Besieged Megaworld faces more questions, legal woes over ‘fraud’ case

Megaworld Corp., the country's largest office landlord led by tycoon Andrew L. Tan, has denied evading any significant payment claims from any of its business partners, following its ongoing dispute with former contractor Datem, Inc. that has led the Quezon City Regional Trial Court Branch 105 to issue a Writ of Preliminary Attachment, or WPA, on five Megaworld properties. The court said Datem had provided sufficient evidence to support its allegations of fraud against Megaworld.

Several banks of Megaworld, 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 a notice of garnishment on 16 November.

The notice of garnishment cautions the receiving banks to prohibit delivering, transferring or disposing of Megaworld's properties to any entity except the court sheriff.

Acting on the WPA, Court Sheriff IV Ferdinand M. Peralta on Friday also served a summons to the Philippine Stock Exchange or PSE, the governing body in charge of the country's capital market, which includes listed companies such as Megaworld.

According to Datem, more Megaworld banks are set to be distributed with the notice — including Land Bank of the Philippines, Philippine National Bank and Security Bank.

'Ridiculous, absurd'

Megaworld, in a strongly worded statement sent to the Daily Tribune on Friday, described Datem's move to have five of its assets frozen by the court as "ridiculous and absurd."

"DATEM's move to have Megaworld's assets frozen is ridiculous and absurd considering the fact that the P873 million they are claiming is just a meager 0.2 percent of the total assets of Megaworld. Clearly, this is DATEM's malicious tactics to garner public sympathy and challenge the integrity and good corporate citizenship of Megaworld.," Megaworld's statement read.

"Megaworld never committed fraud in its dealings with DATEM. Perhaps, what is considered fraudulent is demanding payments for the projects they failed to deliver excellently and on time," it added.

The assets that were allegedly unpaid 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.

While Datem insists on recovering the unsettled amount from Megaworld, the latter said it was the construction firm that "repeatedly" failed to fulfill its project obligations.

Megaworld argued that it even incurred additional costs because of Datem's alleged delays in delivering its projects.

"After the 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 of claims and adjustments, which Megaworld finds unreasonable considering their bad, substandard, and extremely poor performance as a contractor," it added.

Additionally, Megaworld, in a stock exchange disclosure, clarified that the WPA issued does not prompt "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 other remedies to challenge the propriety of the said WPA," it said.

Datem stays firm

In a separate statement, Datem maintained that it has "actively adhered to court procedures to oblige Megaworld to honor this mutual agreement, yet the developer only tried to gain possession of the projects without settling their debts."

The construction firm said elevating its legal dispute with Megaworld to the local stock exchange regulator was a necessary move to finally settle millions of pesos in unpaid projects.

Based on the latest financial data disclosed to the PSE, Megaworld's net income in the first nine months of the year from January to September surged by 39 percent to P13.5 billion from P9.7 billion last year.

On the other hand, the company's net income attributable to the parent company's shareholders jumped by 43 percent to P12 billion from last year's P8.4 billion.

Meanwhile, consolidated revenues during the period also increased by 14 percent to P48.6 billion, buoyed by robust real estate bookings, leasing and hotel operations.

Since the start of the year, Megaworld has launched P69.3 billion worth of projects, with three big projects being rolled out in the third quarter alone.

To date, Megaworld has 30 master‐planned integrated urban townships, integrated lifestyle communities and lifestyle estates across the country.

The Daily Tribune has contacted the PSE to clarify its course of action on the matter, but it has not responded as of writing time.