BY GEROME DALIPE IV
ILOILO City – The Commission on Audit (COA) flagged the municipal government of Lemery, Iloilo over inaccurate asset recording and compliance with COA regulations last year.
According to COA’s annual audit report, 19 parcels of land owned by the municipality were not registered under the Torrens Title System, leaving ownership details inadequately documented and potentially vulnerable.
State auditors noted the three parcels of land, acquired for P11.513 million, were not recorded as “land” in the municipality’s books.
This, the auditors added, violated Section 148 of COA Circular No. 92-386, International Public Sector Accounting Standard (IPSAS) 17, and COA Circular No. 2015-009.
Auditors said the lack of proper recording not only failed to safeguard the municipality’s ownership and interests over these assets but also led to an understatement of the “Land” account in the financial statements.
COA Circular No. 92-386 underscores the responsibility of local chief executives to ensure the proper and effective management of real estate assets owned or titled in the name of their local government unit.
Specifically, it mandates that these properties must be registered under the Torrens Title System to guarantee their legal ownership and protection from encroachment, squatters, and unlawful occupants. The measure is intended to safeguard the assets and prevent any future legal or administrative disputes.
Records from the Municipal Assessor’s Office revealed that the Lemery municipal government owns 21 parcels of land, with a total assessed value of P9.058-million.
However, of these 21 lots, 19 parcels, valued at P9.058 million, were not registered under the Torrens Title System in the municipality’s name.
Only two lots, with TCT Nos. 090-2020010803 and 090-2023009683, covering areas of 0.6557 hectares and 1.830 hectares, respectively, were properly registered under the municipality’s name.
These registered lands were purchased for important municipal projects, including the site for the Local Government Center and the use of Lemery National High School.
However, it was also noted that three additional lots, purchased in 2023, were not recorded as land in the municipality’s books but were instead mistakenly classified as “Other Prepayments.”
These three lots were also excluded from the list of municipal lands, further contributing to the discrepancies in land recordkeeping.
The auditors noted the misclassification and lack of proper registration under the Torrens Title System violate COA guidelines and IPSAS standards, compromising the accuracy and security of the municipality’s asset records.
The two lots purchased by the municipality for quarantine facilities, which were part of the municipality’s contribution to the KALAHI-CIDSS project, also faced several issues related to payment and documentation.
While the municipality paid only 90 percent of the agreed purchase price, the title to these lands has not yet been transferred to the municipality, COA noted.
Additionally, the necessary supporting documents, such as the Certificate of Authorizing Registration from the Bureau of Internal Revenue (BIR), Capital Gains Tax, Documentary Stamp Tax, and Transfer Tax, are still lacking, auditors added.
Moreover, these two lots are encumbered with a Memorandum of Encumbrance from the Department of Agrarian Reform (DAR) due to the issuance of a Notice of Coverage, which complicates the ownership transfer. As for the lot purchased for the public cemetery, there is an ongoing legal dispute regarding its possession.
A case for Recovery of Possession and/or Determination and Payment of Just Compensation is being processed between a private individual and the municipality.
However, the parties have reached an amicable settlement and submitted a compromise agreement to the court.
The purchase price for the public cemetery lot was P9.818 million. According to the Agreement of Sale and Purchase, the terms stipulate a down payment of 50 percent of the agreed price at the time of execution, with the remaining 50 percent to be paid upon presentation of the title in the municipality’s name, and the title transfer must be completed within two years.
In response to the audit query, the municipal assessor’s office clarified the titling process for the 19 parcels of land, which were not registered under the Torrens Title System, is underway.
The office explained that a municipal council resolution authorizing the assessor to process the titling, including securing necessary clearances and documents from various government agencies, had been discussed with the legislative body.
It emphasized that the transfer of title for the lot purchased for the quarantine facility in Barangay Anabo, Lemery, is in progress. It further noted the seller is handling the transfer of the tax declaration and title in the name of the municipality.
Likewise, the municipal assessor’s office said the Deed of Sale executed between the municipality and the seller is required for the payment of taxes such as the Certificate of Authorizing Registration, Capital Gains Tax, Documentary Stamp Tax, and Transfer Tax. The responsibility for these taxes lies with the seller.
The lot purchased in Barangay Milan, Lemery, which is encumbered with a Memorandum of Encumbrance from the Department of Agrarian Reform (DAR), is also being processed for the cancellation of the encumbrances. The office noted the seller is addressing this issue, as the lot falls within the seller’s retention area.
In addition, the municipal assessor’s office said the lot purchased for the public cemetery, which was the subject of a court case, is already occupied by the municipality and is being utilized for its intended purpose.
The municipality is continuing the process of titling, and all expenses for the title transfer will be borne by the seller. The municipal assessor’s office said the final payment for the lot will only be made once the title is transferred into the municipality’s name.
The COA asked the municipal mayor’s office to direct the municipal accountant and municipal assessor to submit the missing documents related to the acquisition of the two lots that have an agreement with DAR.
The municipal accountant was also instructed to reclassify the amount of P6.439 million from the “Other Prepayments” account to the “Land” account for the three lots purchased.
Additionally, the municipal accountant should record the “Land” and the corresponding liability/payable accounts for the unrecognized portion amounting to P5.079 million. This will ensure that the Land account is accurately reflected in the municipality’s financial records, according to COA.
The town’s inventory and appraisal committee was also tasked with accurately identifying all lands owned by the municipality, including any donated lots, and providing proper valuations to correctly record the Land account in the municipality’s financial statements. State auditors explained that such will help address the discrepancy between the actual properties owned and what is reflected in the books.
The COA also recommended to the municipal mayor to designate a responsible person who will facilitate the processing of the Certificates of Title for the 19 parcels of land that are currently not registered under the Torrens Title System, as well as other donated lots that have not yet been transferred to the Municipality.
Such is necessary to establish the municipality’s absolute ownership over these properties and ensure proper legal documentation is in place, the COA noted./PN
