DISPOSAL of

Government
Property
HELLO!
I am
Engineer
Maria Cecilia G.
Alonzo
2
Key Points
1. Part of Disposal in Property Supply and
Management System
2. Legal Basis
3. Definition of Terms
4. Disposal Activities and Procedures
5. Guidelines/Procedures in the Sale of
Property
3
“
Nothing can be taught to a man;
but it’s possible to help him to
find the answer within himself.”

(Galileo Galilei)
4
1. Phase of Disposal in
Property and Supply
Management System

5
PROPERTY and SUPPLY
MANAGEMENT SYSTEM
ACQUISITION
DELIVERY, INSPECTION and
ACCEPTANCE, and PAYMENT
CUSTODIANSHIP
ISSUANCE and UTILIZATION
DISPOSAL 6
Similarities and
Differences
between
Acquisition
and Disposal
7
 ACQUISITION DISPOSAL
 Procurement  Sale
M  Transfer  Transfer
O  Donation  Donation
 Confiscation,  Barter
D Attachment/ Seizure
E /Foreclosure
S  Production/  Condemnation
Manufacture
 Construction 8
 ACQUISITION DISPOSAL
 Procurement  Sale
 Public Bidding  Public Bidding
 Negotiated  Negotiated/ Private
Procurement Sale
 Limited Source Bidding

 Direct Contracting
 Repeat Order
 Shopping 9
 BASIC CONCEPT
ACQUISITIO
N DISPOSAL

the START of
the life cycle the END of the
of a life cycle of a
government government
property property 10
2. Legal Basis

11
Manual on Disposal of
Government Property (National Budget
Circular No. 425 dated 28 January 1992
 Determination of DISPOSABLE
PROPERTY
 DISPOSAL OBJECTIVES
 Modes of Disposal
 Guidelines/ Procedures in the Sale of
Property
Manual on Disposal of
Government Property (National Budget
Circular No. 425 dated 28 January 1992
 Functions of the Disposal Committee
 Secretariat Services
Executive Order No. 309 dated 8
March 1996
 RECONSTITUTING THE DISPOSAL
COMMITTEE CREATED UNDER
Executive Order NO. 285
COA Memorandum 98-569-A
dated August 5, 1998
 Revised Guidelines on Appraisal of
Property Other Than Real Estate,
Antique Property and Works of Art
 Management Responsibilities when the
highest bid price falls below the floor
price
COA Memorandum 98-569-A
dated August 5, 1998
 Manual on Appraisal of Government
Properties:
- Documentations
- Appraisal Process
- Determination of the Appraised Value
COA Memorandum No.
88-024 dated 8 August 1998
 Guidelines on the Review of
Appraised Value of Disposed
Property Other Than Real Estate,
Antique Property and Works of Art
 COA RESPONSIBILITIES
 COA Circular No. 95-006
dated 18 May 1995
 Total lifting of pre-audit on all financial
transactions of the National Government
agencies, GOCCs and LGUs
 Management Responsibilities:
1. Conduct of inspection
2. Submission of Report to the Auditor
3. Notification on the schedule of destruction /
condemnation of unserviceable property
COA Memorandum 2005-027
dated February 28, 2005
 Amendments to COA Memorandum No.
91-704 dated February 27, 1991 on the
Documentary Requirements for the
Evaluation of the Technical Aspect of all
Government Contracts and Inspection of
Government Projects
3. Definition of
Terms

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Abandoned Property
◈ Any personal property in the possession
of any government agency without a
known owner

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Beyond Economical Repair
◈When the cost of repair and maintenance
becomes prohibitive and disadvantageous
to the government considering such factors
as:
◈ Maintenance
◈ Downtime
◈ Replacement cost of spare parts
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Beyond Economical Repair
◈ Frequency of breakdown
◈ Alternative modes such as rental of
equipment or outright replacement

23
Obsolete Property
◈That which has lost its efficacy either due
to technological advancement, change of
procedures, reorganization of office, or
completion of project

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Unserviceable Property
 The property has become unserviceable
for any cause or is no longer needed.
Reference: Sec. 79 of PD 1445

 The end of the life cycle of government

property.
Reference: Manual on Property Management
25
Unserviceable
Property
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Determining Factors
 Can no longer be repaired or
reconditioned;
 Maintenance/repair costs more
than outweighs the benefits and
services that will derived from
its continued use;
 Has become obsolete or
outmoded because of change in
technology; 27
Determining Factors
Has been rendered
unnecessary due to change
in the Agency’s functions/
mandate;
In excess of requirements;
Has become dangerous or
hazardous to use
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Disposal Activities and Procedures
◈Creation of the Disposal Committee
◈ Documents Pertaining to Disposable
Property
◈ Inspection
◈ Appraisal

