8epubllc of Lhe hlllpplnes

SUkLML CCUk1
Manlla
Ln 8AnC
G.k. No. 16S272 September 13, 2007
SLkGIC k. CSMLA III, IUAN M. ILAVILk, kCDCLIC G. 8IA2CN, ALIkLDC S. LIM,
IAM8 A.S. MADkIGAL, LUIS I. SISCN, AND A1kICIA C. SISCN, eLlLloners,
vs.
SCCIAL SLCUkI1 SS1LM CI 1nL nILIINLS, SCCIAL SLCUkI1 CCMMISSICN,
CCkA2CN S. DLLA A2, 1nLLMC . CUNANAN, A1kICIA A. S1C. 1CMAS, IL 1I8AAN-
ANLILLC, DCNALD DLL, SLkGIC k. Ck1I2-LUIS, Ik., LIkLN . AkAN2AMLNDL2,
MAkIANI1A C. MLNDC2A, and kAMCN I. IA8Ak, |n the|r capac|t|es as Members of the
Soc|a| Secur|ty Comm|ss|on, AND 8DC CAI1AL & INVLS1MLN1
CCkCkA1ICN, 8espondenLs.
u L C l S l C n
GAkCIA, !"#
SenaLor Serglo 8. Csmena lll
1
and four (4) oLher members
2
of Lhe hlllpplne SenaLe,
[olned by Soclal SecurlLy SysLem (SSS) members Luls l. Slson and aLrlcla C. Slson,
speclflcally seek ln Lhls orlglnal peLlLlon for cerLlorarl and prohlblLlon Lhe nulllflcaLlon of
Lhe followlng lssuances of respondenL Soclal SecurlLy Commlsslon (SSC):
1) 8LSCLu1lCn no. 428
3
daLed !uly 14, 2004, and
2) 8LSCLu1lCn no. 483
4
daLed AugusL 11, 2004.
1he flrsL assalled resoluLlon approved Lhe proposed sale of Lhe enLlre equlLy sLake of Lhe
SSS ln whaL was Lhen Lhe LqulLable Cl 8ank, lnc. (LCl8 or LCl), conslsLlng of
187,847,891 common shares, Lhrough Lhe Swlss Challenge blddlng procedure, and
auLhorlzed SSS resldenL Corazon S. uela az (uela az) Lo consLlLuLe a blddlng
commlLLee LhaL would formulaLe Lhe Lerms of reference of Lhe Swlss Challenge blddlng
mode. 1he second resoluLlon approved Lhe 1lmeLable and lnsLrucLlons Lo 8ldders.
eLlLloners
3
also ask LhaL a prohlblLlve wrlL lssue Lo permanenLly en[oln publlc
respondenLs from lmplemenLlng 8es. nos. 428 and 483 or oLherwlse proceedlng wlLh
Lhe sale of sub[ecL shares Lhrough Lhe Swlss Challenge meLhod.
8y 8esoluLlon
6
daLed CcLober 3, 2004, Lhe CourL en banc requlred Lhe parLles Lo observe
Lhe sLaLus quo anLe Lhe passage of Lhe assalled resoluLlons. ln Lhe same resoluLlon, Lhe
CourL noLed Lhe moLlon of respondenL 8uC CaplLal and lnvesLmenL CorporaLlon (8uC
CaplLal) Lo admlL lLs CpposlLlon Lo Lhe eLlLlon.
1he relevanL facLual anLecedenLs:
SomeLlme ln 2003, SSS, a governmenL flnanclal lnsLlLuLlon (Cll) creaLed pursuanL Lo
8epubllc AcL (8A) no. 1161
7
and placed under Lhe dlrecLlon and conLrol of SSC, Look
sLeps Lo llquefy lLs long-Lerm lnvesLmenLs and dlverslfy Lhem lnLo hlgher-yleldlng and
less volaLlle lnvesLmenL producLs. Among lLs asseLs deLermlned as needlng Lo be
llquefled were lLs shareholdlngs ln LCl8. 1he prlnclpal reason behlnd Lhe lnLended
dlsposlLlon, as explalned by respondenL uela az durlng Lhe lebruary 4, 2004 hearlng
conducLed by Lhe SenaLe CommlLLee on 8anks, llnanclal lnsLlLuLlons and Currencles, ls
LhaL Lhe shares ln quesLlon have subsLanLlally decllned ln value and Lhe SSS could no
longer afford Lo conLlnue holdlng on Lo Lhem aL Lhe presenL level of LCl8's lncome.
