Vargas cannot be targeted by attacks, even attacks that target all enemies, until both Ipooh enemies are killed. Vargas primarily uses physical attacks, and occasionally attacks twice in one turn. His special attack, Gale Cut, does minor damage to the entire party. The player should have Edgar fire his Crossbow to kill the Ipooh, and have Locke attempt to steal a rare Mythril Claw from Vargas, then use normal attacks. Terra should use Cure to heal the party, or attack Vargas with Fire.
The player does not need to deplete Vargas's HP to win. After doing approximately 700 - 800 damage, Sabin will appear and Vargas will use Blizzard Fist to remove Locke, Edgar and Terra, leaving Sabin to fight Vargas alone. Vargas immediately uses Doom Fist to inflict Doom on Sabin, giving the player sixty seconds to defeat Vargas or die. To win, Sabin must execute the Raging Fist technique via the Blitz command. If this is the player's first time playing the game and doesn't know any the Blitz combination, Sabin will eventually tell the player how to perform it. While it is technically possible to defeat Vargas by depleting his HP, his high HP, the Doom timer and the handicap of fighting him with only Sabin makes doing so very difficult.