ONE-MAN ACT: Many lawyers and some businessmen were incredulous that a lawyer sitting as commissioner in a quasi-judicial agency like the Securities and Exchange Commission could have fumbled on a basic legal point within his supposed expertise.

No wonder SEC Commissioner Jesus Martinez was heckled when he defended the SEC cease-and-desist order that he served on the annual stockholders meeting of the Manila Electric Co. (Meralco) last Tuesday.

The order carrying only his signature — reportedly applied for and issued in stealth — was to block the meeting that would elect the 11 members of the Meralco board.

Martinez explained the absence of vital elements on the document, such as a control date, as pure “oversight” and its ex-parte issuance as intended to give it an “element of surprise”!

Finding the Martinez order defective, the Meralco board ruled that it was void and proceeded to hold the scheduled stockholders meeting.

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DEFECTIVE ORDER: The Martinez order and the failed campaign of Government Service Insurance System president and general manager Winston Garcia to replace Lopez nominees on the Meralco board have stirred up a legal and political storm.

There is a presumption of regularity in the holding of a stockholders’ meeting after proper notice. The burden of showing it to be irregular and fraught with danger rests on those opposing it.

The Meralco board trashed the Martinez document after it was confirmed to have carried only his signature, was undated, and did not bear the official SEC seal.

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OVERSIGHT?: Even non-lawyers were appalled to hear Martinez’s explanation that the order’s having no control date was a mere “oversight.”

A date on resolutions, orders and decisions is required under the Rules of Court to make them valid.

For one, the date determines when an order is to take effect and bind the parties. The date also reckons the start of the period before an aggrieved party could make an appeal.

With the Martinez order being undated, everybody is in the dark as to when it will take effect. As the order has an effectivity of 10 days, all parties should know when or how to count the 10 days.

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COLLEGIAL BODY: Meralco lawyers pointed out that Martinez had no authority to represent the other four members of the commission (including the  chair who was reportedly abroad) because the SEC is a collegial body as defined in PD 902-A and RA 8799.

For SEC resolutions and orders to be binding, lawyers said, the documents must be signed by at least a majority of the commissioners.

Martinez said he could issue the order alone because he was at the time the officer-in-charge. This is an unusual argument since even the SEC chair cannot issue a valid order just by himself.

He cited Section 4.3 of RA 8799 giving him, he said, the power to issue the order. But he failed to mention that that section only gives the chair (as SEC’s chief executive officer) the power to “execute and administer the policies, decisions, orders and resolutions APPROVED BY THE COMMISSION.” (capitals supplied)

This means that his power is limited to the implementation and administration of policies, decisions, orders and resolutions issued by the commission en banc.

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LEGAL WAR: Martinez appears to have overlooked also the fact that the SEC no longer has jurisdiction over conflicts in the the conduct of stockholders’ meetings because those are intra-corporate disputes.

Under RA 8799 (also known as the Securities Regulation Code), the jurisdiction of such disputes had been transferred to courts of general jurisdiction or the appropriate Regional Trial Courts.

Intra-corporate disputes cover relationships: between the corporation, partnership or association and its stockholders, partners, members, or officers; between the corporation, partnership, or association and the state as far as its franchise, permit or license to operate is concerned; and among the stockholders, partners or associates.

These points, of course, are subject to conflicting interpretations that only the courts can thresh out. If Garcia makes good his threat to sue, we could see the next stage of the fight for Meralco control raging in the courts.

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CLARK ROW: Over in Pampanga, another dispute is starting to boil around the Clark Development Corp., which is supposed to award long-term leases of selected areas to raise money to develop the special economic zone.

Some investors are grumbling that recent contracts signed showed thatCDC has been awarding long-term leases to Fontana Development Corp. at unusually low rates, at the expense of investors who had offered higher rates.

They claimed that CDC had an agreement with the Anteva Group Corp. and the New Kanlaon Construction Inc. to lease 73 hectares for a residential-resort community at $0.10 per square meter per month.

They reported that despite full compliance by AGC/NKCI of the guidelines and revisions set, the CDC made a 180-degree turnaround and advised AGC/NKCI that the CDC board considered as “low and not acceptable” its proposal of $0.10/sqm/month.

Meanwhile, they added, the CDC entered into lease contracts through direct negotiations with Fontana Development Corp., BB International & Resort Development Corp. and JB Cresta Corp.

On Aug. 7, 2007, CDC reportedly leased to Fontana some 52 hectares of property at only $0.007/sqm/month, which is lower than the $0.10/sqm offered by AGC/NKCI that CDC said was “low and unacceptable.”