Some excerpLs of whaL respondenL uela az sald ln LhaL hearlng:
1he markeL value of LqulLable-Cl 8ank had acLually hovered aL 34.00 slnce !uly 2003.
AL some polnL afLer Lhe prlce wenL down Lo 16 or 17 afLer Lhe SepLember 11 ., lL
wenL up Lo 42.00 buL laLer on wenL down Lo 34.00. xxx. We looked aL Lhe prlces ln
abouL March of 2001 and noLed LhaL Lhe Lrade prlces Lhen ranged from 30 Lo 37.
x x x x x x x x x
l have Lo concede LhaL [LCl8] has sLarLed Lo recover, ..
erhaps Lhe facL LhaL Lhere had been Lhls lmproved slLuaLlon ln Lhe bank LhaL aLLracLed
8anco de Cro .. xxx. l wouldn'L know wheLher Lhe prlces would evenLually go up Lo 60
of (slc) 120. 8uL on Lhe basls of my belng Lhe vlce-chalr on Lhe bank, l belleve LhaL Lhls ls
Lhe sub[ecL of a loL of con[ecLure. lL can also go down .. So, ln Lhe presenL slLuaLlon
where Lhe holdlngs of SSS ln [LCl8] conslsLs of abouL 10 percenL of Lhe LoLal reserve
fund, we cannoL afford Lo conLlnue holdlng lL aL Lhe presenL level of lncome ..xxx. And
Lherefore, on LhaL basls, an exposure Lo cerLaln form of asseLs whose prlce can go down
Lo 16 Lo 17 whlch ls a llLLle over 20 percenL of whaL we have ln our books, ls noL a very
prudenL way or conservaLlve way of handllng Lhose funds. We need noL conLlnue
experlenclng opporLunlLy losses buL have an amounL LhaL wlll glve us a falr reLurn Lo
LhaL klnd of value (Words ln brackeL added.)
AlbelL Lhere were oLher lnLeresLed parLles, only 8anco de Cro unlversal 8ank (8uC) and
lLs lnvesLmenL subsldlary, respondenL 8uC CaplLal,
8
appeared ln earnesL Lo acqulre Lhe
shares ln quesLlon. lollowlng Lalks beLween Lhem, 8uC and SSS slgned, on uecember
30, 2003, a LeLLer- AgreemenL,
9
for Lhe sale and purchase of some 187.8 mllllon LCl8
common shares (Lhe Shares, herelnafLer), aL 43.30 per share, whlch represenLs a
premlum of 30 of Lhe Lhen markeL value of Lhe LCl8 shares. AL abouL Lhls Llme, Lhe
Shares were Lradlng aL an average of 34.30 [ share.
ln Lhe same LeLLer-AgreemenL,
10
Lhe parLles agreed "Lo negoLlaLe ln good falLh a
muLually accepLable Share Sale and urchase AgreemenL and execuLe Lhe same noL
laLer Lhan LhlrLy (30) buslness days from [uecember 30, 2003]."
Cn Aprll 19, 2004, Lhe Commlsslon on AudlL (CCA),
11
ln response Lo respondenL uela
az's leLLer-query on Lhe appllcablllLy of Lhe publlc blddlng requlremenL under CCA
Clrcular no. 89-296
12
on Lhe dlvesLmenL by Lhe SSS of lLs enLlre LlC8 equlLy holdlngs,
sLaLed LhaL Lhe "clrcular covers all asseLs of governmenL agencles excepL Lhose
merchandlze or lnvenLory held for sale ln Lhe regular course of buslness." And whlle lL
expressed Lhe oplnlon
13
LhaL Lhe sale of Lhe sub[ecL Shares are "sub[ecL Lo guldellnes ln
Lhe Clrcular," Lhe CCA quallfled lLs deLermlnaLlon wlLh a sLaLemenL LhaL such negoLlaLed
sale would parLake of a sLock exchange LransacLlon and, Lherefore, would be adherlng Lo
Lhe general pollcy of publlc aucLlon. WroLe Lhe CCA:
neverLheless, slnce acLlvlLles ln Lhe sLock exchange whlch offer Lo Lhe general publlc
sLocks llsLed Lhereln, Lhe proposed sale, alLhough denomlnaLed as "negoLlaLed sale"
subsLanLlally complles wlLh Lhe general pollcy of publlc aucLlon as a mode of dlvesLmenL.
