The Fall of the Villar Empire: From "Uncontrollable" to "Governance Test Case"

A corporate crisis unprecedented in decades has struck a once-impenetrable conglomerate in the Philippines. In 2025, the Villar Group became the focal point of the most dramatic valuation scandal in the market, and subsequent decisive actions by regulators demonstrated that the Philippine capital market has fundamentally changed.

The Beginning of the Great Valuation Failure

When Villarland disclosed land acquisitions with a headline valuation of 1.33 trillion pesos, it was initially seen as a victory for the company’s scale and vision. However, this optimistic view was quickly shattered. The first warning came when the auditing firm Punonbayan & Alauro refused to sign off on the fair value adjustments. Later, an investigation by the Securities and Exchange Commission (SEC) revealed that E-Value, the company responsible for the 1 trillion peso figure, did not conform to international valuation standards.

The results were shocking. Villarland’s unaudited assets of 1.37 trillion pesos shrank to just 35.7 billion pesos in audited figures. This was not merely a numerical correction but a loss of confidence in the very foundation of the company. Villarland’s stock plummeted over 80%, evaporating an estimated $18 billion in paper assets. Manny Villar fell from the top of the Philippines’ billionaire rankings.

The Collapse of the “Unattackable” Myth

The core of this valuation scandal was not just accounting errors. It was rooted in the attitude Manny Villar himself had displayed. In a past media interview, he casually stated, “Just valuing 3,500 hectares is enough to set a price.” Such offhand remarks, like a quick calculation at a bar, revealed an implicit belief that scale alone could exempt a company from scrutiny. The capital market does not operate on wishful calculations. Discounted cash flow, zoning realities, infrastructure timelines, market absorption curves, and actual comparable sales are what drive investment decisions.

For years, the Villar Group benefited from tightly integrated business units and political savvy. Once rated as a 9 out of 10 by institutional investors, that score had fallen to just 3 by 2025. As regulators demanded greater transparency, this interconnected structure suddenly became a liability rather than a risk disperser. The unattackable status vanished overnight.

Chain Reaction of Crises: Decline of Each Business Unit

The decline of the Villar empire was not limited to valuation issues. Prime Water, once a model of private sector participation, shifted into the regulator’s crosshairs. Its joint venture with the water district faced mounting pressure from legislators and local stakeholders over service quality, rate changes, and contract fairness. While profitability remained strong—rising from 196 million pesos in 2017 to nearly 1.8 billion pesos in 2023—profits alone could no longer shield the company from mounting political and social pressures.

The power division, SIPCOR, faced even more severe trouble. After the Energy Regulatory Commission (ERC) judged that SIPCOR failed to deliver mandated service improvements, it lost its operating license in Siquijor. This was symbolic—the first time the state revoked a Villar asset’s operating rights. It sent a clear message to the market: no conglomerate can meet regulatory performance standards without consequence.

Oldeay Mart also could not escape the changing tide. Once positioned as Villar Group’s retail champion, Oldeay’s revenue dropped to 9.25 billion pesos, with net profit falling to 268 million pesos. The stock, which debuted at 0.60 pesos during the 2021 IPO boom, now trades at a fraction of that price, with market capitalization down about 70% from its peak.

From Governance Failures to Regulatory Victories

What makes the Villar story particularly instructive is that its decline was not triggered by external shocks or macroeconomic collapse, but by internal tensions and a clash with a newly assertive regulatory environment that insisted on authority. The conglomerate premium turned into a government discount overnight.

Risk indicators surged amid accumulated controversies: Prime Water joint venture disputes, SIPCOR service failures, Villarland’s accounting corrections, and the sudden collapse of investor confidence. Both Villarland and Oldeay’s market caps clearly reflect the scale of reputation correction.

For global investors, the 2025 Villar crisis is not just a family’s financial turmoil but a stark reminder that in emerging markets, reputation is no longer an abstract concept. It is a balance sheet item waiting to be evaluated the moment regulators decide that the numbers no longer add up.

Ironically, Villar Group’s fall from its unattackable position may strengthen rather than weaken the Philippine investment story. By asserting valuation practices, emphasizing utility performance, and demanding greater public accountability, regulators have signaled a move toward more reliable market oversight. Conglomerates with weak governance structures are now on notice. The empire is far from collapse, but the myth surrounding it has definitely been shattered.