DIVESTMENT/DISPOSAL

• Divestment refer to the manner or scheme of taking away, depriving, withdrawing

of an authority, power or title.

• Pursuant to Executive Order No. 888 and COA Circular No. 89-296, 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.
OBJECTIVES
COMMITTEE ON DISPOSAL
RECONSTITUTED PURSUANT TO EO 309 AS PROVIDED FOR UNDER EO 888
1. CHAIRMAN - A Senior Official with rank not lower than the
level of Assistant Secretary for a department and Assistant Director
for bureau/agency or a department head for a GOCC
2. MEMBER - Head of the Department’s Administrative
Service or the Agency’s Administrative Division or Head of the
GOCC’s equivalent organizational unit
3. MEMBER - Head of the Property Unit

A Secretariat and Technical Staff to be manned by existing personnel of the agency

concerned shall be formed to handle all the agency’s Technical and Administrative
manners as well as the safeguarding and systematic filing of Committee documents
and records.
LEGAL BASIS ON DISPOSAL
• Section 79 of PD 1445 - “when government property has become
unserviceable for any cause or is no longer needed, it shall, upon
application of the accountable officer therefore, be inspected by the
Head of the Agency or his duly authorized representative and if found
to be valueless, it may be sold at a public auction to the highest bidder
under the supervision of the proper committee on award or similar
body. In the event that public auction fails, the property may be sold at
a private sale at such prices as may be fixed by the same committee or
body concerned”.
WHEN DOES A PROPERTY BECOME UNSERVICEABLE?
• Property which can no longer be repaired or reconditioned;
• Property whose maintenance cost of repair outweighs the benefits and services
that will be derived from its continued use;
• Property that has become obsolete or outmoded because of changes in
technology;
• Serviceable property that has been rendered unnecessary due to change in
agency’s mandate or function;
• Unused supplies, materials and parts that were procured in excess of
requirements; and
• Unused supplies and materials that has become dangerous to use because of
long storage or use of which is determined to be hazardous.
MODE OF DISPOSAL/DIVESTMENT:
1. PUBLIC AUCTION
 
Conformably to existing state policy, the divestment or disposal of government property as
contemplated herein shall be undertaken primarily thru public auction. Such mode of divestment or
disposal shall observe and adhere to established mechanics and procedures in public bidding, viz:
 
a. adequate publicity and notification so as to attract the greatest number of interested parties;
(vide, Sec. 79, P.D. 1445)
b. sufficient time frame between publication and date of auction;
c. opportunity afforded to interested parties to inspect the property or assets to be disposed of;
d. confidentiality of sealed proposals;
e. bond and other prequalification requirements to guarantee performance; and
f. fair evaluation of tenders and proper notification of award.

It is understood that the Government reserves the right to reject any or all of the tenders.
 MODE OF DISPOSAL/DIVESTMENT:

2. Sale Thru Negotiation

For justifiable reasons and as demanded by the exigencies of the service, disposal thru negotiated sale may
be resorted to and undertaken by the proper committee or body in the agency or entity concerned taking
into consideration the following factors:
a. There was a failure of public auction. As envisioned in this Circular, there is failure of public auction
in any of the following instances:
1. if there is only one offeror. 
In this case, the offer or bid, if sealed, shall not be opened.
2. if all the offers/tenders are non-complying or unacceptable.

A tender is non-complying or unacceptable when it does not comply with the prescribed legal, technical
and financial requirements for pre-qualification.
MODE OF DISPOSAL/DIVESTMENT:

b. The negotiation may be conducted singly, i.e., on a one-on-one basis, or in group, provided that due
communication between the offerors and the government is established with a view to ensuring that the
government gets the best price.

c. To avert possible confabulation among unscrupulous parties, a record of the proceedings of the
negotiation must be maintained.
 
d. It is understood that the price agreed upon at the negotiation shall not be lower than the floor price as
fixed by the government or the highest offer submitted at the failed public auction whichever is higher.
MODE OF DISPOSAL/DIVESTMENT:

3. Barter, which is the direct exchange of commodities without the use of money and without reference to
price or the exchange of goods of one character for goods of another, may be made with other government
agencies or government-owned and/or controlled corporations. This shall be resorted to where there is an
offer that would redound to the interest of and is advantageous to the government.
MODE OF DISPOSAL/DIVESTMENT:

4. Transfer to Other Government Agencies 

Where the property or assets involved are no longer serviceable or needed by the department, agency,
corporation or local government unit concerned, they may be transferred to other government
entities/agencies without cost or at an appraised value upon authority of the head or governing body of
the said agency or corporation, and upon due accomplishment of an Invoice and Receipt of Property
(Cf., Sec. 76, P.D. 1445).
MODE OF DISPOSAL/DIVESTMENT:

5. Destruction or Condemnation
 This mode shall be resorted to only when the unserviceable property has no commercial value, or is
beyond economic repair, or there is no willing receiver, and/or the appraised value is less than the
administrative cost of sale, subject to prior inspection by the Auditor concerned. Valueless property shall
be condemned either by burning, pounding, throwing beyond recovery, and the like. The head of the
department, agency and corporation and the local chief executive shall approve the disposition.
GUIDE:
1. The Property Custodian in possession of the unserviceable property shall submit to the Disposal
Committee through their Administrative Division Chief the following accomplished forms, as
appropriate:
- Inventory and Inspection Report of Unserviceable Property (IIRUP) accompanied by
any of the following:
- Individual Survey Report, duly certified by the Supply and Property Officer and
Agency Head
- List of missing parts, duly certified by the Supply and Property Officer and
Department Head
- Stencils of chassis and engine numbers of motor vehicles
- Current photographs in two positions
- Equipment Ledger Cards
- Equipment Checklists
- Waste Material Report (WMR)
GUIDE:
2. The Disposal Committee shall conduct inspection to observe the physical condition of the property
to be disposed. An ocular inspection is usually done to have a first-hand observation of the
conditions of the property. After the inspection, appraisal of the properties to be disposed shall be
commenced to attain more realistic valuations of property under disposal based on the actual state
or condition of properties being disposed of and to provide a basis of ensuring that government
recovers a fair return from the disposal of properties.

3. The Disposal Committee shall recommend to the Agency Head the mode of Disposal as appropriate
and deemed most advantageous to the government.

4. Upon disposal of property, the pertinent portions of the IIRUP, Waste Material Report or Property
Transfer Report, whichever is applicable shall be accomplished. These reports shall be the bases
for dropping the property from the books of accounts and for taking up the proceeds from the sale
of the property.
GENERAL PROCEDURES 1

Responsibility Activity

Property Custodian Prepares the detailed list of unserviceable property

based on the IIRUP and WMR.
Fills up the data on date acquired, particulars of
property, property number, quantity and remarks.

If property is equipment, attaches the Equipment

Ledger Cards, Equipment Checklists and pictures
and forwards to Agency Administrative Division
Chief.

Agency Administrative Division Chief Receives the IIRUP, WMR and supporting
documents.
GENERAL PROCEDURES 2

Responsibility Activity

Agency Administrative Division Chief Reviews and evaluates the submitted documents.

If incomplete, returns to Property Custodian.

If complete, forwards to Accountant.

Accountant Provides the following data on the IIRUP, unit cost,
total cost, accumulated depreciation, accumulated
impairment losses and carrying amount and
forwards to Agency Head.
GENERAL PROCEDURES 3

Responsibility Activity

Agency Head Receives the IIRUP, WMR and supporting

documents from Accountant.
Approves the IIRUP and WMR for the request
of inspection and disposition and forwards to
Disposal Committee.
Disposal Committee Receives the IIRUP and WMR and supporting
documents from Agency Head.
Conducts the inspection and appraisal of
unserviceable property based on COA
prescribed guidelines and makes Appraisal
Report.
GENERAL PROCEDURES 4

Responsibility Activity

Disposal Committee Prepares Disposal Program including the

disposal methods to be employed and schedule
of bidding and forwards the same together with
IIRUP, WMR, Equipment Ledger Card,
Equipment Checklist and pictures to Agency
Head.

Agency Head Receives and approves the Disposal Program

and schedule of bidding activities and forwards
documents to BAC on Disposal.

Disposal Committee/BAC on Disposal Forwards the same set of documents to COA for
information and notification on disposal
activities at least twenty (20)
GENERAL PROCEDURES 5

Responsibility Activity

Disposal days before the advertisement of the call to public auction. The COA with
Committee/BAC on the assistance of TSO will conduct review of the submitted documents,
Disposal inspection and appraisal of unserviceable properties and prepares
Appraisal Review Report.
Upon receipt of the COA Appraisal Review Report, forwards the document
to the Disposal Committee. If no report is received from COA within the
prescribed period, the schedule of the bidding will commence.
Receives the copy of the COA Appraisal Review Report (if available),
approved Disposal Program, IIRUP, Individual Survey Report, List of
Missing Spare Parts, Stencils of chassis and engine numbers of motor
vehicles, current photographs
GENERAL PROCEDURES 6

Responsibility Activity

Disposal Equipment Ledger Cards, Equipment Checklists, and Waste Material

Committee/BAC on Report.
Disposal
PROCUDURES: SALE THRU PUBLIC BIDDING1
Responsibility Activity

Disposal Advertises by printed notice for not less than three (3) consecutive
Committee/BAC on days in any newspaper or by notices posted in at least three (3)
Disposal prominent public places in the locality.
Sends invitation to COA at least five (5) calendar days before the
scheduled opening of bids.
Allows the bidders to inspect the unserviceable properties within the
prescribed period as indicated in the advertisement.
Receives the sealed bids from interested bidders.
Conducts evaluation of bids on the scheduled bid opening and
evaluate the submitted documents if in compliance of the minimum
requirements set by the BAC
PROCUDURES: SALE THRU PUBLIC BIDDING 2
Responsibility Activity