1hls ls so for shares of sLocks are acLually belng aucLloned Lo Lhe general publlc every
Llme LhaL Lhe sLock exchanges are openly operaLlng.
lollowlng several drafLlng sesslons, SSS and 8uC CaplLal, Lhe deslgnaLed buyers of Lhe
8anco de Cro Croup, agreed on a flnal drafL verslon of Lhe Share urchase
AgreemenL
14
(SA). ln lL, Lhe parLles muLually agreed Lo Lhe purchase by Lhe 8uC CaplLal
and Lhe sale by SSS of all Lhe laLLer's LCl8 shares aL Lhe closlng daLe aL Lhe speclfled
prlce of 43.30 per share or a LoLal of 8,171,383,238.30.
1he proposed SA, LogeLher wlLh Lhe LeLLer-AgreemenL, was Lhen submlLLed Lo Lhe
ueparLmenL of !usLlce (uC!) whlch, ln an Cplnlon
13
daLed Aprll 29, 2004, concurred wlLh
Lhe CCA's oplnlon adverLed Lo and sLaLed LhaL lL dld noL flnd anyLhlng ob[ecLlonable
wlLh Lhe Lerms of boLh documenLs.
Cn !uly 14, 2004, SSC passed 8es. no. 428
16
approvlng, as earller sLaLed, Lhe sale of Lhe
LCl8 shares Lhrough Lhe Swlss Challenge meLhod. A monLh laLer, Lhe equally assalled
8es. no. 483
17
was also passed.
Cn AugusL 23, 24, and 23, 2004, SSS adverLlsed an lnvlLaLlon Lo 8ld
18
for Lhe block
purchase of Lhe Shares. 1he lnvlLaLlon Lo 8ld expressly provlded LhaL Lhe "resulL of Lhe
blddlng ls sub[ecL Lo Lhe rlghL of 8uC CaplLal . Lo maLch Lhe hlghesL bld." CcLober 20,
2004 was Lhe daLe seL for deLermlnlng Lhe wlnnlng bld.
1he records do noL show wheLher or noL any lnLeresLed group/s submlLLed blds. 1he
boLLom llne, however, ls LhaL even before Lhe bld envelopes, lf any, could be opened,
Lhe hereln peLlLloners commenced Lhe lnsLanL speclal clvll acLlon for cerLlorarl, seLLlng
Lhelr slghLs prlmarlly on Lhe legallLy of Lhe Swlss Challenge angle and a provlslon ln Lhe
lnsLrucLlon Lo 8ldders under whlch Lhe SSS underLakes Lo offer Lhe Shares Lo 8uC should
no bldder or prospecLlve bldder quallfles. And as earller menLloned, Lhe CourL, vla a
sLaLus quo order,
19
effecLlvely suspended Lhe proceedlngs on Lhe proposed sale.
under Lhe Swlss Challenge formaL, one of Lhe bldders ls glven Lhe opLlon or preferenLlal
"rlghL Lo maLch" Lhe wlnnlng bld.
eLlLloners asserL, ln glsL, LhaL a publlc blddlng wlLh a Swlss Challenge componenL ls
conLrary Lo CCA Clrcular no. 89-296 and publlc pollcy whlch requlres adherence Lo
compeLlLlve publlc blddlng ln a governmenL-conLracL award Lo assure Lhe besL prlce
posslble for governmenL asseLs. Accordlngly, Lhe peLlLloners urge LhaL Lhe planned
dlsposlLlon of Lhe Shares Lhrough a Swlss Challenge meLhod be scrapped. As argued, Lhe
Swlss Challenge feaLure Lends Lo dlscourage would-be-bldders from underLaklng Lhe
expense and efforL of blddlng lf Lhe chance of wlnnlng ls dlmlnlshed by Lhe preferenLlal
"rlghL Lo maLch" clause. ushlng Lhe polnL, peLlLloners aver LhaL Lhe Shares are ln Lhe
naLure of long-Lerm or non-currenL asseLs noL regularly Lraded or held for sale ln Lhe
regular course of buslness. As such, Lhelr dlsposlLlon musL be governed by Lhe
aforemenLloned CCA clrcular whlch, sub[ecL Lo several excepLlons, prescrlbes "publlc
aucLlon" as a prlmary mode of dlsposal of Clls' asseLs. And obvlously flndlng Lhe
proposed purchase prlce Lo be lnadequaLe, Lhe peLlLloners expressed Lhe bellef LhaL "lf
properly bldded ouL ln accordance wlLh [Lhe] CCA Clrcular ., Lhe Shares could be sold aL
a prlce of aL leasL SlxLy esos (60.00) per share." CLher supporLlng argumenLs for
allowlng cerLlorarl are seL forLh ln some deLall ln Lhe baslc peLlLlon.
