CONTROVERSIAL contractor Datem Inc. is running low on cash and may go bankrupt if it loses in the multi-billion lawsuit to be filed by property giant Megaworld Corp. for gross negligence and abandonment of commitment.

Based on a 2022 audit report, a copy of which was obtained by The Manila Times, Datem has cash on hand and in banks of P1,770,844,017 and cash equivalents of P302,966,176 or a total of P2,073,810,193.

Based on the report, cash in banks earns annual interest at the prevailing deposit rates. Cash equivalents are short-term deposits, highly liquid investments that are made for varying periods up to three months depending on the immediate cash requirements of the Group and earn interest at the respective short-term deposit rates.

For 2022, records show that interest income earned by Datem in its cash in bank and cash equivalents amounted to P5.64 million.

"Their financial statements show that their cash is running low. If they lose the case against them and the multi-billion lawsuit is greater than P2 billion, which they have now, they will go bankrupt," a financial expert said.

Megaworld said that it had given all the chances to Datem to fulfill its obligations and complete the projects contracted to them but repeatedly failed. It added that it was forced to have other contractors take over the projects due to Datem's gross negligence and blatant disregard of project completion timelines.

Among the projects that Datem failed to finish on time is located in Pasig City. It was only able to complete five levels of the 28-story project over a period of more than three years, from October 2019 to August 2022.

Megaworld was prompted to re-assign the project to EEI Corp. in October 2022. EEI finished the project in one year.

"The additional cost [in getting new contractors] for Datem's delays was absorbed by Megaworld," Kevin Tan, chief executive officer of Alliance Global Group, the parent company of Megaworld, said.

"We are filing cases against them, and our internal and external legal teams are now on top of it. They have to be accountable for their gross negligence to project timelines as well as their poor on-ground support and below standard workmanship, which we have had to augment with more reputable, professional and better quality contractors," Tan said.

"We are filing cases against them, and our internal and external legal teams are now on top of it. They have to be accountable for their gross negligence to project timelines as well as their poor on-ground support and below standard workmanship, which we have had to augment with more reputable, professional and better quality contractors," he added.

The property giant has appointed the country's largest law firm, Accra Law, among others, to lead the cases against Datem.