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Creation of the
Disposal Committee
•Disposal Committee
•Functions
•Secretariat and Technical Staff

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Disposal Committee
Chairman – Senior Official with a rank not
lower than Assistant Secretary
for a department and Assistant
Director for a bureau/ agency or
department manager for a
GOCC.
Reference: Executive Order No. 309 dated March 8, 1996; re: RECONSTITUTING THE DISPOSAL
COMMITTEE CREATED UNDER E.O. NO. 285
 Disposal Committee
Members
• Head of Administrative Unit;
• Head of Property Unit

Reference: Executive Order No. 309 dated March 8, 1996; re: RECONSTITUTING THE DISPOSAL
COMMITTEE CREATED UNDER E.O. NO. 285
 Functions of Disposal
Committee
• Inspect or authorize the department’s/
agency’s field offices to inspect the
unserviceable equipment and property
to verify justification for disposal.

Reference: COA Circular No. 83-206 dated May 23, 1983, re: EO 888 dated March 18, 1983
 Functions Disposal
Committee
 Set the final appraised value of all
disposable property considering:
- Obsolescence
- Market demand,
Reference: COA Circular No. 83-206 dated May 23, 1983, re: EO 888 dated March 18, 1983
 Functions Disposal
Committee
 Set the final appraised value of all
disposable property considering:
- Physical condition, and
- Result of previous biddings for
similar property
Reference: COA Circular No. 83-206 dated May 23, 1983, re: EO 888 dated March 18, 1983
 Functions Disposal
Committee
 Recommend to the Minister or Head of
Ministry/Agency for approval, the manner
of disposal taking into consideration the
pertinent provisions of the Revised
Administrative Code and the National
Auditing Code;
Reference: COA Circular No. 83-206 dated May 23, 1983, re: EO 888 dated March 18, 1983
 Functions Disposal
Committee
 Conduct public biddings for the sale
of disposable property on an “AS IS”
‘WHERE IS” basis and to recommend
corresponding award;
Reference: COA Circular No. 83-206 dated May 23, 1983, re: EO 888 dated March 18, 1983
 Functions of Secretariat
and Technical Staff
 Manned from existing personnel of the
Ministry/Agency
 To handle the Committee’s technical and
administrative matters
 Safekeeping and systematic filing of Committee
documents and records
Reference: COA Circular No. 83-206 dated May 23, 1983, re: EO 888 dated March 18, 1983
Documentation
 Inventory and Inspection Report of
Unserviceable Property Annex A

INVENTORY AND INSPECTION REPORT OF UNSERVICEABLE PROPERTY

As of ___________________
Fund: _________________________________________________

INVENTORY INSPECTION

Date Accumulated Net Book Appraised

Particulars Property No. Quantity Unit Cost Total Cost Remarks Disposition Remarks
Acquired Depreciation Value Value

I CERTIFY that I have inspected each I CERTIFY that I have

CERTIFIED CORRECT BY: VERIFIED BY: and every article enumerated in this witnessed the inspection of
report the articles enumerated in
this report

Name and Signature Name/Signature-Head of the Accounting Unit Name and Signature of Inspector

Position and Designation Position and Designation Position and Desigantion Name and Signature of Witness

Date Date Date Date

APPROVED BY:

Authorized Official Date

page 1/2
Inventory and Inspection Report of
Unserviceable Property
◈ The IIRUP is a report prepared by the
Supply and/or Property Unit as basis to
record dropping from the books the
unserviceable properties carried in the
PPE accounts.

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Inventory and Inspection Report of
Unserviceable Property
This report shall be accomplished as follows:
◈As at ______________ – the period covered by the report
◈Entity Name – the name of the agency/entity
◈Fund Cluster – the fund cluster name/code in accordance
with the UACS
◈ Name of the Accountable/Designation/Station – the name,
designation and station of the Accountable Officer

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Inventory and Inspection Report of
Unserviceable Property
Inventory
◈Date Acquired – acquisition date of the PPE
◈Particulars/Articles – description of the unserviceable
PPE
◈Property No. – the assigned number to the
unserviceable PPE
◈Quantity – quantity of unserviceable PPE
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Inventory and Inspection Report of
Unserviceable Property
Inventory
◈Unit Cost – cost per unit of unserviceable PPE
◈ Total Cost – total amount of unserviceable PPE
(Quantity x Unit Cost)
◈ Accumulated Depreciation – accumulated
depreciation of unserviceable PPE
◈ Accumulated Impairment Losses – accumulated
impairment losses of unserviceable PPE 44
Inventory and Inspection Report of
Unserviceable Property
Inventory
◈Carrying Amount – cost less accumulated
depreciation and accumulated impairment losses
◈Remarks – additional information on the unserviceable
PPE such as condition, status, etc.

