G.R. No. 163928 - Jusayan vs. Sombilla

Petitioner Loreto P. Seares, Jr. was appointed General Manager of Abra Electric Cooperative, Inc. (ABRECO) in October 2007.
Respondent is the National Electrification Administration Board (NEAB), which has supervisory and disciplinary powers over electric cooperatives including ABRECO.
Petitioner was administratively charged with Grave Misconduct, Gross Negligence, Dishonesty, Gross Incompetence, and Gross Neglect of Duty in connection with his management of ABRECO.

ABRECO is registered under the Philippine Cooperative Code (Republic Act No. 9520) and governed by its by-laws, which prescribe the duties and functions of the General Manager as overall overseer of the electric cooperative’s operations.
Republic Act No. 10531 (NEA Reform Act of 2013) grants NEAB broad supervisory and disciplinary powers over electric cooperatives, including issuance of orders, preventive or disciplinary measures, suspension or removal of officers, and appointment of independent boards.
Prior to RA 10531, P.D. No. 269 and P.D. No. 1645 provided the supervisory powers of the NEA, including disciplinary actions.
Republic Act No. 9184 governs procurement procedures for government entities, requiring bidding processes and regulating contract awards.
Section 9 of R.A. No. 6939 vests the Cooperative Development Authority (CDA) with certain regulatory powers over cooperatives.

The NEAB’s Electric Cooperative Audit Department (ECAD) conducted a motu proprio audit covering July 1, 2013 to October 31, 2016, which showed:

Financial deterioration due to large loans and unpaid obligations to power suppliers and other agencies;
Delays in mandatory remittances of employee premiums to SSS, PhilHealth, and Pag-IBIG;
Borrowing from private creditors at high interest rates to pay urgent power bills;
Overcharging consumers by using a fixed generation rate higher than the Energy Regulatory Commission (ERC) prescribed formula;
System losses exceeding regulatory caps and low collection efficiency;
Uncontrolled cash disbursements, not deposited in ABRECO’s depository banks;
Violations in subsidy fund utilization and procurement procedures, including advance payments without required bids or notices; and
Indiscriminate cash advances to employees and questionable reimbursements.

NEAB ordered petitioner’s preventive suspension twice and created an interim task force to act as ABRECO’s board.
Petitioner filed a verified answer denying liability and justifying his acts as implementation of Board policies, lack of financial assistance from NEA, technical problems affecting collections, and compliance with procurement laws.
NEAB found petitioner guilty of Grave Misconduct, Dishonesty, and Gross Incompetence and imposed removal from service with accessory penalties including perpetual disqualification and forfeiture of retirement benefits.
Petitioner’s motion for reconsideration before NEAB was denied.

Petitioner appealed to the Court of Appeals, reiterating defenses and questioning NEAB’s authority to dissolve ABRECO’s board, arguing the CDA had exclusive jurisdiction.
The Court of Appeals affirmed the NEAB decision but modified the findings clearing petitioner of grave misconduct related to procurement award flaws, instead finding gross negligence instead.
Petitioner filed the present petition for review before the Supreme Court.

Whether NEAB has the authority to discipline and remove petitioner as General Manager and dissolve ABRECO’s board of directors despite the Cooperative Development Authority’s regulatory powers.

Whether petitioner committed Grave Misconduct, Gross Incompetence, Serious Dishonesty, Gross Negligence, or Gross Neglect of Duty warranting removal from office.

Whether NEAB and the Court of Appeals’ findings are supported by substantial evidence.

Whether petitioner’s right to due process was violated by NEAB’s failure to clearly specify the factual and legal bases for each administrative infraction.