The Commission on Audit (COA) has cautioned local government units (LGUs) against "unnecessary" expenditures for repairs of vehicles that are "beyond economic repair."

The COA said: "The amount paid for the repair of the vehicle could be put into waste, as it can be expected that the vehicle, which is beyond economic repair, may soon break down, thus necessitating another repair. Under these circumstances, the repair becomes unnecessary."

It pointed out that the money spent for the repairs of vehicles that are "beyond economic repair" should, instead, be used for the purchase of a new vehicle.

It cited its Circular 2012-03 dated Oct. 29, 2012 which provides the "guidelines for the prevention and disallowance of irregular, unnecessary, excessive, extravagant and unconscionable expenditures."

It pointed out that "continuous repair of vehicles and equipment already considered beyond economic repair is an unnecessary expenditure."

The COA's reminder to LGUs was contained in its 2023 audit on the municipality of Sanchez Mira in Cagayan which spent P1.037 million for the repair of its ambulance that only had a net book value of P2.239 million as of Dec. 31, 2023.

Citing records, the COA said that on Nov. 28, 2022, the municipality's ambulance, a Toyota Hi-Ace Commuter, was totally wrecked because of an accident. Sanchez Mira then filed for an insurance claim with the Government Service Insurance System (GSIS).

The branch manager of GSIS in Tuguegarao City Branch wrote a letter to the municipal mayor on Jan. 26, 2023, explaining that the repair shop's estimated repair cost would amount to P1,238,000, which is equivalent to 62 percent of the insured value of the vehicle amounting to P2 million, it said.

The repair shop also submitted a certification that there are hidden damages which are not yet included in the estimate and further states that the vehicle is beyond economic repair, it also said.

On March 30, 2023, Sanchez Mira received the total indemnity of P1,070,00 from GSIS. The COA said its auditors reviewed the municipality's disbursements and discovered that the insurance proceeds indeed went to a motor vehicle repair shop on June 14, 2023 amounting to P1,037,900 for the repair of the ambulance.

"The transaction is questionable, considering that per evaluation and assessment by the GSIS, the vehicle is beyond economic repair. Test of prudence would dictate that the decision to repair the vehicle is no longer economical and efficient," the COA said.

"With the indemnity proceeds and possible proceeds from the disposal of the damaged vehicle, the Municipality could have used the amount as a supplement for its budget to purchase a brand-new vehicle," it also said.

The COA directed the municipal officials of Sanchez Mira to submit the justification as to why they proceeded with the repair of the vehicle despite the assessment made by the GSIS that the vehicle is beyond economic repair, and require the town's General Services Office (GSO) and municipal accountant to ensure that repairs for vehicles and equipment shall not be allowed if these are already considered beyond economic repair.