AgalnsL Lhe peLlLloners' sLance, publlc respondenLs lnLer alla submlL LhaL Lhe sale of
sub[ecL Shares ls exempL from Lhe Ledlous publlc blddlng requlremenL of CCA. Cbvlously
sLresslng Lhe pracLlcal slde of Lhe maLLer, publlc respondenLs asserL LhaL lf Lhey are Lo
hew Lo Lhe blddlng requlremenL ln Lhe dlsposlLlon of SSS's hlllpplne SLock Lxchange
(SL)-llsLed sLocks, lL would place Lhe SysLem aL a dlsadvanLage vls-a-vls oLher sLock
markeL players who cerLalnly en[oy greaLer flexlblllLy ln reacLlng Lo Lhe vagarles of Lhe
markeL and could sell Lhelr holdlngs aL a momenL's noLlce when Lhe prlce ls rlghL. ubllc
respondenLs hasLen Lo add, however, LhaL Lhe blddlng-exempL sLaLus of Lhe Shares dld
noL prevenL Lhe SSS from prudenLly proceedlng wlLh Lhe blddlng as conLemplaLed ln Lhe
assalled resoluLlons as a measure Lo valldaLe Lhe adequacy of Lhe unlL prlce 8uC CaplLal
offered Lherefor and Lo posslbly obLaln a hlgher prlce Lhan lLs deflnlLlve offer of 43.30
per share.
20
ubllc respondenLs also advanced Lhe legal argumenL, also shared by Lhelr
co-respondenL 8uC CaplLal, ln lLs CommenL,
21
LhaL Lhe proposed sale ls noL covered by
CCA Clrcular no. 89-296 slnce Lhe Shares parLake of Lhe naLure of merchandlse or
lnvenLory held for sale ln Lhe regular course of SSS's buslness.
endlng conslderaLlon of Lhe peLlLlon, supervenlng evenLs and corporaLe movemenLs
Lransplred LhaL radlcally alLered Lhe facLual complexlon of Lhe case. Some of Lhese
undlspuLed evenLs are deLalled ln Lhe peLlLloners' separaLe Moolfestotloo & Motloo to
1oke IoJlclol Notlce
22
and Lhelr respecLlve annexes. 1o clLe Lhe relevanL ones:
1. ln !anuary 2006, 8uC made publlc lLs lnLenL Lo merge wlLh LCl8. under whaL 8uC
Lermed as "Merger of Lquals", LCl8 shareholders would geL 1.6 8uC shares for every
LCl8 share.
23

2. ln early !anuary 2006, Lhe CSlS publlcly announced recelvlng from an undlsclosed
enLlLy an offer Lo buy lLs sLake ln LCl8 - 12 of Lhe bank's ouLsLandlng caplLal sLock -
aL 92.00 per share.
24

3. Cn AugusL 31, 2006, SM Investments Corporat|on, an afflllaLe of 8uC and 8uC
CaplLal, ln consorLlum wlLh ShoemarL, lnc. et ol., (collecLlvely, Lhe SM Group)
commenced, Lhrough Lhe faclllLles of Lhe SL and pursuanL Lo 8.A. no. 8799
23
, a
mandaLory Lender offer (1ender Cffer) coverlng Lhe purchase of Lhe ent|re outstand|ng
cap|ta| stock of LCI8 aL 92.00 per share. ursuanL Lo Lhe Lerms of Lhe 1ender Cffer,
whlch was Lo sLarL on AugusL 31, 2006 and end on SepLember 28, 2006 - Lhe 1ender
Cffer erlod - all shares valldly Lendered under lL by LCl8 shareholders of record shall
be deemed accepLed for paymenL on closlng daLe sub[ecL Lo cerLaln condlLlons.
