Ethics must prevail

According to Datem, it sent eight demand letters to Megaworld, but they ‘fell on deaf ears’.

Trust and confidence are the basis for the conduct of any business.

Contracts are signed, and the parties to them are expected to follow their provisions.

Penalties apply when the signatories fail to follow the provisions. There are specific remedies indicated in case of disputes.

The legal clash between construction firm Datem and Megaworld over Datem’s outstanding claim of more than P873 million involves the basic need to ensure the integrity of a contract.

Datem explained that it completed the contracted works within the agreed-upon time frame, which was why it was confident about issuing a certificate of settlement to Megaworld.

Despite being required to pay, Datem said Megaworld willfully refused to settle.

Datem is a highly regarded construction firm that built the Sheraton, Okura and Hilton hotels in Pasay City, the Venice Grand Canal Mall in Taguig City, and the Savoy Hotel and Belmont Luxury Hotel in Boracay, among others.

On the other hand, the realty behemoth Megaworld launched big-ticket projects and sold commercial and residential condominium units. Consequently, it managed to dispose of “massive amounts of money by declaring staggering dividends instead of settling its obligations.”

According to Datem, it sent eight demand letters to Megaworld, but they “fell on deaf ears.”

The construction firm then took its case to court, which ruled in its favor, imposing a writ of preliminary attachment, or WPA, on Megaworld assets.

Five Megaworld properties were covered by the freeze order of Quezon City Regional Trial Court Branch 105 — the 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.

Under the court order, the Sheriff placed the Megaworld properties on hold as security for the satisfaction of whatever judgment might be secured in the court proceedings.

Megaworld’s banks were also notified of the WPA to preserve the company’s deposits. The financial institutions included the Land Bank of the Philippines, the Philippine National Bank and Security Bank.

Several other 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 also issued notices of garnishment on 16 November.

Acting on the WPA, the court issued a summons to the Philippine Stock Exchange or PSE.

The PSE is the governing body that oversees the capital market, which includes listed companies such as Megaworld.

The notice of garnishment cautioned against delivering, transferring, or disposing of Megaworld’s properties to any entity except the court sheriff.

Megaworld, following the series of stories that appeared in Daily Tribune on the ongoing court battle, sent representatives to talk to the editors, but they were not authorized to give statements in favor of the company.

In an order dated 14 November 2023, Presiding Judge Rochelle Yvette Galano affirmed that Megaworld must pay P873.32 million to Datem to comply with a mutual agreement signed in September 2022.

The court also indicated that Datem had provided sufficient evidence to support the allegation of “fraud” against Megaworld, which became the WPA’s basis.

“The alleged fraud committed is considered. To the Court, such equates to the defendant’s insincerity in paying the amount due to the plaintiff, knowing fully well that it was already in default. These circumstances of fraud committed undoubtedly support the issuance of a WPA in favor of Datem,” Galano said.

That the court appreciated the existence of fraud and insincerity, as alleged by Datem, was a point against Megaworld — whose malpractices against contractors, industry sources said, is an open secret.

Two other contractors, Monolith Construction Development Corp., and Monocrete Construction Philippines Inc., issued demand letters for P649 million in total arrears for projects they undertook for the property giant.

Bad faith in the close-knit real estate industry has heavy consequences. What goes around, comes around.

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Credit belongs to: tribune.net.ph