CEBU, Philippines - The Commission on Audit has questioned the failure of the municipal government of Barili to transfer the title of a lot purchased in 2002 in Barangay Mantalongon.
The 72,872-square meter property was expropriated by the municipal government to be used as market and trading area. The government paid P7,287,200 to Arneel H. Jadraque et al. for the acquisition of the lot.
State auditors asked the municipal government to submit valid justification for its failure to transfer the title resulting in the government's paying P1,134,231.41 in capital gains tax including surcharges, interest and compromise fee.
According to COA, the local government's failure to immediately transfer the title under its name resulted in the irregular and wastage of government funds.
It said that examination of the extra- judicial settlement of the estate of the deceased Buenaventura Briones and Declaration of Heirs with Deed of Absolute Sale did not provide any statement as to who will pay the capital gain tax and the documentary taxes.
"Since the Contract to Sell was silent, it is presumed that the capital gain tax and documentary stamp is to be paid by the seller," the state auditor said.
But the municipal government paid for it in September last year.
The Bureau of Internal Revenue Code provides that the capital gains tax and documentary stamps are filed by the resident or non-resident, including estates and trusts, who sells, exchanges or disposes of a real property located in the Philippines classified as capital asset for the purpose of securing a Tax Clearance Certificate to effect transfer of ownership of the property from the seller to the buyer.
"The municipality has paid the amount of P1,134,231.41 including surcharges, interest and compromise fee," COA said.
It added that payment of the lot to the heirs was not deducted with the proportionate amount of capital gains tax and documentary stamp.
COA found out that Title No. RO-4549 (031088) / Lot No. 4269 of the Cadastral Survey of Barili, is still under the name of heirs of Briones et al. and not the name of the Municipality of Barili.
There was also a discrepancy with the land area covered by the sale in the Deed of Sale and the Title of the Property when the Deed of Sale reflected that Lot No. 4269 contained an area of 72,572 square meters while the title reflected an area of 72,872 square meters, a difference 300 square meters.
COA further recommended to verify discrepancies in the Deed of Sale and the Certificate of Title with regards to the correct area of the lot purchased and submit legal basis on the payment of the capital gain tax inclusive of penalties and surcharges or else the transaction is deemed irregular. — (FREEMAN)