26
Among
Lhose who accepLed Lhe 1ender Cffer of Lhe SM Croup was L8C lnvesLmenLs, lnc., a
subsldlary of LCl8.
4. A day or Lwo laLer, 8uC flled a 1ender Cffer 8eporL wlLh Lhe SecurlLles and Lxchange
Commlsslon (SLC) and Lhe SL.
27

Cwlng Lo Lhe foregolng developmenLs, Lhe CourL, on CcLober 3, 2006, lssued a
8esoluLlon requlrlng Lhe 'parLles Lo CCnll8M news reporLs LhaL prlce of sub[ecL shares
has been agreed upon aL 92, and lf so, Lo MAnllLS1 wheLher Lhls case has become
mooL."
llrsL Lo comply wlLh Lhe above were publlc respondenLs SSS eL al., by flllng Lhelr
Compllance and ManlfesLaLlon,
28
Lhereln essenLlally sLaLlng LhaL Lhe case ls now mooL ln
vlew of Lhe SM-8uC Croup's 1ender Cffer aL 92.00 [ unlL share, for Lhe sub[ecL LCl8
common shares, lncluslve of Lhe SSS shares sub[ecL of Lhe peLlLlon. 1hey also sLaLed Lhe
observaLlon LhaL Lhe peLlLloners' ManlfesLaLlon and MoLlon Lo 1ake !udlclal
noLlce,
29
never quesLloned Lhe 1ender Cffer, Lhus conflrmlng Lhe dlspensablllLy of a
compeLlLlve publlc blddlng ln Lhe dlsposlLlon of sub[ecL Shares.
lor perspecLlve, a "Lender offer" ls a publlcly announced lnLenLlon by a person acLlng
alone or ln concerL wlLh oLher persons Lo acqulre equlLy securlLles of a publlc company,
l.e., one llsLed on an exchange, among oLhers.
30
1he Lerm ls also deflned as "oo offet by
tbe ocpoltloq petsoo to stockbolJets of o pobllc compooy fot tbem to teoJet tbelt sbotes
tbetelo oo tbe tetms speclfleJ lo tbe offet"
31
1ender offer ls ln place Lo proLecL Lhe
lnLeresLs of mlnorlLy sLockholders of a LargeL company agalnsL any scheme LhaL dlluLes
Lhe share value of Lhelr lnvesLmenLs. lL affords such mlnorlLy shareholders Lhe
opporLunlLy Lo wlLhdraw or exlL from Lhe company under reasonable Lerms, a chance Lo
sell Lhelr shares aL Lhe same prlce as Lhose of Lhe ma[orlLy sLockholders.
32

nexL Lo comply wlLh Lhe same 8esoluLlon of Lhe CourL was respondenL 8uC
CaplLal vlo lLs compllooce,
33
Lhereunder pracLlcally relLeraLlng publlc respondenLs'
poslLlon on Lhe quesLlon of mooLness and Lhe need, under Lhe premlses, Lo go lnLo
publlc blddlng. lL added Lhe argumenLs LhaL Lhe 8uC-SM Croup's 1ender Cffer, lnvolvlng
as lL dld a general offer Lo buy a|| LCl8 common shares aL Lhe sLaLed prlce and Lerms,
were lnconslsLenL wlLh Lhe ldea of publlc blddlng, and LhaL Lhe 1ender Cffer rules
acLually provlde for an opporLunlLy for compeLlng groups Lo Lop Lhe 1ender Cffer prlce.
Cn Lhe oLher hand, peLlLloners, ln Lhelr Moolfestotloo,
34
concede Lhe huge gap beLween
Lhe unlL prlce sLaLed ln Lhe 1ender Cffer and Lhe floor prlce of 43.30 per share sLaLed ln
Lhe lnvlLaLlon Lo 8ld. lL ls Lhelr posLure, however, LhaL unless SSS wlLhdraws Lhe sale of
Lhe sub[ecL shares by way of Lhe 5wlss cbolleoqe, Lhe offer prlce of 92 per share cannoL
render Lhe case mooL and academlc.
Meanwhlle, Lhe poslLlve response Lo Lhe 1ender Cffer enabled Lhe SM-8uC Croup Lo
acqulre conLrolllng lnLeresLs over LCl8 and paved Lhe way for a 8uC-LCl8 merger. 1he
merger was formallzed by subsequenL submlsslon of Lhe necessary merger
documenLs
33
Lo Lhe SLC.
