We refer to your request for clarification of the news article entitled “Megawide seeks P800m from FLI” posted on Manila Standard’s website on September 24, 2017 (“News Article”), quoted portions of which read:
“The rift between construction company Megawide Construction Corp. and client Filinvest Land Inc. has become more intense, with Megawide considering a legal action to demand payment for roughly P800 million in receivables from various projects it delivered to the property developer controlled by the Gotianun family.
FLI said it was also demanding payment from Megawide for its failure to complete several projects.
Megawide chief finance officer Oliver Tan said the company had been trying to collect around P800 million worth of receivables for more than a year now from five construction projects it completed for FLI.
Tan said the five projects, mostly high-rise buildings, had been completed, turned over to FLI and were now being occupied by FLI customers.
Tan said the issue stemmed from the claim of Filinvest Group that Megawide failed to deliver the projects based on the agreed timetable.
‘What they are saying is we did not complete the projects in time as per the contract. However, in our agreements, there are time extensions approved during the implementation of the projects. So we have new turnover schedule based on the approved extension and we are well within the approved new turnover schedule,’ Tan said.
‘We already endorsed this issue to our legal department for appropriate action because we have been following it up with FLI for quite sometime. We sent several demand and follow-up letters,’ he said.
FLI said in a statement sent to Manila Standard Megawide was the one liable for damages over ‘delays in construction and abandonment’ of five projects.
‘It is Megawide, not Filinvest, that is liable for damages because of its delays in construction and abandonment of five Filinvest building projects,’ FLI said, when asked to comment on the issue.
‘Filinvest had to take over these projects to ensure completion, which resulted in substantial liquidated damages and other actual damages for costs of rectification, take-over works and lost income. Filinvest has already demanded payments from Megawide to no avail,’ FLI said.
‘Further, Megawide, in its recent letter to Filinvest has expressed its intent to discuss an amicable settlement. It seems however, that they now prefer to discuss the issue outside of the proper legal forum. In any case, Megawide’s delays in construction and abandonment of the projects are well-documented and Filinvest is ready to prove these before the proper forum,’ FLI said.
Tan said it was the first time that Megawide had experienced this issue over the 20 years of its operations.
Tan said Megawide was willing to settle the issue amicably and that the filing of a legal case against FLI would be a last resort.
. . . .“
We respectfully clarify that Megawide Construction Corporation (“Megawide”) abandoned and/or incurred substantial delays in completing five (5) projects of Filinvest Land, Inc. (“FLI”) and Cyberzone Properties, Inc. (“CPI”), which is a subsidiary of FLI, making Megawide liable for liquidated damages in the total amount of P793,500,000.00.
Pursuant to the parties’ respective agreements for these projects, for failure to complete the work on the agreed completion date pursuant to the respective Notices of Award, Megawide shall be charged with liquidated damages and the project owner has the right to deduct such accrued liquidated damages from any sum due Megawide.
Megawide’s statement in the News Article that they are “within the approved new turnover schedule” is false. On the contrary, they exceeded the agreed completion dates even after factoring in the approved extensions of time. This fact is supported by documents and other evidence.
Please see continuation of clarification under Other Relevant Information. |
Continued...
On top of liability for delay liquidated damages, Megawide is also liable for other costs incurred by the project owners for rectification works, take-over works, importations, and other expenses in the amount of P72,240,309.67.
This amount may still increase as additional repairs and takeover works occasioned by Megawide’s fault and delay are being undertaken by the project owners. In addition to these, Megawide is also liable for substantial consequential damages caused by its delay in completing the projects.
Thus, FLI and CPI have repeatedly demanded payment from Megawide in writing, citing their right to set off these amounts with those that may be due Megawide, with the deficit to be additionally paid by Megawide. Meanwhile, Megawide has also made its own demands, ignoring FLI and CPI’s demands for payment. In any case, FLI and CPI are both ready to prove their right to payment before the proper forum. |