The National Electrification Administration Board (NEAB) violated a petitioner's right to due process when it failed to clearly and distinctly state the specific factual findings corresponding to each administrative charge, thereby preventing the petitioner from adequately preparing a defense. Furthermore, administrative liability requires substantial evidence, and mere reliance on an audit report without specific proof of corruption, willful intent to violate the law, or flagrant disregard of established rules for grave misconduct, malicious intent for dishonesty, or want of even slight care for gross negligence, is insufficient to hold an official liable.

Petitioner Loreto P. Seares, Jr. was appointed General Manager of Abra Electric Cooperative, Inc. (ABRECO) in October 2007. The National Electrification Administration (NEA), through its Electric Cooperative Audit Department (ECAD), conducted a motu proprio audit of ABRECO covering July 1, 2013, to October 31, 2016. The audit revealed numerous issues, including deteriorating financial conditions, unpaid obligations, delayed remittances of mandatory contributions, borrowing from outside sources at high interest, overcharging consumers, high system losses, breakdown in disbursement and cash handling, non-submission of documents for subsidy funds, and improper procurement procedures, all attributed to ineffective management by Seares.

• In October 2007, Loreto P. Seares, Jr. was appointed General Manager of ABRECO.
• NEA's ECAD conducted a motu proprio audit of ABRECO (July 1, 2013 - October 31, 2016), revealing operational retrogression and financial deterioration.
• Audit findings included: huge unrestructured loan with PSALM; unpaid obligations to NGCP, PEMC, WESM, APRI; delayed remittances to SSS, PhilHealth, Pag-IBIG; borrowing from private creditors at 5-6% monthly interest; overcharging consumers by using a fixed generation rate (P6.6156/kWh) instead of the WESM rate, resulting in an estimated P128,135,206.21 difference; system losses above the 13% cap; low collection efficiency (93%); penalties for late power bill payments; breakdown in disbursement and cash handling (collections not deposited, cash basis disbursements); non-submission of documents for subsidy fund utilization and mobilization payment exceeding 15% for electrification projects; improper procurement procedures, including no bidding for large transactions and purchases above NEA Price Index; and indiscriminate grant of excessive cash advances.
• NEAB ordered Seares' preventive suspension and created Task Force Duterte Abra Power as ABRECO's interim board.
• The audit report was treated as a complaint, and Seares was required to answer.
• NEAB found Seares guilty of Grave Misconduct, Dishonesty, and Gross Incompetence, leading to his removal from service.
• The Court of Appeals affirmed NEAB's findings, specifying acts constituting grave misconduct (violating ERC rate formula, failing to oversee departments, not ensuring timely remittances, allowing fund deposits outside depository bank, approving dubious reimbursements, breaching procurement rules), serious dishonesty (irregular accounting, dubious reimbursements, improper bid procedures, unauthorized payment of legal fees), and gross incompetence (poor management and collection strategies).
• On reconsideration, the CA cleared Seares of grave misconduct related to procurement but found him guilty of gross negligence for failing to ensure ABRECO's compliance with procurement procedures.

• NEAB lacked authority to order his removal and dissolve ABRECO's Board, as these powers pertain to the Cooperative Development Authority (CDA).
• The findings of NEAB and the Court of Appeals were unsupported by substantial evidence.
• Regarding grave misconduct for implementing a higher generation rate, he merely performed his ministerial duty to implement ABRECO Board Resolution No. 48, Series of 2015.
• Regarding gross incompetence, NEAB failed to specify which payables were incurred during his incumbency, and ABRECO had to secure private loans because NEAB failed to grant financial assistance.
• Depositing ABRECO funds elsewhere was necessary to prevent garnishment due to labor cases.
• ABRECO complied in good faith with procurement methods under RA 9184 for the Sitio Electrification Program.
• Regarding serious dishonesty, claims for reimbursement by drivers/utility workers were already disapproved by NDs issued by the Board; it was the finance department's fault they were still paid.
• Regarding gross negligence/neglect of duty for non-remittance of SSS/PhilHealth premiums, complaints were withdrawn, and remittance was the HR Department's responsibility.

• NEAB has supervisory and disciplinary power over electric cooperatives under RA 10531.
• Petitioner's acts and omissions constituted grave misconduct, dishonesty, and gross inefficiency (changed to gross incompetence by CA).
• Petitioner willfully violated the law by allowing ABRECO to apply a fixed generation rate instead of the ERC prescribed formula.
• Petitioner failed to oversee operations, ensure timely remittances, and exercise due diligence in fund deposits and reimbursements.
• Petitioner breached procurement rules under RA 9184.
• Petitioner deliberately adopted irregular accounting and internal control policies, approved dubious reimbursements, and allowed improper bid procedures.
• Petitioner paid legal fees without board authorization.
• Petitioner's poor management and collection strategies caused ABRECO's delayed loan payments and operational retrogression.
• Petitioner was grossly negligent in not ensuring ABRECO adhered to proper procurement procedures.