Cn May 23, 2007, Lhe SLC lssued a CerLlflcaLe of llllng of Lhe ArLlcle and lan of
Merger
36
approvlng Lhe merger beLween 8uC and LCl8, relevanL porLlons of whlch are
reproduced hereunder:
1PlS lS 1C CL81ll? LhaL Lhe lan and ArLlcles of Merger
execuLed on uecember 28, 2006 by and beLween:
8AnCC uL C8C unlvL8SAL 8Ank,
now 8AnCC uL C8C-LCl, lnC.
(Survlvlng CorporaLlon)
and
LCul1A8LL Cl 8Ank, lnC.
(Absorbed CorporaLlon)
. approved by a ma[orlLy of Lhe 8oard of ulrecLors on november 06, 2006 and by a voLe
of Lhe sLockholders ownlng or represenLlng aL leasL Lwo-Lhlrds of Lhe ouLsLandlng caplLal
sLock of consLlLuenL corporaLlons on uecember 27, 2006, slgned by Lhe resldenLs,
cerLlfled by Lhelr respecLlve CorporaLe SecreLarles, whereby Lhe enLlre asseLs of [LCl]
lnc. wlll be Lransferred Lo and absorbed by [8uC] unlvL8SAL 8Ank now 8AnCC uL
C8C-LCl, lnC. was approved by Lhls Cfflce on Lhls daLe buL whlch approval shall be
effecLlve on May 31, 2007 pursuanL Lo Lhe provlslons of . (Word ln brackeL added,
emphasls ln Lhe orlglnal)
ln llne wlLh SecLlon 80 of Lhe CorporaLlon Code and as expllclLly seL forLh ln ArLlcle 1.3 of
Lhe lloo of Metqet adverLed Lo, among Lhe effecLs of Lhe 8uC-LCl8 merger are Lhe
followlng:
a. 8uC and LCl shall become a slngle corporaLlon, wlLh 8uC as Lhe survlvlng
corporaLlon. [LCl8] shall cease Lo exlsL.,
x x x x x x x x x
c. All Lhe rlghLs, prlvlleges, lmmunlLles, franchlses and powers of LCl shall be deemed
Lransferred Lo and possessed by Lhe merged 8ank., and
d. All Lhe properLles of LCl, real or personal, Langlble or lnLanglble . shall be deemed
Lransferred Lo Lhe Merged 8ank wlLhouL furLher acL or deed.
er ArLlcle 2 of Lhe lan of Merger on Lhe exchange of shares mechanlsm, "oll tbe lssoeJ
ooJ ootstooJloq commoo stock of jlcl8] (lcl sbotes) sboll be coovetteJ loto folly-
polJ ooJ ooo ossessoble commoo stock of 8uO (8uO commoo sbotes) ot tbe totlo of
1.80 8uO commoo sbotes fot eocb lssoeJ jlcl8] sbote (tbe xcbooqe kotlo)." And
under Lhe exchange procedure, "8uO sboll lssoe 8uO commoo 5botes to lcl
stockbolJets cottespooJloq to eocb lcl 5bote belJ by tbem lo occotJooce wltb tbe
ofotesolJ xcbooqe kotlo."
lL appears LhaL 8uC, or 8uC-LCl, lnc. Lo be preclse, has slnce lssued 8uC common
shares Lo respondenL SSS correspondlng Lo Lhe number of lLs former LCl8
shareholdlngs under Lhe raLlo and exchange procedure prescrlbed ln Lhe lan of Merger.
ln neL effecL, SSS, once Lhe owner of a block of LCl8 shares, ls now a large sLockholder
of 8uC-LCl, lnc.
Cn Lhe posLulaLe LhaL Lhe lnsLanL peLlLlon has now become mooL and academlc, 8uC
CaplLal supplemenLed lLs earller compllooce ooJ Moolfestotloo
37
wlLh a formal Motloo
to ulsmlss.
38

8y 8esoluLlon daLed !uly 10, 2007, Lhe CourL requlred peLlLloners and respondenL SSS Lo
commenL on 8uC CaplLal's moLlon Lo dlsmlss "wlLhln Len (10) days from noLlce."
