Mañosa property firm seeks court-assisted rehab

Boutique residential property developer Mañosa Properties Inc. (MPI), founded by the late national artist for architecture Francisco Mañosa and his son Francisco Jr., is seeking court-assisted corporate rehabilitation to prevent creditors from seizing its assets amid current difficulty in servicing P1.07 billion in obligations.

Declaring “insolvency” at a time that the local property industry is generally riding on a boom, MPI cited lower-than-expected returns, breach of obligations by the general contractor of its Campanilla Lane project in New Manila, Quezon City, and setbacks at its Tago project in Tagaytay for its financial woes.

In a petition filed at the Regional Trial Court of Parañaque dated Aug. 9, a copy of which was obtained by the Inquirer, MPI asked the court to place it under receivership and to stretch out debt payments over a 10-year period, inclusive of one-year grace period, without any interest rate.

Unlike many property developers that sought debt relief in the past, most of MPI’s P1.07-billion obligations are not owed to creditor-banks but to individuals, trade suppliers, partner-landowners and buyers of unfinished villas, houses and condominium units.

Represented by law firm Santiago & Santiago, MPI said the advantage of its corporate rehabilitation proposal was that the assets of the company—estimated at P1.19 billion—would remain intact and retain their market value.

“On the other hand, if petitioner is forcibly liquidated within the next 120 days and its assets sold on a fire-sale basis, the value of said assets shall be drastically decreased by at least 50 percent, and the said amount shall not be enough to cover the outstanding liabilities of petitioner, such that only the secured creditors shall be fully paid, while the unsecured creditors and the buyers of unfinished projects will be left with nothing,” the petition said.

MPI owes P106 million to a few secured creditors, namely: Luzon Development Bank (P56.4 million); First Industrial Credit & Co. (P47.5 million), and, Metropolitan Bank & Trust Co. (P2.1 million), the documents showed.

The company also has existing working capital loans from Esquire Financing and Security Bank totaling P3.57 million. Overall, it has obligations to private individuals worth P196.6 million, alongside obligations to landowners.

From the family’s core business of architectural services, the Mañosa family ventured into real estate development via MPI in 2012. It completed upscale Lantana Lane and Ylang Lane projects, both in New Manila, in 2014 but expected profits from these first projects were lower than expected.

MPI assumed it could recover its unrealized profits from the subsequent pipeline of projects, which were projected to generate up to P8 billion in the next five years. In 2017, however, MPI alleged that its general contractor and construction manager for the Campanilla project breached obligations, in collusion with several employees, escalating project cost, resulting in the delay and eventual suspension of the project, which was only 60 percent completed. Buyers either discontinued payments or threatened to demand for refund.

Total payments made by all buyers amounted to P553.38 million. MPI also has an outstanding obligation of P53.9 million to the owner of the property.

MPI said it’s taking legal actions against the general contractor, project manager and several officers and employees of petitioner.

On the Tago project in Tagaytay, MPI said because of “low sales velocity,” it was unable to comply with its obligations as development manager under its agreement with the landowner and joint venture partner, UPCC Holdings.

In 2016, it was compelled to buy out UPCC for P126.56 million and assume its debt.  As MPI defaulted on obligations, its relationship with UPCC became “strained,” delaying the project extensively. Buyers demanded for refunds on payments amounting to P58.81 million. 

As of the filing of the petition, MPI was expecting UPCC to initiate legal proceedings for the collection of some P87.4 million remaining obligations or the rescission of their deal.