The Supreme Court has affirmed with finality the Securities and Exchange Commission’s (SEC) authority to accredit external auditors, ending a long-standing legal challenge that threatened the regulator’s oversight of the capital markets.

In a resolution dated Oct. 14, the court denied a motion for reconsideration from the 1Accountants Party-List Inc., stating the group failed to provide substantial arguments to reverse a previous ruling.

The high court ordered an entry of judgment be made immediately and barred further pleadings on the matter.

The decision cements the SEC’s power to vet Certified Public Accountants (CPAs) who audit 
“covered corporations”—entities that issue registered securities or hold secondary licenses, such as banks and investment houses.

“We welcome the decision, which strengthens our thrust toward promoting transparency and accountability,” SEC Chairperson Francis Lim said in a statement.

Lim noted that auditors of firms imbued with public interest require additional oversight to reinforce investor protection and financial integrity.

The case, which began as a challenge to Rule 68 of the Securities Regulation Code and Memorandum Circular No. 13, argued that the SEC was overstepping its mandate.

The petitioners claimed that only the Board of Accountancy (BOA) should regulate the profession and that SEC requirements restrained CPAs from practicing.

The legal battle saw significant swings. In 2022 to 2023, the Supreme Court initially sided with the accountants, declaring the SEC rules unconstitutional.

But in January 2025, the court reversed its stance following an SEC appeal, ruling the guidelines valid.

The court clarified that while the BOA remains the primary regulator for the accounting profession, the SEC has the jurisdiction to supervise the specific “juridical and natural persons” that operate within its regulated sectors.

The ruling ensures that the SEC can continue to enforce specialized standards for auditors responsible for the financial statements of publicly listed companies, a move the agency says is “crucial in building public trust” in the Philippine capital market.