SC orders Baguio water execs to return P1.39M in perks

The Supreme Court (SC) has ordered former officials of the Baguio Water District (BWD) to return nearly P1.39 million in fringe benefits paid to the district’s top executives in 2009. In the same ruling, it held that a non-lawyer armed only with a special power of attorney (SPA) cannot sign and file a petition before the Court on behalf of the parties.

In a decision promulgated on July 8, 2026 and penned by Justice Gaerlan, the SC En Banc dismissed the petition for certiorari filed by former BWD general manager Teresita P. de Guzman and other officers and board members. The petition challenged Commission on Audit (COA) Decision Nos. 2020-487 and 2023-457.

The Court affirmed the COA rulings with one modification. It absolved senior accountant Wilhelmina A. Aquino from liability.

P40,000 and P20,000 a month

The case goes back to December 6, 2008. That day, the BWD Board of Directors passed Resolution Nos. 64-2008 and 65-2008, which granted monthly fringe benefits of P40,000 to the general manager (GM) and P20,000 each to the two assistant general managers (AGMs), starting January 2009.

The board said the benefits recognized the executives’ efforts “in sustaining the operations of the District,” including “completing the AusAid project activation jointly with the LWUA [Local Water Utilities Administration]” and “sourcing out new water sources.” The payments were charged to the district’s extraordinary expenses account.

On May 15, 2012, the BWD’s resident auditors issued 10 notices of disallowance. These covered P683,882.37 paid to De Guzman and P705,882.24 paid to the two AGMs, Salvador M. Royeca and Ma. Luisa C. Tenedero.

The auditors said the GM’s payments exceeded the ceiling on extraordinary expenses under the 2009 General Appropriations Act (GAA). The AGMs, they added, were not among the officials entitled to extraordinary and miscellaneous expenses (EME) at all.

The COA’s Cordillera regional office and the COA proper both upheld the disallowance.

Signed by an ‘attorney-in-fact’

Before the SC, the Office of the Solicitor General (OSG) asked for the outright dismissal of the petition. It pointed out that the petition was signed not by a lawyer but by an attorney-in-fact who was not a party to the case.

The record showed that the petition was signed by Luzvimin G. Ramos, manager of BWD’s Internal Audit Division, under an SPA executed by the petitioners. The petitioners admitted that since 2018, BWD officials had “consistently executed” SPAs naming non-lawyers as attorneys-in-fact. They said this was the first time the OSG had questioned the practice.

The SC sided with the OSG.

Citing Rule 7, Section 3(a) and Rule 138, Section 34 of the Rules of Court, the Court said the Rules limit representation by non-lawyers to the municipal courts. In all other courts, litigants must handle their cases “either by themselves, without any representation at all, or through a member of the Philippine Bar.”

“The act of signing a pleading constitutes a warranty of good faith in its filing and the existence of factual and legal bases therefor,” the Court said. “Only the party, per se, is in a position to make such warranty, being the one most cognizant of the legal and factual bases of their claims.”

The SC held that the petition “should be treated as an unsigned pleading with no legal effect.” It stressed that “the act of signing a pleading is personal to a party and cannot be delegated to an ordinary agent who is not a member of the Bar.”

The Court also rejected the petitioners’ reliance on Dandoy v. Court of Appeals and Wee v. Galvez. It noted that in Dandoy, the party and her attorney-in-fact had a lawyer, while in Wee, the party was abroad and could not sign personally. “There is no showing that petitioners are out of the country nor otherwise unable to sign their pleadings personally,” the SC said.

Ruling on the merits

Despite the defect, the Court went on to decide the case on the merits “in the interest of justice.”

The SC said it is “settled law” that the pay of local water district managers is governed by Section 12 of Republic Act No. 6758, the Salary Standardization Law. Under that provision, allowances not listed in it are deemed integrated into the standard salary.

The Court applied its earlier ruling in Paguio v. Commission on Audit, which upheld the disallowance of EME paid to the GM of the Pagsanjan Water District in 2009. In Paguio, the SC held that because Presidential Decree No. 198 does not authorize water districts to grant EME, the ceilings in the GAA apply, as provided under COA Circular No. 2006-001.

Section 25 of the 2009 GAA lists the officials entitled to extraordinary expenses. A local water district GM is not among them. The SC also found that the petitioners failed to prove that the AGMs held ranks equivalent to any official on the list.

“The abovequoted ruling on the validity of Paguio’s benefits is thus squarely applicable to De Guzman, Royeca, and Tenedero,” the Court said.

Calling the payments “fringe benefits” did not help either. The SC said fringe benefits are not among the exempted allowances under Section 12 of RA 6758. The fact that the National Internal Revenue Code taxes fringe benefits “cannot be construed as a grant of authority for local water districts to grant such non-integrated benefits,” it added.

Officers held in bad faith

On who must pay back the money, the Court applied the rules in Madera v. Commission on Audit and its later clarifications.

The SC noted that the certifying officers declared the payments necessary and lawful “despite the absence of any in-house or Department of Justice legal opinion or ruling supporting the grant of EMEs.”

“The Court thus has no choice but to find the certifying and approving officers in bad faith, as they relied on their own institutional reading of Presidential Decree No. 198, without regard to Republic Act No. 6758 and other legal limitations on the compensation-fixing power of the BWD,” the decision read.

The petitioners were held solidarily liable for the net disallowed amount, except Aquino. The Court said her role was limited to certifying that the supporting documents were complete and proper, a “purely ministerial” act.

The SC said it could not extend the same relief to two other accounting employees with the same role, Joanna Carame and Jo Allan Baptista, because they did not join the petition and are “outside the jurisdiction of the Court.”

De Guzman, Royeca and Tenedero were also ordered to return what they received. The Court said the benefits were disallowed “not for mere procedural reasons but for being ultra vires.” For that reason, they “cannot be considered benefits genuinely given in consideration of services rendered.”