• Whether the NEAB has jurisdiction to order the removal of an electric cooperative's General Manager and dissolve its Board of Directors.
• Whether the petitioner's right to due process was violated by NEAB's failure to specify which findings corresponded to each administrative charge.
• Whether there was substantial evidence to hold petitioner administratively liable for grave misconduct.
• Whether there was substantial evidence to hold petitioner administratively liable for serious dishonesty.
• Whether there was substantial evidence to hold petitioner administratively liable for gross negligence.

• The NEAB is vested with supervisory and disciplinary powers over officers and members of the Board of Directors of electric cooperatives, including removal, under P.D. No. 269, as amended by P.D. No. 1645 and R.A. No. 10531. The creation of the CDA did not divest NEA of this jurisdiction.
• Petitioner's right to due process was violated because NEAB failed to pinpoint which of the acts allegedly committed by petitioner pertained to grave misconduct, serious dishonesty, or gross incompetence, merely making a shotgun statement based on the audit report. This hampered petitioner's ability to frame his defense. The CA's attempt to dissect NEAB's ruling did not cure this fatal infirmity, rendering NEAB's decision void ab initio.
• There was no substantial evidence for grave misconduct. Implementing the Board-approved higher generation rate was a ministerial duty. Securing high-interest loans was a necessary judgment call to keep ABRECO operational after NEA denied financial assistance. Delayed remittances of employee contributions were not proven to be his direct fault, and the duty lay with the HR department. Depositing funds in another bank was a legitimate measure to protect funds from garnishment for ABRECO's continued operation. Approving reimbursements, even if later found questionable, did not automatically constitute grave misconduct without proof of corruption or willful intent, especially if he relied on subordinates and no notice of disallowance was previously issued to him for his own claims.
• There was no substantial evidence for serious dishonesty. Adopting alleged irregular accounting policies was not specified, and approving dubious reimbursements was already addressed under misconduct. Payment of legal fees for services already rendered to ABRECO does not require a new board resolution for each payment if the engagement was previously approved, and there was no evidence of malicious intent.
• There was no substantial evidence for gross negligence. Regarding procurement, petitioner, as General Manager, had the right to rely on the presumption of regularity and credence of certifications from the Bids and Awards Committee and other offices in charge, absent any circumstances that should have prompted further inquiry.
• The petition was GRANTED. The CA Decision and Resolution were REVERSED and SET ASIDE. The administrative complaint against petitioner was dismissed. He was ordered immediately REINSTATED with full back salaries and benefits, and 6% legal interest per annum on the monetary award.

• Supervisory Powers of NEA over Electric Cooperatives — P.D. No. 269, as amended by P.D. No. 1645 and R.A. No. 10531, grants NEA (now NEAB) the power to supervise, control, and impose disciplinary sanctions, including removal, over directors, officers, and employees of electric cooperatives. This power was not divested by the creation of the CDA. Applied to affirm NEAB's jurisdiction over Seares.
• Administrative Due Process (Right to be Informed of Charges and Evidence) — A component of due process is that a decision must be rendered in such a manner that parties can know the various issues involved and the reasons for the decision, clearly and distinctly stating the facts and law on which it is based (Art. VIII, Sec. 14, Constitution; Ang Tibay v. CIR). Applied here, NEAB's failure to specify which acts constituted which offenses violated Seares' due process rights, rendering its decision void.
• Substantial Evidence in Administrative Cases — Such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. The burden is on the complainant. Applied to find that the evidence against Seares did not meet this quantum for any of the charges.
• Ministerial Duty — An act which an officer performs in a given state of facts, in a prescribed manner, in obedience to the mandate of legal authority, without regard to or the exercise of his own judgment upon the propriety of the act being done. Implementing a board resolution is a ministerial duty. Applied to Seares' implementation of ABRECO's Board Resolution on generation rates.
• Grave Misconduct — Transgression of some established and definite rule of action, particularly by a public officer's unlawful behavior, recklessness, or gross negligence, coupled with elements of corruption, willful intent to violate the law, or flagrant disregard of established rules. Applied to find Seares not liable as these elements were not proven.
• Serious Dishonesty — Disposition to lie, cheat, deceive, or defraud, involving malicious intent to conceal truth or make false statements, attended by circumstances like causing serious damage, abuse of authority, or involving accountable property with intent for material gain. Applied to find Seares not liable as malicious intent was not proven.
• Gross Negligence — Negligence characterized by the want of even slight care, or by acting or omitting to act willfully and intentionally with conscious indifference to consequences. It denotes a flagrant and culpable refusal or unwillingness to perform a duty. Applied to find Seares not liable, distinguishing it from simple neglect.
• Arias Doctrine (Reliance on Subordinates) — Heads of offices have to rely to a reasonable extent on their subordinates and on the good faith of those who prepare documents, bids, or enter negotiations, unless circumstances exist that should prompt further inquiry. Applied to Seares' reliance on BAC certifications for procurement.

