Baguio paid 154 times BIR zonal value for Benguet lots, auditors say

MANILA, Philippines – State auditors flagged Baguio City officials for a 2023 land deal in Benguet province that allegedly inflated property costs to staggering levels.

The city government paid P101.46 million for two parcels of land in Tuba, Benguet, a deal that auditors said ignored official valuation standards. 

The Commission on Audit (COA) said the Bureau of Internal Revenue (BIR) set the zonal value at only P10 per square meter, yet the local government paid P1,500 per square meter – 154 times higher.

Auditors said the purchase was “excessively higher than the BIR Zonal Valuation of P635,850 and the Fair Market Value per Tax Declaration of P141,190.”

The lots cover 35,407 square meters in the village of Tupinao, and another 36,514 square meters in Takian, also in Tuba town.

The COA said documents for the payment of capital gains and documentary stamp taxes included a BIR computation showing a total fair market value of P141,190 based on the tax declaration, and a zonal value of P635,850, or P10 per square meter.

“These two amounts are way lower than the City’s purchase price of P1,500 per square meter,” the COA said.

State auditors said the city government sourced the payment for the two lots from its 20% Development Fund under a 2020 supplemental budget approved by the city council.

Auditors, however, said the fund should only support priority development projects listed in the local government’s development plan and investment programs, based on a joint circular issued in late 2020 by the Department of Budget and Management, the Department of Finance, and the Department of the Interior and Local Government.

Eligible projects are those necessary for efficient local governance and essential to promoting public welfare, COA said.

The COA noted that in a letter to the city council requesting a supplemental budget, the mayor said the lots would be part of the local government’s “land banking strategy for future sale or development.”

“Review of the City’s Local Development Investment Program and other Plans disclosed that there is no specific development project that was identified/planned/programmed requiring the purchase of the Topinao lots,” the COA said.

Responding to COA, the city government said the properties were identified for social housing projects.

It also said it conducted consultations with various officials, including legislators and the COA.

“The good faith and the due diligence exercised by the city officials accompanied with the exigency of taking advantage of the offered price justifies the acquisition of the Topinao lands,” the city government said.

The city government added that the transaction was previously halted after COA issued a Notice of Suspension and only proceeded once the notice was lifted. It maintained that it had fully complied with the requirements to warrant the lifting. – Rappler.com