Disposal To include the Bidder’s bond which is equivalent to at least 10% of

Committee/BAC on the minimum bid amount, latest Financial Statements and Income Tax
Disposal Return (ITR.)
Recommends conduct of second bidding if failure of bidding occurs
due to no bid qualifiers or no bids received on the closing date and
undertake bidding process again from the start of publication.
Prepares BAC Resolution recommending award to the highest bidder
for approval of Agency Head.
Agency Head Receives the BAC Resolution recommending award and approves it.
Forwards the document to BAC for preparation of NOA & Contract
of Sale.
PROCUDURES: SALE THRU PUBLIC BIDDING 3
Responsibility Activity

Disposal Receives the approved BAC Resolution and prepares the NOA &
Committee/BAC on Contract of Sale.
Disposal
Forwards to the Agency Head for approval.
Agency Head Receives the Notice of Award and Contract of Sale.
After verifying the correctness, approves the NOA & issues to the
winning bidder.
Property Custodian Receives the NOA & Contract of Sale together with the other
supporting documents.
Cashier Receives the payment of the sold property from the winning bidder
and issues Official Receipt.
Property Custodian Issues the withdrawn property to the buyer upon presen-
PROCUDURES: SALE THRU PUBLIC BIDDING 4
Responsibility Activity

Property Custodian tation of Official Receipt issued by the Cashier. The

withdrawn properties shall be released in the presence of the
Disposal Committee.
Prepares and accomplishes the tally-out sheet as evidence of
actual delivery.
Disposal Committee/BAC on Sign the tally-out sheet witnessing the release of the property
Disposal/Agency Head and by the buyer acknowledging the receipt of items
purchased.

Property Custodian Accomplishes the pertinent portions of the IIRUP or WMR

and forwards to Accounting Unit together with the other
documents supporting the sale. This will be the basis for
dropping the property from the
PROCUDURES: SALE THRU PUBLIC BIDDING 5
Responsibility Activity

Property Custodian books of accounts and taking up the proceeds from the sale
of the property.
Accounting Unit Prepares Journal Entry Voucher to drop the assets from the
books of accounts. Updates the PPE Ledger Cards to record
the sale of assets.

Property Custodian Updates the Property Cards to record the sale of assets.
PROCUDURES: THRU NEGOTIATED SALE 1

Responsibility Activity

Disposal Committee/BAC on Prepares BAC Resolution recommending Negotiated Sale as

Disposal mode of disposal after two failed bidding and forwards to
Agency Head for approval.

Agency Head Receives and approves the BAC Resolution. Returns to the
BAC for the conduct of negotiated sale
Disposal Committee/BAC on Invites qualified bidders to submit sealed proposals. Opens and
Disposal evaluates submitted bids. Compares if the negotiated price is
not lower than the highest offer submitted at the failed public
bidding.
Prepares a BAC Resolution recommending award to the
negotiated bidder and forwards to the Agency head for
approval.
PROCUDURES: THRU NEGOTIATED SALE 2

Responsibility Activity

Agency Head Receives and approves the BAC Resolution recommending

award. Returns to the BAC for the preparation of NOA and
Deed of Sale. Receives the NOA and Deed of Sale. After
verifying correctness, approves the NOA and issues to the
negotiated bidder.

[Apply same procedures – public bidding – pages 3-5, starting role of Property Custodian]
PROCUDURES: TRANSFER OF GOVERNMENT
PROPERTIES 1

Responsibility Activity

Agency Head Receives requests from private or public government agency

and forwards the request to the Property Custodian.

Property Custodian Receives the request and checks if the property requested is no
longer needed. If no longer needed, cancels all the PAR
covering the transferred properties so that the end user be
relieved from accountability over the property.

Takes out the individual employee’s folder the corresponding

PARs and forwards the cancelled PARs to the end user(s).
PROCUDURES: TRANSFER OF GOVERNMENT
PROPERTIES 2

Responsibility Activity

Property Custodian Prepares the Property Transfer Report (PTR) and forwards the
PTR to the Agency Head.
Agency Head Receives and approves PTR.
If the property to be transferred is a computer, ensures that the
data contained therein are removed by the authorized
technician upon approval by the Agency Head and attaches the
Certification on computer data and program removal from the
PTR.

Property Custodian Releases the transferred equipment to authorized official of the

recipient agency.
PROCUDURES: TRANSFER OF GOVERNMENT
PROPERTIES 3

Responsibility Activity

Property Custodian Ensures the appropriate receipt of the items by the receiving
entity by signing the PTR. Prepares two (2)copies of all
documents (e.g. PTR and computer data and program removal
certificate, if applicable) and provides one (1) copy to the
receiving agency/entity.
Forwards the copies of the PTR and other supporting
documents to the Accounting Unit for dropping in the books of
the transferred property.
Accounting Unit Prepares JEV to drop the assets from the books of accounts.
Updates the PPE Ledger Cards to record the transfer of assets.
PROCUDURES: TRANSFER OF GOVERNMENT
PROPERTIES 4

Responsibility Activity

Property Custodian Updates the Property Cards (PC) to record the transfer of
assets.