The Commission on Audit (COA) has declared as “overpriced” the P95.3 million purchase by the local government of Baguio City of two lots in Tuba, Benguet in 2023.

In its 2024 annual audit report, the COA said that the purchase of the two lots was intended for development and socialized housing programs.

However, it said a pricing issue arose as the Baguio City local government did not negotiate for the reduction of the cost per square meter.

"The city's purchase price of P101,465,425.53 (including capital gains tax and documentary stamp tax), and the P95,377,500 paid to the vendor is excessively higher than the Bureau of Internal Revenue (BIR) Zonal valuation of P635,850, and the Fair Market Value per Tax Declaration of P141,190," the COA’s report said.

Thus, it said its auditors raised an issue over the "reasonableness" of the purchase price, which was solely based on the vendor's offered selling price of P1,500 per square meter.

It added that the audit team found the price to be "excessively high" compared to the BIR Zonal valuation of P10 per square meter.

"The purchase price of P1,500 may be in congruence with a Hypothetical Development Approach such as the fair market value reported by the private appraiser who determined the value of the lots based on the present value of future benefits using the time value of money concept," it also said.

But it pointed out that “the private appraiser's approach cannot be applied under the context of government acquisition of real property."

Thus, the COA recommended that Baguio city should submit justifications to establish the reasonableness of their purchase price of the Tuba lots despite non-compliance with the land acquisition procedures.

The purchase of the lots had been the subject of a complaint filed against Baguio City Mayor Benjamin Magalong before the Office of the Ombudsman. Former city councilor Maria Mylen Victoria G. Yaranon wanted Magalong charged for violation of graft.

But last July, the Ombudsman cleared Magalong of his alleged criminal and administrative liabilities as there was insufficient evidence to hold him accountable for the offenses charged.