• "Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is indisputably a paramount component of due process and fair play."
• "A decision that does not clearly and distinctly state the facts and the law on which it is based leaves the parties in the dark as to how it was reached and is precisely prejudicial to the losing party, who is unable to pinpoint the possible errors of the court for review by a higher tribunal."
• "Misconduct is a transgression of some established and definite rule of action, particularly, as a result of a public officer's unlawful behavior, recklessness, or gross negligence. The misconduct is gross if it involves any of the additional elements of corruption, willful intent to violate the law, or to disregard established rules, which must be proven by substantial evidence."
• "Dishonesty requires malicious intent to conceal the truth or to make false statements. Simply put, dishonesty is a question of intention."
• "Gross negligence 'refers to negligence characterized by the want of even slight care, or by acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally, with a conscious indifference to the consequences, insofar as other persons may be affected.'"

• Zambales II Electric Cooperative, Inc. Board of Directors v. Castillejos Consumers Association, Inc. — Cited to affirm NEA's (now NEAB) disciplinary jurisdiction over electric cooperatives, which was not divested by the Cooperative Code or the creation of the CDA.
• Yao v. Court of Appeals — Cited for the principle that parties should be informed of how a case was decided, with an explanation of factual and legal reasons, as part of due process.
• Ang Tibay v. Court of Industrial Relations — Cited for the components of administrative due process, including the requirement that a tribunal should render its decision in a manner that parties can know the issues and reasons.
• Republic v. Legaspi, Sr. — Cited for the rule that a decision not conforming to the form and substance required by the Constitution (i.e., clearly stating facts and law) is void and legally inexistent.
• Buscaino v. Commission on Audit — Cited to support the argument that implementing a board resolution is a ministerial duty, and the implementing officer cannot be faulted for it if the resolution itself is the source of the issue.
• Joson III v. COA — Cited for the principle that a head of agency is not automatically liable for disallowed transactions solely because he is the final approving authority and has supervisory powers; reliance on subordinates in good faith is generally permissible.
• Arias v. Sandiganbayan — Cited for the doctrine that heads of offices can rely on their subordinates in good faith, absent circumstances that would prompt further inquiry.
• Abubakar v. People of the Philippines — Cited as a qualifier to the Arias doctrine, stating that reliance on subordinates is not a shield if circumstances should have prompted further inquiry by the superior.

• Republic Act No. 10531 (National Electrification Administration Reform Act of 2013), Section 6 (inserting Section 4-A into P.D. No. 269) — Grants NEAB supervisory and disciplinary powers over electric cooperatives, including issuing preventive or disciplinary measures like suspension or removal of directors and officers. Relevance: Established NEAB's jurisdiction.
• Presidential Decree No. 269, as amended by P.D. No. 1645, Section 10 — Empowers NEA to conduct investigations and impose preventive or disciplinary sanctions over the board of directors of regulated entities. Relevance: Basis of NEAB's disciplinary powers.
• 1987 Constitution, Article VIII, Section 14 — Mandates that no decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based. Relevance: Basis for finding violation of petitioner's due process rights due to NEAB's vague decision.
• Republic Act No. 9184 (Government Procurement Reform Act) — Allegedly violated by petitioner in procurement processes. Relevance: One of the grounds for the charges against petitioner, which the Court found unsubstantiated.
• ABRECO's By-Laws, Section 1(e) — Enumerates the functions and responsibilities of a General Manager, including implementing duly approved plans and programs of the cooperative and directives of the BOD. Relevance: Used by petitioner to argue that implementing the Board's rate resolution was part of his duties.
• 2013 NEA Administrative Rules of Procedure, Rule VII, Sections 2 and 3(a) — Basis for the accessory penalties imposed by NEAB. Relevance: Showed the severity of the penalties initially imposed.
• Civil Service Commission (CSC) Resolution No. 06-0538 — Defines circumstances when dishonesty is considered serious. Relevance: Standard used by CA in assessing the charge of serious dishonesty.