City breaks appropriations act: P180 million excess stock – COA

CEBU, Philippines — The Commission on Audit (COA) has called out the Cebu City Government for maintaining more than P180 million worth of materials and supplies in its warehouses, saying the stockpile exceeded the two-month inventory limit prescribed under the General Appropriations Act (GAA) of 2025.

In its 2025 Annual Audit Report, COA found that the city was keeping P180,558,554.54 worth of inventories at the Department of General Services (DGS) and Local School Board (LSB) warehouses.

State auditors cited Section 26 of the GAA, which provides that “inventory levels of supplies, materials, and equipment spare parts shall not exceed the agency’s two month requirements, except under specific circumstances such as anticipated price increases, national emergencies, impending shortages, or when otherwise authorized by law.”

The findings pointed to deficiencies in procurement planning, inventory monitoring, and distribution, raising concerns over the city's compliance with the principles of economy, efficiency and effectiveness under Presidential Decree No. 1445, or the Government Auditing Code of the Philippines.

COA said the DGS warehouse was holding P100.6 million worth of supplies, while the LSB warehouse stored P79.9 million, leaving both facilities nearly at full capacity.

Auditors found large quantities of Cebu City P.E. uniforms, disaster storage boxes, tax declaration forms, fire extinguishers, floodlights and construction materials sitting idle, with little or no distribution.

One of the most notable examples involved the city's stock of tax declaration forms.

COA found 3,414 boxes in storage despite annual consumption averaging only 25 to 30 boxes. Although thousands of unused forms procured in 2023 remained on hand, the city still purchased another 1,500 boxes in 2024, prompting auditors to question the necessity and timing of the procurement.

The audit attributed the excessive inventories to poor procurement planning, the absence of a structured inventory management system and inefficient distribution practices.

Records showed repeated purchases of identical items within the same year from different suppliers without validated demand data.

Warehouse personnel told auditors their responsibilities were limited to receiving and storing deliveries and that they were not consulted to verify existing inventory levels before new procurements were made.

COA also noted that purchases continued despite sufficient stock of slow-moving items.

Among the undistributed supplies were 108,960 sets of P.E. uniforms, 10,353 floodlights, hundreds of disaster storage boxes and several thousand school kits.

The delay in distribution, auditors said, could result in uniforms becoming unsuitable for students and fire extinguishers expiring before they are used.

The report further noted that procurements under the LSB included P134.2 million worth of electrical supplies, P81.57 million in civil works materials, P23.5 million for plumbing materials and P138.9 million in repair and maintenance supplies for public schools.

COA questioned the necessity and timing of the acquisitions, saying the quantities far exceeded immediate requirements.

The audit agency warned that funds tied up in idle inventories could have been used for other priority programs.

It added that prolonged storage increases the risk of deterioration, damage and obsolescence while reducing warehouse space for essential supplies.

COA recommended that Mayor Nestor Archival require city offices to justify procurement decisions, improve coordination between requesting offices and warehouse personnel, and establish a functional inventory management system to ensure purchases are based on actual requirements.

During the April 8, 2026 exit conference, the LSB informed auditors that school kits procured in 2023 and 2024 remained in storage but would be distributed during the upcoming Brigada Eskwela. It was not immediately learned whether these were all distributed before the opening of classes last month.

The office also reported that the P.E. uniforms have since been distributed, while floodlights are scheduled for turnover to the Department of Public Services.

Disaster storage boxes are now being released to families affected by fire incidents, while the Office of the City Assessor assured auditors that no additional tax declaration forms would be procured until existing stocks are fully consumed.

Despite these commitments, COA maintained that the substantial inventory balances underscored the need for stricter procurement planning, inventory monitoring and timely distribution.

It reiterated that purchases financed through the Special Education Fund should be promptly utilized for their intended beneficiaries and stressed that future procurements must be guided by actual consumption, existing stock levels and realistic distribution schedules to prevent waste and ensure the efficient use of public funds. — /FPL (FREEMAN)