G.R. No. 224516 - Domato-Togonon vs. Commission on Audit

In 2001, pursuant to Executive Orders Nos. 24 and 25, the City Appraisal Committee and Task Force on Lot Purchase was created in Koronadal City to find a site for a new city hall.
The heirs of Plomillo owned Lot 80, PLS-246-D and expressed willingness to sell. Initially, they offered the property for P30,000,000.00, inclusive of all costs and incidental expenses.
Subsequently, they lowered the price to P22,000,000.00 on condition that the city government would shoulder all transfer and related expenses except realty taxes. The expenses included documentation, capital gains tax, estate taxes, transfer tax, and documentary stamp tax; boundary disputes were to be borne by the sellers.
The City Appraisal Committee found the offer reasonable and endorsed the property to Mayor Fernando Q. Miguel, who caused an evaluation and sought authority from the Sangguniang Panlungsod.
The Sangguniang Panlungsod passed Resolution No. 746 on August 14, 2003, authorizing Mayor Miguel to enter into a deed of sale with the heirs of Plomillo, abiding by the terms set by the sellers, including the city shouldering related transfer expenses.
Koronadal City, through Mayor Miguel, entered into a Deed of Absolute Sale with the heirs of Plomillo; however, this deed did not explicitly provide that the city would pay the transfer expenses.

Koronadal City paid a total of P24,398,403.02 inclusive of the purchase price (P22,000,000.00), notarial fees, capital gains tax, documentary and estate tax, transfer tax, registration fees, and other related expenses.
Post-audit, the Commission on Audit (COA) audit team issued Audit Observation Memorandums citing irregularities in payment of taxes and fees as contrary to law and regulations.
COA’s Regional Cluster Director issued Notices of Disallowance Nos. 05-001-101(04) and 05-002-101(03), disallowing P2,398,403.02 representing the transfer costs for violating Bureau of Internal Revenue Regulation No. 13-85.
Several local officials including Marites Domato-Togonon, a member of the Sangguniang Panlungsod, and the heirs of Plomillo were held liable.

The Legal and Adjudication Office (LAO) of COA affirmed the disallowances in a May 18, 2006 Decision but excluded some officials from liability.
Motions for reconsideration were denied. Togonon and other officials filed a Petition for Review before the COA, which was denied by Decision upholding the Notices of Disallowance on July 11, 2007.
COA reasoned that Koronadal City’s payment of taxes was an indirect imposition of tax prohibited under Section 133(o) of the Local Government Code (LGC), the deed did not provide that the city would shoulder expenses, and COA cannot nullify legislative enactments like the Sangguniang Panlungsod’s Resolution No. 746.
On September 16, 2013, COA’s decision became final. Togonon sought to set aside a Notice of Finality due to lack of receipt of a copy but her motion for reconsideration was denied in 2015 for failure to present new matters.

COA gravely abused its discretion by failing to consider that the city’s payment of taxes was part of the contract’s consideration.
The payment benefited Koronadal City which saved P5,601,596.98 from the original price.
Resolution No. 746 merely authorized entering into a contract and did not impose taxes unlawfully.
COA ignored the Ombudsman’s resolution and the Sandiganbayan ruling in People v. Miguel validating the sale and the Sangguniang Panlungsod’s authority.

Were contrary to law because the liabilities to pay capital gains, documentary stamps, and transfer expenses are on the seller.
Violated prohibitions on local government units paying private lawyers’ fees without compliance to COA circulars.
Constituted an indirect and unlawful imposition of taxes on the local government unit prohibited by the LGC.

Togonon replied that COA disregarded the parties’ agreement, Resolution No. 746, and opined that the city may employ a private lawyer for notarization as supported by a Department of the Interior and Local Government (DILG) legal opinion.

Whether COA gravely abused its discretion in not considering Koronadal City’s payment of transfer taxes, fees, and expenses as part of the contract’s consideration.
Whether COA gravely abused its discretion in regarding Sangguniang Panlungsod Resolution No. 746 as an indirect imposition of tax on Koronadal City, violating the LGC.
Whether COA gravely abused its discretion in disallowing the payment of notarial fees to a private lawyer engaged by Koronadal City.
Whether petitioner Marites Domato-Togonon is personally liable to pay the disallowed amount of P2,398,403.02.