[ANALYSIS] SEC and PSE under suspicion of lapses over Villar Land revaluations

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READ Part 1 | [Vantage Point] Villar Land’s net income: A trillion-peso mirage? Part 2 | [ANALYSIS] Villar Land Holdings and its astonishing story

Critics among market watchers continue to believe that Villar Land Holdings Corporation (VLC), formerly Golden MV Holdings, has violated listing and disclosure rules in its reported massive surge in net income and growth that even the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) are again under suspicion of lapses.  

Last May 15, 2025, trading of VLC shares was suspended pending the submission of its 2024 annual financial reports. On the same day, VLC also requested for an extension for its first-quarter report due to the extended finalization of the 2024 audited financial statements.

Because of this seeming difficulty of VLC to submit its audited financial statements, its claim can’t just be warmly accepted by critics for such record performance looked more like it was crafted than as the simple result of hard work — or even sheer luck — for as whispers would have it, the deed was done to thrust Manny Villar into the limelight in order to grab the bragging rights to be the Philippines’ richest individual in Forbes Magazine’s list of billionaires for 2025.  

How VLC did it is no longer a puzzle. But the way it did it is now the subject of more questions and intense discussions. As a publicly listed company, did VLC violate any listing and disclosure rule of the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE)? Was there fraud? Was there insider trading, too? If yes, will VLC be just allowed to get away with all the machinations?  

However, if VLC’s methods are legit after all but may hurt the investing public in the end, what must be done? 

With these questions, attention has now shifted to the SEC and the PSE for answers.  As critics have often harshly judged them, have they been respectively sleeping on the job again as the market’s government regulatory watchdog and capital market self-regulatory shareholder-based organization? 

Finding the valuations

Does the SEC or the PSE have rules governing the reappraisals of hard assets? The answer is “Yes!” 

SEC Memorandum Circular 02-14 provides the guidelines on asset valuations, especially for publicly listed companies. Publicly listed companies are required under certain circumstances (like in receiving assets for shares or in adopting fair value models) to engage the services of SEC-accredited appraisal companies or related professional services organizations, in order to enhance the reliability and quality of the asset valuation processes and resultant outputs.  

As a rule, the regulatory watchdog requires accredited appraisers and related PSOs to conform and comply with operational guidelines, reporting requirements, and valuation standards, that are aligned with current international valuation standards adopted by the Financial and Sustainability Reporting Standards Council (FSRSC), which is based on the International Financial Reporting Standards (IFRS) developed by the International Accounting Standards Board (IASB).  

The goal is obviously to promote universality, comparability and transparency among listed companies, large unlisted companies, financial institutions, and public utilities, not only within the national boundary but across countries.

These standards are incorporated in what is called the Philippine Financial Reporting Standards or PFRS, the carbon copy of the accounting principles prescribed by FSRSC.  

Incidentally, it’s the Accounting Standards Council (ASC) that is responsible for issuing and updating PFRS in the Philippines. The ASC is part of the Financial and Sustainability Reporting Standards Council (FSRSC). And it’s the SEC that approves the accounting principles incorporated in the Financial and Sustainability Reporting Standards (FSRS). 

In this regard, the SEC imposes penalties for non-compliance, such as fines and denial of transaction approvals involving unaccredited entities.

Considering VLC’s management bench and board of directors, I doubt if they are at all clueless about the matter much less that dumb not to understand to follow this rule by the SEC. The mere engagement of SyCip, Gorres, Velayo & Co. or SGV & Co. (the largest multidisciplinary professional services firm in the Philippines) as their primary external auditor and consultant is a clear evidence and manifestation that they are knowledgeable and compliant on the subject.

Likewise, I may have expressed some serious reservations and cruel statements about some shortcomings of the PSE not too long ago, but in this case, I’d like to commend the institution. The PSE’s rules on this matter are clear and in place. 

However, it seems that the PSE does not have a specific provision in its listing and disclosure rules that listed companies are required to seek prior approval for the revaluation method they will use. There is a provision, though, that it can order such when it deems necessary in the case of companies applying for listing. Otherwise, PSE’s requirement to listed and applicant companies for listing with regard to reappraisals of hard assets is to use only duly accredited independent appraisal entities.

In the absence of any new rule whereby the SEC or PSE would require all listed companies to get prior approval of their reappraisal method, both institutions could not be faulted or be said to be at fault for questions or objections by anyone who may have something against VLC on the reappraisals it has done with its hard assets or what it may report as resultant income as long as the method used conforms to the PFRS.

The solution

It might even surprise and get you upset to know that VLC is allowed to reverse its transactions later on, as long as it again conforms to the financial and accounting principles of the PFRS. 

Moreover, in view of past experiences, it’s very difficult to haul VLC legally. To say there was fraud, insider trading, or malpractice, VLC followed to the letter the generally accepted accounting principles (GAAP) and generally accepted auditing standards (GAAS) of the PFRS. 

The VLC case should be another lesson for the investing public that the first and most important consideration when investing in a company is the integrity of its management. It takes precedence over and above any attractive numbers the company is producing.”

It’s just too bad for those who want to sell out now because the trading of VLC shares is still suspended, as of writing. This happens when you pick the wrong horse to ride on with your money. The accounting adjustments done by VLC have all the semblance of regularity — disappointing or disgusting as it may be.  

In the BW Resources stock market scam of 1999, which is the biggest insider trading scandal to hit the market even today, fraud, insider trading, or malpractice were not exactly proven, as what may happen in VLC. The investigations did not result in the indictment and imprisonment of any of the suspects except for a slap on the wrist owing to the small fines imposed.  

Something good happened though because of the scandal. It forced Congress to make a full-blown investigation, which led to the enactment of the Philippine Securities Regulation Code of 2000 to restore market confidence. 

But then, how can any type of machination of accounting principles and practices be prevented? The engagement of big reputable accounting firms like SGV doesn’t seem to be a guarantee.  

Like in the Enron scandal in the US, the accounting firm Arthur Andersen was unable to prevent company executives from orchestrating fraudulent accounting practices. As a solution, it led to the enactment of the Sarbanes-Oxley Act of 2002, which was basically about the organization of an auditing body to “audit the auditors” that would be under the US SEC. Again, the goal was to increase the accuracy and reliability of corporate disclosures, enhance the responsibility of corporate officers, and — foremost — reinforce the independence of auditors. 

Last words

The VLC case should be another lesson for the investing public that the first and most important consideration when investing in a company is the integrity of its management.  It takes precedence over and above any attractive numbers the company is producing. This is the key behind a company’s success, and it is the only attribute that cannot be copied or faked — even by AI. – Rappler.com