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Inventory and Inspection Report of
Unserviceable Property
◈Inspection and Disposal
◈ Disposal – the amount per mode of disposal such
as sale, transfer, destruction, etc.
◈ Appraised Value – appraisal assigned by the
agency/entity
◈ Record of Sales – the official receipt number and
corresponding amount for the sales proceeds
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Inventory and Inspection Report of
Unserviceable Property
◈Inspection and Disposal
◈ Disposal – the amount per mode of disposal such
as sale, transfer, destruction, etc.
◈ Appraised Value – appraisal assigned by the
agency/entity
◈ Record of Sales – the official receipt number and
corresponding amount for the sales proceeds
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Guidelines/ Procedures in the
Sale of Property
 Pre-bidding Requirements

1. Invitation to Bid
- Name of the Owning Agency
- Sufficient description of the items
- Date, time and place of pre-bidding
conference, if necessary

Reference: Manual on Disposal of Government Property, DBM

 Pre-bidding Requirements
1. Invitation to Bid
- Date, Time and place of submission
and opening of bids
- Bidding Requirements
- Reservation or Option on the part of
the government to accept or reject
Reference: Manual on Disposal of Government Property, DBM
 Pre-bidding Requirements
◈ Schedule of Bidding
- not less than seven (7) working
days from date of
issuance/publication/ posting of
the ITB
Reference: Manual on Disposal of Government Property, DBM
Accomplishment and Submission of Bids
◈ Preparation of the Bid Tender
(qualified bidder)
- Description of the Items with
corresponding bid offer clearly indicated
in figures and in words
- Name and signature of the bidder
Reference: Manual on Disposal of Government Property, DBM
Accomplishment and Submission of Bids
◈ Preparation of the Bid Tender
(qualified bidder)
- Business or residence address of the bidder
- Business license number of the bidder
- Terms and conditions offered regarding
bidders bond, payment, default and
delivery
Reference: Manual on Disposal of Government Property, DBM
 Accomplishment and
Submission of Bids
◈ Bid Tender
– 3 copies, preferably in type
written;

Reference: Manual on Disposal of Government Property, DBM

 Accomplishment and
Submission of Bids
◈ Bid Tender
- properly signed and submitted on
or before the time scheduled for the
opening of bids
- envelop should be sealed and
addressed properly and correctly
Reference: Manual on Disposal of Government Property, DBM
 Bid Bond
◈Per Item/ lot, as the case maybe
◈10% of the minimum bid price set by the
government
◈Form – cash or manager’s check or
cashier’s check

Reference: Manual on Disposal of Government Property, DBM

 Opening of Bids

◈All bids shall be opened at the

time, date and place set in the
invitation to bid

Reference: Manual on Disposal of Government Property, DBM

 Opening of Bids
◈Bid Tender shall be signed by the
members of the Disposal
Committee immediately after its
opening and announced in order to
confirm compliance with the
requirements of the bidding.
Reference: Manual on Disposal of Government Property, DBM
Abstract of Bids
◈Abstract of bids in duplicate copies;
◈Signed by the members of the Disposal
Committee

Reference: Manual on Disposal of Government Property, DBM

Abstract of Bids
◈Matrix Summary form showing bids
of the individual bidders, their bids
and bid bonds per item/ per lot and
the confirmation of the disposal
committee
Reference: Manual on Disposal of Government Property, DBM
 Unsuccessful Bidding
◈No bidding participant;
◈One (1) bidder submitted a bid
tender for each lot

Reference: Manual on Disposal of Government Property, DBM

 Unsuccessful Bidding
◈All bidders failed to comply with the
terms and conditions prescribed in the
ITB
◈Complying bidders failed to meet the
minimum bid price
Reference: Manual on Disposal of Government Property, DBM
 The highest bid falls below the
government floor price, the
agency shall:

