June 24, 2024

The Supreme Court has reversed a decision of the Court of Appeals which affirmed a ruling of the National Electrification Administration Board that found the general manager of the Abra Electric Cooperative guilty for grave misconduct, dishonesty, and gross incompetence in the performance of official duties and meted his removal from office with accessory penalties.

In a 30-page decision promulgated Nov. 18, 2021 and released May 13, the SC also ruled for the immediate reinstatement of Abreco General Manager Loreto P. Seares, Jr. with full back salaries and benefits without loss of seniority rights.

The High Court also imposed a six percent legal interest per annum on the monetary award reckoned from the finality of its decision until fully paid.

Seares’ petition for review by the SC stemmed from an audit report conducted by the NEA Electric Cooperative Services through its EC Audit Department on Abreco covering July 1, 2013 to Oct. 31, 2016.

Based on the audit report, Abreco was found to be in a state of continuous operational retrogression attributed to the alleged ineffective management of Seares, who was appointed general manager in 2007.

Among others, the audit report found Abreco had huge restructured loans to Power Sector Assets and Liabilities Management Corporation and obligations to the National Grid Corporation of the Philippines, Philippine Electricity Market Corporation, Wholesale Electricity Spot Market, and AP-Renewables, Inc.; had been delayed in paying mandatory remittances to government agencies; incurred net losses in 2015 and 2016; incurred penalties due to late payment to power suppliers; huge system losses; made transactions that did not follow the procurement procedures for ECs; it stopped using the formula prescribed in computing the monthly generation rate passed-on to member-consumers; and questionable claims for reimbursements.

The NEA Board (NEAB) ordered Seares’ preventive suspension for 30 days, extended it to another 60 days, and created a Task Force Duterte Abra Power to act as Abreco’s interim board of directors.

The NEAB considered the audit report as an administrative complaint.

In his answer, Seares said he merely implemented the policies approved by the board of directors which was passed to prevent an incident in 2015 wherein the WESM rate suddenly spiked up, rendering Abreco’s collections during the immediately preceding month insufficient to cover the increase. It was for this reason that Abreco was compelled to charge its member-consumers a higher generation rate.

He said NEA did not extend the financial assistance, which Abreco requested to meet its urgent piling obligations, constraining Abreco to secure loans from private creditors to pay off its power bills and other obligations. NEA did not deny, as it actually affirmed indeed Abreco was in dire need of financial assistance to sustain its operation, among other arguments.

In its May 7, 2018 decision, the NEAB found Seares guilty of grave misconduct, dishonesty, and gross incompetence. He was removed from office, perpetually disqualified for reinstatement or reemployment in any EC, disqualified to run as candidate for board director in any cooperative, and forfeited his retirement benefits.

Seares filed a motion for reconsideration but it was denied. He appealed the decision to CA which affirmed NEAB’s ru-lings. When Seares filed an MR, the CA modified its earlier decision and cleared him of grave misconduct but still found him guilty of gross negligence for his supposed failure to ensure Abreco’s compliance with proper procedures.

In seeking review before the SC, Seares among others maintained he only did his ministerial duties as approved by Abreco’s BOD and based on its by-laws.

He said the NEAB failed to specify which among the current payables of Abreco were incurred during his incumbency for which he could be held liable for gross incompetence in the management of the EC.

He said all NEAB have against him was an incomplete audit report containing a mere general averment that Abreco contracted loans of significant amounts and maintained he followed procurement procedures.

In reversing CA, the SC ruled Seares’ right to due process was violated when NEAB failed to cite which of the findings against him specifically pertained to grave misconduct, which of them pertained to serious dishonesty, and which ones pertained to gross incompetence.

“What NEAB simply did was make swift shotgun statement that based on the results of its commissioned audit report, petitioner was found to have committed all three infractions. There was absolutely no effort at all to discuss each infraction, let alone, draw its one on one correspondence with the supposed evidence or factual findings on record,” the SC stated.

The SC said “by reason of such fatal infirmity, the CA should have declared as void the assailed ruling of NEAB and freed petitioner from its debilitating shackles” but it failed to do so.

“Instead, it tried to dissect the ruling of NEAB and came out with its own one on one correspondence between the infraction and the supposed evidence.”

The SC also mostly sided with all of Seares’ claims. It agreed he was merely doing ministerial duties, that he had a valid reason he had to borrow funds from private entities to keep Abreco afloat, and the fact he claimed reimbursements for items which turned out not beneficial to the cooperative should not automatically make him liable for misconduct.

“There ought to be an evidence of corruption, willful intent to violate the law, or disregard of established rules, which must be proven by substantial evidence. To be sure, none of these elements was proven here. What we see here was a general manager who exhausted all possible ways and means to rehabilitate Abreco’s dwindling financial situation,” the SC decision reads. – Hanna C. Lacsamana