In defense of Megaworld

Recently, a construction company sought a freeze order on five Megaworld projects, demanding some P873 million in payment. The court granted Datem Inc.'s petition.

It is unthinkable for a giant and prestigious firm like Megaworld to renege on a contractual obligation, especially when the amount involved represents less than 0.2 percent of the firm's assets and, more importantly, when the firm has several ongoing projects with other contractors that are proceeding smoothly.

 It may be worth recalling the global financial crisis in 2008 and 2009, when the worst credit squeeze since the Depression was felt the world over. In the Philippines, a number of project cancellations, withdrawals, recalls, and postponements were seen as jitters permeated the economic environment.

It was here that Megaworld's star glowed when it not only pursued its projects but also answered the call of the government to pump-prime the economy, plowing in more investments to help mitigate the financial crunch and sustain employment. This effort contributed to the confidence building much needed at the time. Thus, Megaworld earned the reputation of a company that could be trusted and relied on.

 Further back, when the government was still negotiating for the BPO industry to come to the Philippines, it was Megaworld that invested in BPO centers way before any agreement was won. Hence, the Philippines immediately had the readiness to invite BPO centers as Megaworld had the vision and resolve to wager on a then-nonexistent industry.

Now this.

Datem entered into a contract that it could not perform and, worse, meet timelines. For MW, timelines are critical as there are other contractual commitments for delivery to as many clients. Usually, adjustments are negotiated between and mutually agreed upon by the parties concerned for unseen or fortuitous instances. But sooner or later, these timelines have to be called.

Apparently, Datem was unable to perform. MW claims that in the construction of the 38-story building at Arcovia, Datem took three years to do five floors and could not meet the timeline, which prompted MW to contract EEI Corp. which completed the project in a year.

While the completion meant a heftier cost, Megaworld had to bite the bitter bullet to meet its commitment to its clients. MW likewise maintains that Datem had similarly failed with the other projects.

I talked to two contractors who did projects for MW and I was informed that MW continues to pay them, and when questions arise they merely present complete documentation and they are paid accordingly, adjustments notwithstanding. Further, these contractors told me that Datem had lost a sizable number of employees which made it difficult for it to fulfill its obligations.

Indeed, the allegation of fraud is preposterous and only meant to besmirch the reputation of Megaworld and box it into paying unsubstantiated claims. Datem could have opted to go to arbitration whereby both parties could thresh out claims and counterclaims outside of the courtroom, rendering a more neutral space for negotiations.

At the end of a long working day, if things can be prevented from turning into a legal battle, both parties may emerge as winners.