1o daLe, peLlLloners have noL submlLLed Lhelr compllance. Cn Lhe oLher hand, SSS, by
way of commenL, relLeraLed lLs poslLlon arLlculaLed ln respondenLs' Compllance and
MoLlon
39
LhaL Lhe SM-8uC Croup 1ender Cffer aL Lhe prlce Lhereln sLaLed had rendered
Lhls case mooL and academlc. And respondenL SSS conflrmed Lhe followlng: a) lLs sLaLus
as 8uC-LCl8 sLockholder, b) Lhe 1ender Cffer made by Lhe SM Croup Lo LCl8
sLockholders, lncludlng SSS, for Lhelr shares aL 92.00 per share, and c) SSS' accepLance
of Lhe 1ender Cffer Lhus made.
A case or lssue ls consldered mooL and academlc when lL ceases Lo presenL a [usLlclable
conLroversy by vlrLue of supervenlng evenLs,
40
so LhaL an ad[udlcaLlon of Lhe case or a
declaraLlon on Lhe lssue would be of no pracLlcal value or use.
41
ln such lnsLance, Lhere
ls no acLual subsLanLlal rellef whlch a peLlLloner would be enLlLled Lo, and whlch would
be negaLed by Lhe dlsmlssal of Lhe peLlLlon.
42
CourLs generally decllne [urlsdlcLlon over
such case or dlsmlss lL on Lhe ground of mooLness -- save when, among oLhers, a
compelllng consLlLuLlonal lssue ralsed requlres Lhe formulaLlon of conLrolllng prlnclples
Lo gulde Lhe bench, Lhe bar and Lhe publlc, or when Lhe case ls capable of repeLlLlon yeL
evadlng [udlclal revlew.
43

1he case, wlLh Lhe vlew we Lake of lL, has lndeed become mooL and academlc for
lnLerrelaLed reasons.
We sLarL off wlLh Lhe core sub[ecL of Lhls case. As may be noLed, Lhe LeLLer-
AgreemenL,
44
Lhe SA,
43
Lhe SSC resoluLlons assalled ln Lhls recourse, and Lhe lovltotloo
to 8lJ senL ouL Lo lmplemenL sald resoluLlons, all have a common sub[ecL: Lhe Shares -
Lhe 187.84 Mllllon LCl8 common shares. lL cannoL be overemphaslzed, however, LhaL
Lhe Shares, as a necessary consequence of Lhe 8uC-LCl8 merger
46
whlch saw LCl8
belng absorbed by Lhe survlvlng 8uC, have been Lransferred Lo 8uC and converLed lnLo
8uC common shares under Lhe exchange raLlo seL forLh ln Lhe 8uC-LCl8 lan of
Merger. As Lhus converLed, Lhe sub[ecL Shares are no longer equlLy securlLy lssuances of
Lhe now defuncL LCl8, buL Lhose of 8uC-LCl, whlch, needless Lo sLress, ls a LoLally
separaLe and dlsLlncL enLlLy from whaL used Lo be LCl8. ln neL effecL, Lherefore, Lhe
187.84 Mllllon LCl8 common shares are now losL or lnexlsLenL. And ln Lhls regard, Lhe
CourL Lakes [udlclal noLlce of Lhe dlsappearance of LCl8 sLocks from Lhe local bourse
llsLlng. lnsLead, 8uC-LCl SLocks are presenLly llsLed and belng Lraded ln Lhe SL.
Under the |aw on ob||gat|ons and contracts, the ob||gat|on to g|ve a determ|nate th|ng
|s ext|ngu|shed |f the ob[ect |s |ost w|thout the fau|t of the debtor.
47
And per ArL. 1192
(2) of Lhe Clvll Code, a Lhlng ls consldered losL when lL perlshes or dlsappears ln such a
way LhaL lL cannoL be recovered.
48
ln a very real sense, Lhe lnLerplay of Lhe ensulng
facLors: a) Lhe 8uC-LCl8 merger, and b) Lhe cancellaLlon of sub[ecL Shares and Lhelr
replacemenL by LoLally new common shares of 8uC, has rendered Lhe ersLwhlle 187.84
mllllon LCl8 shares of SSS "unrecoverable" ln Lhe conLemplaLlon of Lhe adverLed Clvll
Code provlslon.
