Second of three parts
SEN. Sherwin Gatchalian tries hard to project the image of an independent, crusading lawmaker, but the political reality is that President Ferdinand Marcos Jr. effectively has him under his thumb. The leverage Malacañang holds over the Gatchalian family is not political but existential, for Sherwin’s conglomerate.
The 52-year-old Sherwin is the eldest of the 80-year-old patriarch William Gatchalian’s three sons, his heir apparent in the conglomerate at the same time his and main operative in the political sphere.
The family’s corporate fate depends on the grace of Marcos on two massive fronts. First, the administration holds a financial guillotine over the family’s existing assets: It possesses the sole power to execute a final 2023 Supreme Court order to seize a massive chunk of their corporate empire over a controversial, unpaid loan. Second, their most ambitious corporate venture, the 318-hectare Manila Waterfront City, remains paralyzed by the president’s blanket suspension of Manila Bay reclamations.
That financial guillotine is the ghost of the Estrada administration, which haunts the corporate ledgers of patriarch William. In February 2000, his Wellex Group secured a massive P500 million loan from a trust account at Equitable-PCI Bank. That account was secretly owned by then-president Joseph Estrada, William’s close friend, who famously signed the bank documents under the alias “Jose Velarde.” To secure this loan — which is equivalent to roughly P1.27 billion in today’s money based on inflation alone — Wellex pledged 450 million shares of Waterfront Philippines and 300 million shares of Wellex Industries as collateral.
When Estrada was convicted of plunder in 2007, the Sandiganbayan ordered the forfeiture of his ill-gotten wealth, which included the Jose Velarde Equitable-PCIBank account and the right to collect its receivables. Instead of turning over the collateral for the defaulted loan, the Gatchalian clan undertook a decades-long legal evasion campaign. Initially, Wellex brazenly claimed they shouldn’t lose their shares because they had already paid the P500 million directly to the “principal” (Estrada), but they failed to produce valid proof to the courts that this legally settled their debt to the bank. Shifting tactics, Wellex later argued that the debt had simply prescribed, claiming the government had waited too long after the loan’s 2001 maturity to foreclose. Unbelievably, a Makati Regional Trial Court sided with Wellex in 2019, ordering the state to release the Waterfront shares.
The legalistic defenses, however, hit a brick wall in late 2023, when the Supreme Court issued a definitive ruling dismantling Wellex’s defense. The high tribunal explicitly declared that Wellex’s failure to pay the obligation was “undisputed.” More importantly, the court ruled that because the funds originated from Estrada’s ill-gotten wealth, the State’s right to recover the money was protected by the Constitution and never prescribes. The justices gave Wellex an ultimatum: settle the debt or surrender the Waterfront and Wellex collateral to the Republic.
Unpaid
As of today, this obligation remains unpaid with the Gatchalians ignoring it, and becoming Marcos’ most ardent supporter. The meter is running though. A 12 percent annual interest rate prior to July 2013 and the 6 percent rate thereafter, that original P500 million principal has ballooned. Today, the total amount the Gatchalians would have to cough up, including unpaid interest, to clear the debt is estimated at a staggering P1.64 billion.
There are no corporate disclosures indicating that the Gatchalians have voluntarily handed over these funds or the shares. This is exactly where the Marcos administration’s leverage lies. The burden of collection now rests squarely with the government; state lawyers and the Sandiganbayan must formally execute the Supreme Court’s order by either demanding this P1.64-billion cash payout or foreclosing on the collateral — effectively transferring a roughly 20-percent stake in Waterfront to the State. By simply deciding when, or if, to aggressively execute this forfeiture and when to lift the reclamation ban, Malacañang keeps the Gatchalians exactly where it wants them.
Marcos’ second Damocles sword over Sherwin’s clan, enough for him to do his bidding in the Senate, involves his clan’s newest and biggest project, the Manila Waterfront City, a 318-hectare reclamation and, located just off the Quirino Grandstand and Manila South Harbor, is considered the most ideal property among the 22 such reclamations in Manila Bay. The project is being carried out by Waterfront Manila Premier Development Inc., the Gatchalian family’s private vehicle, in joint venture with the city of Manila. Its cost is about P34.3 billion, making it, on public record, the biggest single project yet of the Gatchalian empire. It is the kind of undertaking that can recast a family’s wealth, prestige and political reach for years.
