M. Peralta on Friday served the WPA to the Philippine Stock Exchange or PSE.
The PSE is the governing body in charge of the country's capital market, which includes listed companies such as Megaworld.
DAILY TRIBUNE has contacted the PSE to ask about its course of action, but it has yet to respond as of this writing.
More Megaworld banks to be served attachment notice
According to Datem, more Megaworld banks are set to be provided with the attachment notice, including the Land Bank of the Philippines, the Philippine National Bank, and the Security Bank.
Several other banks, including Asia United Bank, Union Bank of the Philippines, Bank of the Philippine Islands, Banco De Oro, China Bank, PS Bank, East West Bank, Maybank, Metropolitan Bank and Trust Co., and Rizal Commercial Banking Corp., were issued notices of garnishment on 16 November.
The notice of garnishment cautions the receiving banks to prohibit the delivery, transfer, or disposal of Megaworld's properties to any entity except the court sheriff.
Since the start of the year, Megaworld has launched P69.3 billion worth of projects, with three big projects rolled out in the third quarter alone.
'Absurd, ridiculous' court order
Megaworld Corp., the country's largest office landlord led by tycoon Andrew Tan, has denied evading any significant payment claims by any of its business partners despite its ongoing dispute with former contractor Datem Inc.
Megaworld, in a strongly worded statement sent to the DAILY TRIBUNE on Friday, described the recent Quezon City court order freezing five of its assets as "ridiculous and absurd."
"Datem's move to have Megaworld's assets frozen is ridiculous and absurd because the P873 million they are claiming is just a meager 0.2 percent of the total assets of Megaworld. Clearly, (it) is Datem's malicious tactic to garner public sympathy and challenge the integrity and good corporate citizenship of Megaworld," the company's statement read.
"Megaworld never committed fraud in its dealings with Datem. Perhaps, what is considered fraudulent is demanding payment for the projects they failed to deliver excellently and on time," it said.
The assets that were allegedly the subject of Megaworld's delinquent payments were Uptown Parksuites Towers 1 and 2; Eastwood Global Plaza corporate tower and luxury residences; One Le Grand Tower; 18 Avenue De Triomphe; and Clark Green Frontier.
Incurred expenses
While Datem was firm about recovering the unsettled amount from Megaworld, the latter maintained that it was the construction firm that failed to "repeatedly" fulfill its project obligations.
Megaworld argued that it even incurred additional costs because of Datem's alleged delays in delivering its projects.
"After the (pandemic) lockdown was lifted, Datem could not catch up with the completion of works for the projects contracted to them. Despite many meetings with their president, Mr. Levy Espiritu, Datem continued to fail in fulfilling their obligations and worked slower compared to other similar-sized or even smaller contractors. They also consistently missed the completion dates they committed to Megaworld," Megaworld said.
"Despite their chronic failure to deliver the projects, Datem demanded a huge amount in claims and adjustments, which Megaworld finds unreasonable considering their bad, substandard, and extremely poor performance as a contractor," it added.
The Quezon City RTC, in its writ of preliminary attachment, or WPA, accused Megaworld of insincerity in dealing with Datem.
"Verily, the alleged 'fraud' committed by the defendant is considered. To the court, such equates to the defendant's insincerity in paying the amount due the plaintiff, knowing full well that it was already in default. These circumstances of 'fraud' committed undoubtedly support the issuance of a Writ of Preliminary Attachment in favor of the plaintiff."
On the allegation of "fraud," Presiding Judge Rochelle Yvette Galano said in the ruling that "circumstances are sufficient evidence to support that defendant committed 'fraud' in contracting the debt and in the performance of its obligation."
Business as usual
Additionally, Megaworld, in a stock exchange disclosure, clarified that the WPA issued does not prompt a "cessation of any of Megaworld's business operations, including with respect to the projects."
"Megaworld is prepared to immediately avail of remedies to lift the WPA and any such notices of garnishment, including by immediately posting a counter bond, without prejudice to availing of other remedies to challenge the propriety of the WPA," it said.
Bigger legal woes coming
Several contractors are expected to surface and go after Megaworld Corp. to stop the company from its malpractice of "reneging" from its financial obligations.
An industry source said that big suppliers of the company will file similar claims against the real estate firm following Daily Tribune's story about the Quezon City Regional Trial Court's issuance of a writ of preliminary attachment to cover P873 million in Megaworld obligations.
"They're not paying their suppliers or contractors, it is already their standard operating procedure, or SOP," according to the Tribune source.
The source said Megaworld "has a lot of unpaid contractors" which are afraid of collecting from the influential company.
"Contractors have to run after Megaworld to halt the practice" of not paying their contractors when a project is about to be completed.
"Their public image differs from what they actually practice with their contractors and subcontractors," according to the source.
"Hopefully there would be a bandwagon effect among those with collectibles from Megaworld," he explained.
"The suppliers are also getting together to consolidate their legal action against Megaworld," the source added.
"It will have an industry-wide effect," the source said who requested anonymity.