WlLh Lhe above conslderaLlon, respondenL SSS or SSC cannoL, under any clrcumsLance,
cause Lhe lmplemenLaLlon of Lhe assalled resoluLlons, leL alone proceed wlLh Lhe
planned dlsposlLlon of Lhe Shares, be lL vloLhe LradlLlonal compeLlLlve blddlng or Lhe
challenged publlc blddlng wlLh a 5wlss cbolleoqe feaLure.
AL any raLe, Lhe mooL-and-academlc angle would sLlll hold sway even lf lL were Lo be
assumed hypoLheLlcally LhaL Lhe sub[ecL Shares are sLlll exlsLlng. 1hls ls so, for Lhe
supervenlng 8uC-LCl8 merger has so effecLed changes ln Lhe clrcumsLances of SSS and
8uC/8uC CaplLal as Lo render Lhe fulflllmenL of any of Lhe obllgaLlons LhaL each may
have agreed Lo underLake under elLher Lhe LeLLer-AgreemenL, Lhe SA or Lhe
Swlss cbolleoqe package legally lmposslble. When the serv|ce has become so d|ff|cu|t as
to be man|fest|y beyond the contemp|at|on of the part|es,
49
tota| or part|a| re|ease
from a prestat|on and from the counter-prestat|on |s a||owed.
under Lhe Lheory of tebos slc stootlbos,
30
Lhe parLles sLlpulaLe ln Lhe llghL of cerLaln
prevalllng condlLlons, and once Lhese condlLlons cease Lo exlsL, Lhe conLracL also ceases
Lo exlsL.
31
upon Lhe facLs obLalnlng ln Lhls case, lL ls abundanLly clear LhaL Lhe condlLlons
ln whlch SSS and 8uC CaplLal and/or 8uC execuLed Lhe LeLLer-AgreemenL upon whlch
Lhe prlclng componenL - aL 43.30 per share - of Lhe lovltotloo to 8lJ was predlcaLed,
have ceased Lo exlsL. Accordlngly, Lhe lmplemenLaLlon of Lhe LeLLer- AgreemenL or of
Lhe challenged 8es. nos. 428 and 483 cannoL plauslbly push Lhrough, even lf Lhe cenLral
flgures ln Lhls case are so mlnded.
LesL lL be overlooked, 8uC-LCl, ln a manner of speaklng, sLands now as Lhe lssuer
32
of
whaL were once Lhe sub[ecL Shares. ConsequenLly, should SSS opL Lo exlL from 8uC and
8uC CaplLal, or 8uC CaplLal, ln Lurn, opL Lo pursue SSS's shareholdlngs ln LCl8, as Lhus
converLed lnLo 8uC shares, Lhe sale-purchase oughL Lo be vla an lssuer 1ender Cffer -- a
phrase whlch means a publlcly announced lnLenLlon by an lssuer Lo acqulre any of lLs
own class of equlLy securlLles or by an afflllaLe of such lssuer Lo acqulre such
securlLles
.33
ln LhaL evenLuallLy, 8uC or 8uC CaplLal cannoL posslbly exerclse Lhe "rlghL
Lo maLch" under Lhe 5wlss cbolleoqe procedure, a Lender offer belng wholly
lnconslsLenL wlLh publlc blddlng. 1he offeror or buyer ln an lssue Lender offer
LransacLlon proposes Lo buy or acqulre, aL Lhe sLaLed prlce and glven Lerms, lLs own
shares of sLocks held by lLs own sLockholder who ln Lurn slmply have Lo accepL Lhe
Lender Lo effecL Lhe sale. no blddlng ls lnvolved ln Lhe process.
Whlle Lhe CourL ends up dlsmlsslng Lhls peLlLlon because Lhe facLs and legal slLuaLlon
call for Lhls klnd of dlsposlLlon, peLlLloners have Lo be commended for Lhelr efforLs ln
lnlLlaLlng Lhls proceedlng. lor, ln Lhe flnal analysls, lL was Lhelr peLlLlon whlch lnlLlally
blocked lmplemenLaLlon of Lhe assalled SSC resoluLlons, and, ln Lhe process, enabled Lhe
SSS and necessarlly Lhelr members Lo reallze very much more for Lhelr lnvesLmenLs.
WnLkLICkL, the |nstant pet|t|on |s DISMISSLD.
no cosLs.
SC CkDLkLD.