AOM NO. 01-Unserviceable PPE

Unserviceable properties costing P12,833,077.
81 are still carried in the books and

not yet disposed by the General Services Office contrary to Sections 379 of Republic
Act (R.A.) No. 7160 and COA Circular No. 89-296, thus, the Property, Plant and
Equipment (PPE) as of December 31, 2019 did not reflect the actual serviceable
properties of the Municipality.
Section 379 of RA 7160 provides:
When property of any local government unit has become

unserviceable for any cause or is no longer needed, it shall upon
application of the officer accountable thereof, be inspected and appraised
by the provincial, city or municipal auditor, as the case may be, or his
duly authorized representative or that of the Commission on Audit and, if
found valueless or unusable, shall be destroyed in the presence of the
inspecting officer.
If found valuable, the same shall be sold at public auction to the

highest bidder under the supervision of the committee on awards and in
the presence of the provincial, city or municipal auditor or his duly
authorized representative. Notice of the public auction shall be posted in
at least three (3) publicly accessible and conspicuous places, x x x .
Other prescribed modes of disposal of unserviceable properties were also

provided thereof:
Section 380. Negotiated Sale of Property- Property no longer

needed may also be disposed of at a private sale at such price as may be
determined by the Committee on Awards or its duly authorized
representative...x x x. In case of real property, the disposal shall be
subject to the approval of the Commission on Audit regardless of the
value or cost involved.
Section 381. Transfer without cost- Property which has become

unserviceable or is no longer needed may be transferred without cost to
another office, agency, subdivision or instrumentality....x x x at an
appraised valuation determined by the local committee on awards. Such
transfer shall be subject to the approval of the sanggunian concerned
making the transfer and by the head of the office…x x x receiving the
property.
Further, Section IV of COA Circular No. 89-296 dated January 27, 1989 on
Authority or Responsibility for Property Disposal/Divestment provides:
Pursuant to existing laws on the matter, the full and sole authority and
responsibility for the divestment or disposal of property and other assets
owned by national government agencies or instrumentalities, local
government units, and government-owned and/or controlled corporations
and their subsidiaries shall be lodged in the heads of the departments,
bureaus, and offices of the national government, the local government
units, and the governing bodies or managing heads of government-owned
or controlled corporations and their subsidiaries conformably to their
respective corporate charters or articles of incorporation, who shall
constitute the appropriate committee or body to undertake the same.
Review of the Inventory and Inspection Report of Unserviceable Property

disclosed that several unserviceable properties were still carried in the books of the LGU.
However, the accumulated depreciation for each item was not shown in the report thus,
the carrying value of each property could not be determined. The Municipal Accountant
explained that they lack the knowledge on the proper disposal of said properties.
Summary of the unserviceable properties is shown Table I, to wit:
Table 1
Particular Quamtity Cost

Other Public Infrastructures 2 84,502.25
Buildings and Other Structures 17 2,213,108.10
Office Equipment 41 1,229,116.45
Information and Communication
Technology Equipment 114 3,493,177.97
Communication Equipment 22 652,835.67
Disaster Response and Rescue Equipment 4 9,599.00
Medical Equipment 12 152,731.50
Sports Equipment 2 59,570.00
Technical and Scientific Equipment 2 74,100.00
Other Machinery and Equipment 3 266,500.00
Motor Vehicles 4 3,034,000.00
Watercrafts 4 113,542.00
Furnitures and Fixtures 30 248,366.15
Library Books 2 8,525.00
Other PPE 48 1,193,403.72
Total 307 12,833,077.81
Also, it was observed that there were 307 items of unserviceable PPE that were
included in the Inventory and Inspection Report of Unserviceable Property without
corresponding cost.
The benefits and service potential of unserviceable and obsolete PPE valued at
P12,833,077.81 are no longer expected to flow to the entity because they are already of
no use, thus, these must be dropped from the books of the agency.
Further, the storage rooms or areas occupied by these properties could have been
used by the LGU for better purpose.
We recommend that the Municipal Mayor require the General Services Officer to
institute measures for the immediate and proper disposal of all obsolete and unserviceable
properties stipulated in Section 370 of RA No. 7160. Also, once proper disposal has been
undertaken, the Municipal Accountant should derecognize in the books said
unserviceable PPE items.
May we have your comments on the foregoing audit observation within five (5)
calendar days from receipt hereof.

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Unserviceable properties costing P12,833,077.

81 are still carried in the books and

Section 379 of RA 7160 provides:

When property of any local government unit has become

If found valuable, the same shall be sold at public auction to the

Other prescribed modes of disposal of unserviceable properties were also

Section 380. Negotiated Sale of Property- Property no longer

Section 381. Transfer without cost- Property which has become

Review of the Inventory and Inspection Report of Unserviceable Property

Summary of the unserviceable properties is shown Table I, to wit:

Particular Quamtity Cost

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