GR 165272; (September 2007) (Digest)
G.R. No. 165272 September 13, 2007
SERGIO R. OSMEÑA III, ET AL., Petitioners, vs. SOCIAL SECURITY SYSTEM, ET AL., Respondents.
FACTS
Petitioners, led by Senator Sergio Osmeña III, sought to nullify two Social Security Commission (SSC) Resolutions approving the sale of SSS’s entire equity stake in Equitable PCI Bank (EPCIB) through a Swiss Challenge bidding procedure. The SSS, aiming to liquidate a long-term investment that had declined in value, entered into a Letter-Agreement with Banco de Oro Universal Bank (BDO) for the sale of approximately 187.8 million EPCIB shares at ₱43.50 per share. The Commission on Audit and the Department of Justice opined that while the sale was subject to public bidding guidelines, a negotiated sale via the stock exchange substantially complied with the policy of public auction. The SSC subsequently issued the assailed resolutions to formalize the sale process via Swiss Challenge.
ISSUE
The core issue was whether the SSC committed grave abuse of discretion in approving the sale of the EPCIB shares through the Swiss Challenge method.
RULING
The Supreme Court dismissed the petition, finding no grave abuse of discretion by the SSC. The legal logic centered on the nature of the Swiss Challenge as a valid alternative bidding method and the subsequent supervening event that rendered the case moot. The Court explained that the Swiss Challenge method, where an unsolicited proposal is publicly challenged to match or better its terms, is a recognized form of public bidding that promotes transparency and competition. The SSC’s adoption of this method for the sale of listed securities, following consultations with COA and DOJ, was a reasonable exercise of its administrative discretion to protect the SSS fund.
Crucially, the Court ruled the petition was moot and academic due to a supervening event: the execution of a merger between BDO and EPCIB, approved by the Bangko Sentral ng Pilipinas and the Securities and Exchange Commission. This merger extinguished the very subject of the sale—the specific EPCIB shares—as they were converted into shares of the surviving entity. Consequently, the SSC resolutions authorizing the sale of those particular shares could no longer be implemented. The Court emphasized that it will not determine questions that no longer present an actual, substantial controversy. The dissolution of the corporate entity whose shares were the object of the sale removed any practical legal effect that a judgment on the petition could achieve.