Donations

1. Documentation/s
2. Cash? How sure are we –“purpose”- spent ung cash given
3. Accounting treatment?

1. Pertinent documents necessary for donations were not attached in the voucher contrary to
Article 749 of the New Civil Code (NCC) of the Philippines and Section 3.1 COA Circular 2012-001,
thus, cast doubt on the validity and proprietary of such transfer.

Article 725 of the New Civil Code (NCC) of the Philippines defines Donation is an act of
liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it.
Person in the Civil Code refers either Natural or Juridical person, of which, the latter may refer to the
State and its political subdivisions.

Article 749 of the NCC provides that “In order that the donation of an immovable may be valid, it
must be made in a public document, specifying therein the property donated and the value of the charges
which the donee must satisfy. The acceptance may be made in the same deed of donation or in a separate
public document, but it shall not take effect unless it is done during the lifetime of the donor. If the
acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and
this step shall be noted in both instruments.”

The delivery by the donor and the acceptance by donee must be simultaneous and the acceptance
by a person other than the true donee must be authorized by a proper power of attorney set forth in a
public document. The formalities for acceptance must be present, otherwise the donation is void.

COA Circ… prescribes… For donation, the ff requirements

Post-audit of donations account disclosed that there were no pertinent documents necessary for a
valid donation attached in the vouchers as stated in Section 3.1 COA Circular 2012-001 dated June 14,
2012 such as Copy of Memorandum of Agreement/Trust Agreement, Authorization by the local
Sanggunian for the Local Chief Executive to enter into contract.

Section 76, of Presidential Decree No. 1445 provides that “Any government property that is no
longer serviceable or needed by the agency to which it belongs may be transferred without cost, or at an
appraised value, to other agencies of the government upon authority of the respective heads of agencies
in the national government, or of the governing bodies of government-owned or controlled corporations,
other self-governing boards or commissions of the government, or of the local legislative bodies for local
government units concerned.”

Interview…

Thus, cast doubt on the validity and proprietary of the transaction.

We recommend that Management comply with the documentary requirements provided under
Article 749 of the New Civil Code (NCC) of the Philippines and Section 3.1 COA Circular 2012-001
for a valid donation.