The P840-million collection claim of the Social Security System against now Senator Sherwin Gatchalian and his family’s Waterfront and Wellex companies has been revived.
In an unprecedented reversal, the Court of Appeals last week overturned the 2015 decision of the Quezon City Regional Trial Court that nullified the SSS foreclosure on two Gatchalian properties in the upscale Green Meadows, Quezon City.
The foreclosure stemmed from a P375-million loan extended by the SSS in 1999 to finance the renovation of the Waterfront hotel chain.
As security for the loan, Waterfront pledged two Green Meadows lots with a total area of nearly 6,688 square meters along Temple Drive.
Wellex Group, Wellex Industries, with the young Gatchalian as president, and Waterfront also pledged their respective shares of stock as additional security.
In less than a year, Waterfront, unable to service the loan, capitulated to a debt-to-property swap with the SSS to partially settle the debt that had grown to nearly P420 million by that time.
Even with the foreclosure, Waterfront racked up over P452 million in delinquent loan balance by 2004, prompting SSS to sue the Gatchalian companies for sum of money with damages.
But the Quezon City RTC not only sided with Gatchalian, the court also voided the loan agreement, saying the SSS had “no power” to extend the Waterfront loan and that the bank officers who had extended the P375-million loan unable to show that they had been authorized to extend the facility.
Last week, appellate court justices Pablito Perez, Franchito Diamante, and Tita Marilyn Payoyo-Villordon not only overturned the Quezon City court but also gave the unidentified judge a refresher course on commercial contracts and obligations.
Saying that the foreclosure and extrajudicial sale of the Green Meadows properties legal but inadequate to cover the total and still growing indebtedness, the appellate court also pegged the Waterfront obligation as of April 2010 at around P841 million, plus unspecified interest, penalty charge and the legal 6% interest a year on the total monetary award.
Gatchalian and the related companies are expected to appeal the case to the Supreme Court.
FULL STORY HERE
SSS lives another day in its 20-year claim against Gatchalian