1. Determine whether the difference is

excessive

Reference: COA Memorandum 98-569-A dated August 5, 1998

 Excessive if amount of deviation of the
highest bid from the floor/reference value
is greater than 10% of the
floor/reference value plus the cost of
calling another public auction
If Excessive, call another public
auction with the floor/reference value
reduced by 10%
Reference: COA Memorandum 98-569-A dated August 5, 1998
 The highest bid falls below the
government floor price, the
agency shall:
◈If the 2nd auction still fails (highest bid is
still excessively lower than the reduced
floor/reference value) the sale may be
negotiated with the highest offeror
Reference: COA Memorandum 98-569-A dated August 5, 1998
 The highest bid falls below the
government floor price, the
agency shall:
◈ If NOT excessive, continue with
the sale of the property

Reference: COA Memorandum 98-569-A dated August 5, 1998

 Awarding of Bids
◈Award shall be given to the
highest complying bidder
◈2 or more complying bidders with
identical bids – viva voce

Reference: Manual on Disposal of Government Property, DBM

Awarding of Bids
◈Price not less than the offered
bids
◈Immediately after the opening of
bids

Reference: Manual on Disposal of Government Property, DBM

 Awarding of Bids
◈Deferment of award: issue a
temporary receipt, but not to
exceed five (5) working days from
the date of opening of bids

Reference: Manual on Disposal of Government Property, DBM

 Awarding of Bids
◈Bid bonds of the losing bidder
shall be returned immediately after
the announcement of the winning
bidder

Reference: Manual on Disposal of Government Property, DBM

Payment
◈Bid bond shall be considered as
partial payment
◈Balance shall be paid in the form of
cash, cashier’s check or manager’s
check
Reference: Manual on Disposal of Government Property, DBM
Payment
◈Shall be made within five (5) working
days from the date of the notice of
award
◈In case failure for full payment –
cancellation of award and forfeiture of
the bid bond
Reference: Manual on Disposal of Government Property, DBM
 Guidelines in the Claim of Award /
Withdrawal of Property
• Claims shall be made only by
the Awardee after full payment.
• The Property Officer shall accomplish a Tally-
Out Sheet to be acknowledged by the
Awardee.

Reference: Manual on Disposal of Government Property, DBM

 Guidelines in the Claim of Award /
Withdrawal of Property
• Claims shall be made only
during official working hours.
• Claims shall be made within the period fixed by
the Disposal Committee but not more than 30
days after awarding.

Reference: Manual on Disposal of Government Property, DBM

Failure on the part of awardee to claim the
property
◈Cancellation of the award;
◈Ownership of the property automatically
revert to the government

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MODES OF
DISPOSAL
Modes of Disposal
 Destruction or Condemnation of Property
 Transfer to Other Government Agencies
 Barter
 Donation
 Sale of Unserviceable Property
 Sale thru Public Bidding
 Sale thru Negotiated Sale
 Condemnation/Destruction
• has no commercial value
• No willing receiver
• hazardous property
• Appraised value is less than the
administrative cost of sale
• Subject to prior inspection by the Auditor
concerned
Transfer to Other Government Agencies

◈With or Without Condition

◈Accomplishment of Property
Transfer Receipt (formerly Invoice
and Receipt of Property (Cf., Sec.
76, P.D. 1445)
References: COA Circular 89-296 dated January 27, 1989; GAM vol. II
 Barter (Government to Government)
◈exchange for another piece of property
without the use of money
◈Offer that would redound to the
interest of and is advantageous to the
government
Reference: COA Circular 89-296 dated January 27, 1989
 Public Auction
◈adequate publicity and notification
◈sufficient time frame between publication and
date of auction
◈opportunity to inspect the property
◈confidentiality of sealed proposals
◈bond and other pre-qualification requirements
◈fair evaluation of tenders and proper
notification of award
Reference: COA Circular 89-296 dated January 27, 1989
Sale thru Negotiation

◈There was failure of two(2) public auction.

◈The negotiation may be conducted singly provided
that government gets the best price.
◈A record of proceedings must be maintained.
◈The negotiated price shall not be lower than the
highest offer submitted at the failed public
auction.

Reference: COA Circular 89-296 dated January 27, 1989 and DBM Manual on
Disposal
 Dropping from the Books of
Accounts
◈Accomplish the pertinent portions of
the Inventory and Inspection Report
Unserviceable Property, Waste
Materials Report, whichever is
applicable
Reference: Manual on Disposal of Government Property, DBM
Dropping from the Books of
Accounts
◈Reports shall be the basis for
dropping the property from the books
of accounts and taking up the
proceeds from the sale of the
property.
Reference: Manual on Disposal of Government Property, DBM
 Impairment
Impairment is a loss in the future economic benefits or service potential of
an asset, over and above the systematic recognition through depreciation.

