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NEA Board orders removal of Buseco OIC

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The National Electrification Administration (NEA) has ordered the removal from office of Bukidnon Second Electric Cooperative, Inc. (Buseco) Officer-in-Charge Deiter Hoff Arellano after he was found guilty of grave misconduct, dishonesty and conduct prejudicial to the best interest of the electric cooperative (EC) and its member-consumer-owners (MCOs).
In a 22-page decision dated June 22, the NEA Board of Administrators said Arellano committed acts of dishonesty, grave misconduct and conduct prejudicial to the best interest of the EC and the MCOs when he concealed a material fact in recommending to the Board of Directors of Buseco to enter into a power supply contract with the FDC Misamis Power Corporation (FDC Misamis).
Aside from dismissal, Arellano was also meted the accessory penalty of perpetual disqualification from employment and being qualified to run as candidate for the Board of Directors of any rural electric cooperative, and forfeiture of retirement benefits.
The case stemmed from a complaint filed by NEA Chief Edgardo Masongsong, a former representative of the party-list group 1-CARE and general manager of Buseco. He filed the administrative case against Arellano when he was still in Congress and took no part in the decision of the case.
Masongsong charged Arellano for making a recommendation to the Board of Directors for the purchase of power from the FDC Misamis but concealing the vital information regarding other power suppliers that offered cheaper power. This act, he said, led the Board of Directors to approve the power supply contract which prejudiced the MCOs by paying a substantially more expensive electricity. This, the NEA chief said, was in violation and blatant disregard to the mandate of distribution utilities as provided for Republic Act 9136, otherwise known as the Electric Power Industry Reform Act of 2001 or EPIRA.
In his defense, Arellano insisted that the decision to acquire power from FDC Misamis was unanimously approved by the Board of Directors of Buseco. He added that the decision was also "not a product of haphazard or knee-jerk response to the looming power crises."
The respondent also questioned the jurisdiction of the NEA. He argued that the NEA had no authority to hear the case as the exclusive jurisdiction belonged to the Energy Regulatory Commission with regard to the Power Supply Agreements (PSAs) entered into by electric cooperatives.
However, the NEA Board said it had jurisdiction to decide on the case, citing Department Circular No. 2013-07-0015 of the Department of Energy, otherwise known as the "Implementing Rules and Regulations (IRR)" of the Republic Act No. 10531 or the "National Electrification Administration Reform Act of 2013."
The NEA Board, in its ruling, also found substantial evidence to hold Arellano liable for dishonesty, grave misconduct and conduct prejudicial to the best interest of the electric cooperative and the MCOs.
t said the Executive Committee, chaired by the respondent, was responsible in the evaluation of the output of the Power Supply Contracting Team (PSCT). It added that although the decision to acquire power from FDC Misamis was unanimously approved by the Board of Directors, it was still the respondent who presented and recommended to the Board the approval of the agreement.
Moreover, the NEA Board said documents submitted also showed that not all existing committed suppliers of Buseco, particularly the Association of Mindanao Rural Electric Cooperatives, Inc.-Power Supply Aggregation Corporation (Amreco-Psagcor), were invited to submit their proposal or letter of intent to supply the additional power requirement of the cooperative.
It added that as OIC and as chairman of the Executive Committee, it was incumbent upon Arellano "to guide and provide valuable insights and disclose information that will help PSCT members, ExeCom and ultimately the Board of Directors in their deliberation, study and eventual approval of the procurement of additional power supply requirement of the cooperative."
"Respondent's acts clearly reflect his dishonesty and grave misconduct. He was less than forthright in his dealings with the Board in particular and to the MCOs in general. He wilfully did not invite GNPower, in particular or other power suppliers for that matter who may have lower rates, to submit a proposal/letter of intent thus depriving the MCOs to avail of a cheaper power rate resulting to the latter's detriment," the decision read.
"Likewise, his acts imply malevolent intent, and not merely error in judgment. He was fully aware of the availability of other power suppliers with significantly lower prices but he did not inform the Board about them. At the very least, he failed to advance the welfare of the MCOs, and that constitutes wilful disregard of the laws and rules," it added.
"Taken together, all the circumstances, and as proven by substantial evidence, show that respondent committed acts of dishonest, grave misconduct, and conduct prejudicial to the best interest of the electric cooperative and its member-consumer-owners," the decision further stated.
The NEA Board has directed the Human Resources Department of Buseco to implement the dismissal order against Arellano as soon as it receives the copy of the decision. The ADCOM has also been tasked to conduct motu proprio investigation against the members of the Buseco Board of Directors for possible administrative liability on the contracts entered into by the cooperative with FDC Misamis. ###