This business enterprise’s fate depends much on government actions. Reclamation in Manila Bay requires a chain of government consents, permits, technical reviews, and continuing regulatory tolerance. The city of Manila may be the local government partner, and the Philippine Reclamation Authority may be the principal regulator, but the Office of the President has the uncontested authority over its fate.
That is not conjecture. It is precisely why the Makati Regional Trial Court (RTC) Branch 148, after first voiding the project, later canceled its own ruling and called the earlier judgment “premature”: the Office of the President had not been impleaded even though presidential approval was an indispensable component of the arrangement.
Asserco
The complaint that nearly derailed the project came from Asean Seas Resources and Construction Development Corp., or Asserco. The firm claimed that the Gatchalian-led project overlapped with its own earlier 140-hectare reclamation award, known as the MCCRP-North Sector Reclamation Project, which had allegedly been granted by the old Public Estates Authority in 1991. On top of that, Asserco argued that the 2017 joint venture between the city of Manila and Waterfront Manila Premier Development Inc. was legally defective because it did not go through competitive public bidding and did not secure the required approval from the board of the National Economic and Development Authority. In April 2022, Makati RTC Branch 148 Judge Benjamin Pozon accepted Asserco’s arguments and declared the project’s joint venture agreement null and void.
That ruling could have killed the project. Instead, in August 2022, presiding judge Rommel Baybay canceled the April decision of his predecessor judge Pozon. He did not do so because the Gatchalian project had been vindicated on the merits. He did so because Asserco had failed to include the Office of the President as a respondent. In effect, the Gatchalian project was saved by a procedural defect in the complaint filed against it — as in the case of the financially distressed bank that the Gatchalians had sold to a government entity. The initial court win of the complainant disappeared, and the case reverted to a pending posture with the Office of the President ordered impleaded.
That procedural reversal is revealing in another way. It said the project could not even be properly litigated without Malacañang at the table. In plain language, the legal architecture of the project itself acknowledges that the presidency is embedded in the venture. Anyone who says the Gatchalian family’s biggest project is insulated from Marcos is therefore denying what the court record itself recognized.
After the April 2022 voiding order was set aside, PRA treated the court’s cancellation of its earlier ruling as enough basis to let Waterfront Manila move ahead. It allowed the company to commence reclamation upon payment of the initial regulatory fee and even extended the deadline for the second tranche of that fee. Public reports do not disclose how much the family has already spent in cash, but they do show that dredging and sand-piling had begun near the Bayview and Manila Ocean Park stretch.
Reminder
Then came the reminder of who ultimately decides whether the project continues or dies. President Marcos Jr. ordered a suspension of all 22 Manila Bay reclamation projects pending review, and the Department of Environment and Natural Resources began an environmental impact assessment of projects around the bay. The National Historical Commission later refused to issue a heritage clearance for the Gatchalian project because of its implications for the visual corridor around Rizal Park and Intramuros. One stroke from Malacañang was enough to freeze what local approvals, PRA permits, and private mobilization had already set in motion.
This leverage is so potent because the Gatchalian conglomerate is not in the untouchable trillion-peso league of the Ayalas or the Sys, nor does it possess the sprawling nationwide dominance of the Villars. Instead, the Wellex Group is a mid-tier conglomerate. Based on recent financial disclosures, their flagship public vehicles — Waterfront Philippines and Wellex Industries — report a combined gross asset value in the neighborhood of P30 billion. Losing 20 percent of Waterfront to the government would not just be a financial blow; it would be a structural shock to the crown jewel of their hotel and casino portfolio.
As long as the Gatchalians’ 318-hectare Manila Waterfront City remains hostage to suspensions, reviews, clearances by the president, as long as it hasn’t paid the P1.64 billion to government to settle its Jose Velarde loan, the Palace basically leads the family — and the patriarch William’s heir apparent — by the nose.
Now we understand better why Marcos last week acknowledged Gatchalian as the new Senate leader, with his mouthpiece Claire Castro even recognizing Sherwin’s faction as the legitimate Senate majority just hours after he was “sworn in” as “acting president.”
The narrative being disseminated by Malacañang and its media minions is that the Senate leadership is being contested by two factions, with some commentators lamenting the deterioration of the quality of our senators that they are fighting among themselves.
The simple truth stares at us: This is all about Marcos plotting to put as Senate head somebody he leads by the nose, which 12 courageous senators are resisting.
Facebook: Rigoberto Tiglao
X: @bobitiglao
Website: www.rigobertotiglao.com
