G.R. No. 254336 . November 18, 2021
GM LORETO P. SEARES, JR., PETITIONER, VS. NATIONAL ELECTRIFICATION ADMINISTRATION BOARD, RESPONDENT.

FACTS

Petitioner Loreto P. Seares, Jr. was appointed General Manager of the Abra Electric Cooperative, Inc. (ABRECO) in October 2007. Under ABRECO’s by-laws, his functions included overseeing day-to-day operations, implementing board-approved plans, ensuring compliance with regulatory bodies, and submitting monthly operational reports. Pursuant to Republic Act No. 10531 (the National Electrification Administration Reform Act of 2013), which grants the National Electrification Administration Board (NEAB) supervisory and disciplinary powers over electric cooperatives, the NEA’s Electric Cooperative Audit Department conducted a motu proprio audit of ABRECO covering July 1, 2013 to October 31, 2016. The audit revealed numerous deficiencies: ABRECO had consistently retrogressed due to huge financial obligations (including restructured loans with PSALM and unpaid bills to NGCP, PEMC, WESM, and APRI); delayed mandatory remittances to SSS, PhilHealth, and Pag-IBIG; borrowings from private creditors at high interest rates (5%-6% monthly) to pay power bills; overcharging of transmission charges to consumers by using a fixed rate higher than the actual WESM rate, resulting in an estimated P128,135,206.21 difference from January to October 2016 alone; system losses above the cap; low collection efficiency; a breakdown in the disbursement and cash handling system (collections were not deposited and disbursements were made on a cash basis from collections); irregularities in the utilization of subsidy funds for electrification projects, including a mobilization payment exceeding legal limits; and procurement violations, including failure to follow bidding procedures, purchases at costs higher than the NEA Price Index, and payments for questionable vehicle expenses and accessories for high-end vehicles. Based on these findings, the NEAB found Seares administratively liable.

ISSUE

Whether the Court of Appeals correctly affirmed the administrative liabilities of petitioner Loreto P. Seares, Jr. for Grave Misconduct, Gross Negligence, Dishonesty, and Gross Incompetence in the performance of his official duties as General Manager of ABRECO.

RULING

Yes, the Court of Appeals’ affirmance of petitioner’s administrative liabilities was correct. The Supreme Court upheld the findings of the NEAB and the Court of Appeals. The audit findings established that petitioner failed to perform his duties as General Manager, which directly led to ABRECO’s financial and operational deterioration. His actions and omissions constituted Gross Negligence, as he exhibited a blatant disregard for his duties to manage the cooperative prudently, resulting in substantial losses and prejudice to member-consumers. The overcharging of consumers and the irregularities in procurement and fund utilization constituted Dishonesty. His overall failure to oversee operations, ensure compliance, and implement proper financial controls demonstrated Gross Incompetence. The Court found that the NEAB’s exercise of its supervisory and disciplinary powers under R.A. No. 10531 was proper and that due process was observed in the proceedings against petitioner. The penalties imposed were commensurate with the gravity of the offenses.