Rarely does this column pivot from its default theme — advocating for Muslim peaceful co-existence with non-Muslims and the concerns of Mindanaoans, especially the Bangsamoro. When it does, it means the issue is of utmost importance that might adversely affect the interest of Mindanaoans.
Readers, my attention was caught by the legal face-off between two giants in their respective industries — real estate conglomerate Megaworld and construction firm Datem with a Quadruple A rating under its belt.
Megaworld's promotion tagline reads: "The Philippines Most Awarded Township Developer." One of its projects is the Davao Park District, the first township project in Mindanao on 11 hectares, and this is what sparked the interest of this column lest the project "go south."
The effect of the controversy that Megaworld is embroiled in might spill over to the Davao project, leaving Mindanaoans holding the proverbial bag. Plaintiff Datem averred, as cited in the Writ of Preliminary Attachment, or WPA, issued by the court, that "defendant has also evaded its obligations to its other contractors and has disposed of units in the projects by sale despite not having paid for the work done." That's a cause for worry, if true.
Let's pedal back to how it started. The facts were succinctly recited in a court document reported in the media.
"Plaintiff (Datem) alleged that Megaworld Corporation (defendant) obligated itself to pay P873,324,248.89 under a Mutual Agreement on Turnover of Contracts (mutual agreement) executed on 28 September 2022. The mutual agreement is a settlement agreement between plaintiff and defendant covering accomplished works undertaken by plaintiff…"
To cut to the chase, the defendant failed to pay the plaintiff despite repeated demands. In the Civil Case for Collection of Sum of Money, the plaintiff applied for a WPA, which the Court granted after a summary hearing. The Court also observed that "the Complaint and Judicial Affidavit of Norman S. Bautista show circumstances of fraud… such equates to defendant's insincerity in paying the amount due to the plaintiff, knowing fully well that it was already in default." (Bautista is the head of the Contract Management Department of Datem.)
The importance of the issue is illustrated by the prominent reporting accorded by mainstream media. The corporate eminence of the parties, giants in their respective industries, is a magnet for public attention. And judging by the media statements of the protagonists, the tiff is heating up.
It looks like the controversy is getting nastier and might lead to a murkier morass of heightened controversy. Megaworld announced in the media that it will "file multibillion suit vs. Datem," its estranged contractor, for "gross negligence and abandonment of commitment that resulted in huge losses to the property company."
This countermove by Megaworld bothers this column no end. Why were these issues not raised in the mother complaint by way of affirmative and special defenses? Or were the issues raised but found wanting by the court, or had been outweighed by the documentary and testimonial evidence presented by the plaintiff? Did the defendant have its "day in court?"
Our knowledge of the case stems from what has been reported in print media. The defendant is represented by one of the top, if not the top, law firms in the country. We are sure that they have not overlooked this issue. A separate complaint would be expensive even if the expenses for court litigation will not make a dent in Megaworld's super income.
But this question persists in our minds as we follow the progress of the controversy. Am I missing something? Is there a provision in Corporation or Remedial Law that I missed? Corporate law practice is not my forte, nay, field of interest. We have no corporate cases in Morolandia, where I am based. What we have are election and criminal cases for murder, etc. This is why, as a caveat to my readers, my knowledge of corporation law (with its kilometric provisions that confuse more than teach law students) is really limited.
But basic is the certainty that the life of a construction company is very much dependent on its cash flow. Lack of it will greatly jeopardize its operation, not to mention the splotch on its name in the corporate world. This was a core issue discussed by the court and by an influencer. It is no surprise, therefore, that the Court issued the WPA, knowing the dire need for Datem.
In litigation, the issuance of a WPA is enormous. It establishes a prima facie presumption that the complaint is imbued with merit. However, the Court cautioned that its finding "should NOT in any manner affect the merits of the principal case."
Why don't the parties agree to refer the case to the Construction Industry Arbitration Commission?