Carryin RSA
Impairme (NCGA)
g
or
nt Loss Amoun RA
t (CA) (CGA)

Cost – Fair value less

Accumulated Cost to sell and
Depreciation and Value in Use
Accumulated whichever is
Impairment Loss higher
NCGA – Non-Cash Generating
Asset GAM: Accounting Session 9: Applying the Accounting Policies on Property, Plant
and Equipment
Policies on Disposal/Derecognition of PPE

 Gain or loss arising from derecognition shall be included in surplus

or deficit.
 If an entity recognizes in the CA the cost of a replacement, then the
CA of the replaced part should be derecognized
 Gain or loss from disposal shall be determined as the difference
between the net disposal proceeds, if any, and the CA
 JEV shall be prepared by the Accounting Unit to record the disposal
 Disposal procedures of unserviceable property shall be in
accordance with Supply and Property Management Manual and
Section 79 of PD 1445.

GAM: Accounting Session 9: Applying the Accounting

Policies on Property, Plant and
 Documentary Requirements:
EQUIPMENT, MACHINERIES, OFFICE
EQUIPMENT and FURNITURE
◈Program for disposal with time schedule
◈Copy of the in-house or private company
appraisal report

Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary Requirements:
EQUIPMENT, MACHINERIES, OFFICE
EQUIPMENT and FURNITURE

◈Inventory and Inspection Report of

Unserviceable Property (IIRUP)

Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary Requirements:
EQUIPMENT, MACHINERIES, OFFICE
EQUIPMENT and FURNITURE

◈Complete technical description of

the property indicating the capacity,
type, model, brand, dimension, and
other relevant description
Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary Requirements:
EQUIPMENT, MACHINERIES, OFFICE
EQUIPMENT and FURNITURE

◈Colored photographs of the

property
◈The location/site of the property

Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary Requirements:
EQUIPMENT, MACHINERIES, OFFICE
EQUIPMENT and FURNITURE

◈The Equipment ledger/record of

maintenance/repair of the equipment

Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary Requirements:
EQUIPMENT, MACHINERIES, OFFICE
EQUIPMENT and FURNITURE

◈The equipment inspection report

indicating specifically the missing parts, if
any

Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary
Requirements: Aircraft
◈Copy of the in-house or private
company appraisal report
◈Cost and date of acquisition

Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary
Requirements: Aircraft
◈Latest copy of Certificate of
Airworthiness from the Air
Transportation Office

Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary
Requirements: Aircraft
◈Certificate of Registration
◈Latest service bulletin

Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary
Requirements: Aircraft
◈Total hours since last overhaul of
engine
◈Airtime flying hours
◈Time between overhaul
Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary
Requirements: Aircraft
◈Certificate of total flying time
◈Colored photographs showing
three sides
◈List of instruments/equipment
accessories installed
Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary
Requirements: MARINE
VESSEL
◈Complete technical description of the vessel
to include the following:
a. type of vessel, year built
b. dimensions (length over-all, length
between perpendiculars, breadth, depth)

Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary
Requirements: MARINE
VESSEL
c. deadweight/light displacement weight,
net tonnage, and gross tonnage/general
description
d. vessel classification
e. description of propulsion machinery
/engine and Break Horse Power (BHP)
Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary
Requirements: MARINE
VESSEL
◈Copy of the in-house or private
property appraisal report
◈Date and cost of acquisition
Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary
Requirements: MARINE
VESSEL
◈Copy of Certificate of Philippine
Registry
◈Copy of Certificate of Ownership
issued by the Philippine Coast Guard

Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary
Requirements: MARINE
VESSEL
◈Date of last dry-docking and
itemized extent and cost of repairs

Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
 Documentary
Requirements: MARINE
VESSEL
◈Colored photographs showing three
sides
◈List of major equipment and major
accessories on board
Reference: Annex “M” of COA Memorandum No. 2005-027 dated February 28, 2005
Management Responsibilities
◈Conduct inspection of
unserviceable and disposable
government property and other
assets

COA Circular No. 95-006 dated 18 May 1995

 Management Responsibilities
◈Submit the report of inspection or
its equivalent to the Head of the
Auditing Unit immediately after
inspection

COA Circular No. 95-006 dated 18 May 1995

 Management Responsibilities
◈Furnish the Auditor with a copy of
the schedule of condemnation /
destruction of government property
at least 5 days before the
scheduled time
COA Circular No. 95-006 dated 18 May 1995
THANKS!
Any questions?

114