3/9/26, 11:17 AM

​

The Supreme Court (SC) has upheld the PHP 2 million fine imposed on Abacus Coal Exploration and Development Corporation for failing to properly disclose the full value of its assets in its Audited Financial Statements (AFS).

In a Decision written by Associate Justice Maria Filomena D. Singh, the SC’s Third Division denied the company’s petition challenging the ruling of the Securities and Exchange Commission (SEC).

The SEC fined Abacus Coal after finding that the company failed to include important asset information in its financial statements.

In 2008, Abacus Coal increased its capital stock from PHP 20 million to PHP 300 million after acquiring coal mining rights worth PHP 2.7 billion from Abacus Consolidated Resources & Holdings, Inc.

However, the company’s 2008 and 2009 AFS did not list these assets in the Balance Sheet. Instead, the information appeared only in the Notes to the financial statements.

When asked to explain, Abacus Coal said the omission was due to a supposed conflict between accounting standards and the pending SEC approval of its capital increase.

The SEC rejected this explanation. It said the omission made the company’s total assets appear smaller than they actually were, violating SEC Memorandum Circular No. 08-09. The SEC also noted that the capital increase had already been approved in December 2008, before the financial statements were issued.

The Court of Appeals agreed with the SEC, saying that putting the information only in the Notes did not give a complete picture of the company’s financial condition.

The Supreme Court affirmed this ruling.

The SC said Abacus Coal violated Rule 68 of the Securities Regulation Code, which requires companies to include all intangible assets, capital, and reserves directly in the Balance Sheet. Failing to disclose them results in material deficiencies and misstatements that may lead to fines.

Under Rule 68, information is considered material if leaving it out could affect the decisions of people who rely on the financial statements.

The Court found that the company’s understatement of assets was significant, since the missing information could affect the decisions of investors and other users of the financial reports.

The SC stressed that simply mentioning the assets in the Notes was not enough, because the rules require such information to appear directly in the Balance Sheet.

The Court also noted that the company’s revised financial statements still failed to correct the problem, as they continued to omit the PHP 2.7 billion appraised value of the mining rights.

Finally, the SC upheld the SEC’s computation of the penalty under SEC Memorandum Circular No. 08-09, which imposes a fine equal to one-tenth of one percent of the value of the omitted amount, with a maximum penalty of PHP 1 million for each year of misstatement.