THE BAGUIO CITY local government unit has much explaining to do on its purchase of atrociously-overpriced parcels of land in Tuba, Benguet in 2024, says the Commission on Audit (COA).
According to its audit report, the Baguio city government bought two parcels for P103.46 million — way above the zonal value of the Bureau Internal Revenue (BIR).
The BIR zonal value is P10 per square meter but the price at which the LGU bought them was at P1,500 per sq.m. — or 154 times more than the BIR value.
Clearly, the excess funds must have been pocketed or shared among the local officials even when such procurements were charged in the city’s Development Fund on the 2020 Supplemental Budget unanimously passed by the Sanguniang Panlungsod under Ordinance Number 42, series of 2020.
“The City’s purchase price paid with a total of P101,465,425.53… is excessively higher than the BIR Zonal Valuation of P635,850 and the Fair Market Value per Tax Declaration of P141,190,” the audit team pointed out.
PRIORITY DEV’T PROJECTS
COA cited the Joint Memorandum Circular No. 1 of the Department of Budget and Management (DBM)-Department of Finance (DOF)-Department of the Interior and Local Government (DILG) dated November 4, 2020, that the 20% Development Fund shall be utilized to finance the local government unit’s priority development projects.
Such priority projects however must be included in the LGU’s local development plan, medium-term, and annual investment program.
The DBM-DOF-DILG Joint Circular further defined the projects under the 20% Development Fund as those that are “necessary, appropriate, or incidental to the efficient and effective local governance, and those which are essential to the promotion of the general welfare of the people.”
City Mayor Benjamin Magalog, in a letter to the city council requesting for the Supplemental Budget, declared that the lot to be purchased is part of the city’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,” COA said.
The Topinao lots in Tuba, Benguet, a 6.5 hectare property in Sitio Topinao, Poblacion Village, are owned by businessman William Tan Jr. and his daughter Hazel Dominique before being acquired by Baguio City with Mayor Magalong as the buyer.
As declared, the acquisition is for land banking purposes in preparation for a housing project which led to graft complaints against Magalong, but was cleared by the Ombudsman in July 2025 finding no probable cause for indictment.
Former City Councilor Mylen Yaranon had accused Magalong of graft and grave abuse of authority in her complaint filed before Christmas last year, alleging that the mayor proceeded with the purchase in 2023 without an endorsing city council ordinance or public bidding, reported Inquirer earlier.
She also claimed Magalong ignored the need for geological testing due to the lots’ topography, as well as a property dispute involving one of Tan’s lots that had been disclosed to the city council.
Sold through a negotiated P95-million deal, the Topinao lot is currently being evaluated by the Department of Human Settlements and Urban Development as a potential site for the government’s Pambansang Pabahay para sa Pilipino Program, Magalong said during a July 9 City Hall briefing. The site is projected to house 5,500 families.
NO NEED FOR BIDDING
The Ombudsman’s Special Panel of Investigators, headed by lawyer Maria Olivia Elena Roxas, dismissed on July 15, 2025 Yaranon’s complaint, concluding that the land acquisition did not require a mandatory bidding process and was already approved in 2020 through an ordinance endorsing that year’s Annual Investment Plan — which included a P120-million allocation for land banking.
The panel also cleared Magalong of Yaranon’s allegation that he gave the Tans undue advantage over other private land offers and of consummating the transaction within days, despite an understanding that half of the payment could be made on a staggered basis within two years after the sale.
The panel cited Tan’s original sales offer to City Hall dated January 4, 2020 — before the COVID-19 outbreak — which allowed for either full payment in cash or 50 percent upon execution of the deed, with the balance payable within two years in 24 equal monthly installments.
The panel added that the court dispute involving one of Tan’s Topinao lots began a few days after the Deed of Absolute Sale was executed, indicating that there were no adverse claims at the time of sale.
It also noted that the 2022 Property Valuation Report provided City Hall with sufficient information to determine the “merits and viability of the lots purchased.”
The panel’s resolution was issued on February 24, but the city government only obtained a copy on July 4.
The same panel had issued a separate joint resolution on February 18 dismissing criminal and administrative complaints previously filed by Yaranon, who had claimed Magalong gave contractor Khatib Construction “unwarranted benefits” despite the firm’s poor track record in constructing a multipurpose government building in Baguio’s Irisan village.
That project was partly financed by a P50-million grant from the Department of Public Works and Highways.
The panel noted that Magalong had later terminated Khatib’s contracts for two other projects due to delays and “serious defects,” the Inquirer reported.
The Ombudsman then Samuel Martires, whose term ended on July 27, 2025.
The first lot measuring 35,407 square meters is located in Tupinao, Tuba, Benguet while the second one covering an area of 36,514 square meters is situated in Takian, Tuba, Benguet.
AS PER BIR VALUATION
Attached to the disbursement voucher on the payment for Capital Gains tax and Documentary Stamp tax on the purchase of both lots was the computation by the BIR of the total Fair Market Value (based on the tax declaration) of P141,190, while the Zonal Value was pegged at 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,” COA said.
In its reply to the audit observations, Baguio City said the properties have been identified as the area for social housing projects.
In its defense, it pointed out that due consultations were made with various local government officials including Sangguniang Panlungsod members. It added that the COA was likewise consulted.
“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 LGU said.
It added that the transaction was previously halted when the COA issued a Notice of Suspension and only pushed through when the same Notice was lifted. The city government said it believed it had already fully complied with the requirements to warrant such lifting.