Peregrine Development International Inc. Contract with GGDC Remains Valid


Contractor Peregine Development International Inc. (Peregrine) on Tuesday said its contract with Global Gateway Development Corp. (GGDC) remains valid pending a final decision from the Court of Appeals.

Peregrine, in a statement, said the CA issuance of temporary restraining order (TRO) in favor of GGDC does not authorize for the takeover of the Global Gateway Logistics project at the Clark Freeport in Pampanga.

The Global Gateway Logistic City project is a 177 hectare mixed use logistics and business center.

Peregrine, the local contractor and the project owner GGDC are embroiled in a dispute. GGDC committed to fund and finance the 177 hectare green-field site adjacent to the Clark International Airport.

Peregrine stressed that the CA TRO only enjoins the Angeles RTC orders from being implemented.

"However, this does not mean that Peregrine no longer has any right under the Engineering, Procurement , Construction and Management (EPCM). Again, this will only be resolved in arbitration," Peregrine said.

Peregrine said it conceived the project in 2006 and paid $20,000 for the right to develop the site.

Through 2007, Peregrine conducted environmental and land use studies, developed a master plan and financial models and sought out third party investors.

In the course of this search Peregrine identified and selected the Kuwait group known as KGL. One of the affiliates of KGL, KGL Investment Company (KGLI) then agreed to carry the investment. The parties then memorialized their agreement in EPCM contract in 2008 which stipulated that Peregrine would retain exclusive rights to be the developer and prime contractor while KGLI would fund and finance the project for the duration of the 50 year lease.

KGLI initially funded the project through a private equity fund called The Port Fund (TPF) and a local entity established in the Philippines, GGDC.

A dispute arose over a notice of termination that GGDC sent to Peregrine in April.

The EPCM contract does mandate that all disputes were subject to arbitration. This is a key point since Philippine law does recognize the authority of arbitration tribunals, which has now been legally constituted in Singapore. Thereafter, in May, GGDC filed for Arbitration in Singapore.

Peregrine also clarified reports that GGDC had assumed “operational control” of the project following the issuance of the TRO.

"Upon a thorough reading of the TRO one learns that the Appeals’ Court TRO only temporarily set aside for 60 days the previous rulings of the RTC where Peregrine had initially filed its complaint. Peregrine, however, had filed, and is still pending an Urgent Motion for Reconsideration (MR)," the company said.

Peregrine said the CA ruling is only for 60 days and did not permanently nullify or set aside the orders of the RTC.

"The said orders simply may not be enforced at this time. Indeed, it is possible that the CA may ultimately rule on the MR to affirm or uphold the RTC orders," it said.

Peregrine stressed that the CA ruling also did not direct Peregrine to vacate the GGLC project site or remove it from possession.

The decision also did not authorize GGDC to takeover the project site.

It added that the CA decision did not give license to GGDC to bring in new contractors, security force and other workers to the side.

"GGLC has no final legal court order or arbitral award, hence it has no right to disregard or throw away Peregrine, who has a contractual right to be the sole developer and prime contractor," it said.

For six years, Peregrine has been the sole EPCM contractor for the GGLC project.

"GGDC has no legal right to introduce new contractors or usurp the rights of Peregrine as the exclusive developer and prime contractor.," it said.

Peregrine also denied alleged breaches in its contract with GGDC including cost overruns, dealings unbeneficial to GGDC, the use of GGDC-funded assets for non-GGDC projects, failure to comply with applicable laws which materially affected the project’s implementation, failure to faithfully observe the procurement and bidding procedures to ensure competitive bidding, and willfully committing other acts inimical and adverse to the best interest of GGDC.

"Peregrine vehemently denies the allegations made by GGDC. The truth is, for the past six years GGDC has evaluated Peregrine’s performance on a quarterly basis based in large part based on monthly independent audits that GGDC itself conducts," it said.

These quarterly performance evaluations of Peregrine by GGDC reflect ratings of 100% for the last 10 consecutive quarters through the first quarter of 2014.

The evaluations are based on Peregrine’s strict adherence to Schedule, Cost Control, Value-Added and Overall Performance. The cumulative average for all six years, through the first quarter of 2014, of Peregrine’s performance rating from GGDC is 96.8%.

"This fact cannot be denied by GGDC as it is supported by monthly budget, cost and independent audit reports and on site ocular visits. Further, GGDC has also asserted and certified, each and every year, in their annual GGLC project audited financial statements that they “are free from material misstatements whether due to fraud or error," it said.

Peregrine is also refuting allegations that the failed to abide by the termination of the agreement and has reportedly caused millions of dollars of unnecessary losses to GGDC.

Peregrine rejects GGDC’s allegations because in fact, it was GGDC who failed to abide by the terms of the contract when it inappropriately issued its termination notice.

In reality, it is Peregrine that is, and continues to be, seriously and irreparably harmed by the illegal and invalid termination of the EPCM contract by GGDC.

Further to GGDC’s improper and invalid termination, on June 3rd, GGDC willfully and maliciously removed over a million US Dollars from the Working Capital Account (WCA) that was used to fund and finance the project.

This money was previously budgeted, allocated and approved by GGDC, including over a million of this for ongoing construction work that had been performed on the Medical City hospital.

A review and audit of the WCA checking account will illustrate that on June 3rd millions dollars was in fact withdrawn by GGDC.

It was GGDC’s own unilateral act that caused 14 checks previously drawn on the account to immediately bounce for insufficient funds.

"In good faith, and with hope that issues could be resolved, Peregrine continued to fund work through June and July using its own funds," it said.

In August, Peregrine was left with no choice but to suspend all work and to lay-off 170 workers. It was a sad event to layoff so many loyal workers because the investor, GGDC, not only stopped funding the project, but took back over a million dollars on June 3rd that had been previously budgeted, authorized and approved for work.

"The layoffs were the direct result of GGDC withdrawing all the funds from the WCA and their continued refusal to comply with the RTC orders to reconstitute the status quo. This is what caused the suspension of all work, this is what caused the loss of over 1,000 jobs, this is what caused the bounced checks, this is what caused many vendors and suppliers to go unpaid and the accrual of millions of dollars of claims with corresponding economic problems for those who worked and supported GGLC for the past six years," it said.

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