Learning Objectives

At the end of the session, the participants are

expected to be able to:
Identify the assets that should be disposed;
Enumerate the modes of disposal;
Understand the general procedures to be
followed and the documents required in
disposing government property.
DISPOSAL in government refers to:
The sale or destruction of:

Unserviceable property no longer needed by

the government agency
 Property confiscated/forfeited by law
enforcement agencies
 Records which are already unnecessary and
valueless.
Privatization/divestment of
government assets owned by
government-Owned or controlled
Corporation (GOCCs) and
Government Financial Institutions
(GFIs)
Authority and Responsibility for
Divestment or Disposal is lodged
in the agency head or governing
bodies who shall constitute the
appropriate committee to
undertake the disposal.
COA Cirs. 86-264 & 89-296;
EO No. 888 & 309
PD 1445
 COA Circular 95-006
Section 6.10

Management shall furnish the

COA Auditor with a copy of the
schedule or notice of opening
of bids or condemnation/
destruction of government
property and other disposable
assets at least five days before
the scheduled time.
Objectives of Disposal
to avoid continuing carrying/inventory
costs
to prevent further deterioration
thereby obtaining the fair return in case
of sale
to relieve accountable officers of
unnecessary accountability
to make available space for the agency
Determination of Disposable Property
• Unserviceable or can no longer be repaired
or reconditioned
• Maintenance/repair costs more than
outweighs the benefits and services
• Has become obsolete or outmoded
• Has been rendered unnecessary due to
change in the Agency’s functions/mandate
• In excess of requirements
• Has become dangerous or hazardous to use
Property/Assets Subject to
Disposal
1. Unserviceable property
2. Confiscated/Seized property
3. Property under distraint/levy/garnishment
4. Unclaimed motor vehicles
5. Real property
6. Valueless records/documents
Determining Factors in the
Disposed of Unserviceable
Property

Serviceable property that has been rendered

unnecessary;
Unused supplies, and spare 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.
UNSERVICEABLE
PROPERTY:

Refer to property, supplies, materials and

equipment owned by the government but are no
longer needed in its operations.
That which is beyond repair and has no more
utilization potential.
potential
Beyond economic repair:
When cost of repair/maintenance becomes
prohibitive/disadvantageous to the government
considering such factors as:
◦ Maintenance expenses
◦ Downtime/ Frequency of breakdown
◦ Replacement cost of spare parts
◦ Alternative modes such as rental of equipment
or outright replacement are more economical
Obsolete Property
That which has lost its efficacy either
due to technological advancement,
change of procedures, reorganization
of office, or completion of project.
CONFISCATED/SEIZED PROPERTY:

Refer to property which came into the ownership and

possession of the government as a result of its
implementation and enforcement of laws and
regulations on the protection of forest lands,
smuggling or failure to pay customs duties,
confiscation of prohibited drugs and contrabands and
other similar prohibited/regulated operations.
VALUELESS
RECORDS/DOCUMENTS:

Include all record materials that have

reached their prescribed retention periods
as per National Archives of the Phil. (NAP)
Guidelines No. 2 and are no longer useful to
agency or the government as whole.
VALUELESS
RECORDS/DOCUMENTS:

Exclude library and museum materials,

documents submitted for copyright, models,
copies of documents preserved for
reference, and stocks of publications and
processed documents (NAP General Records
Disposition Schedule, S2009).
 VALUELESS RECORDS/DOCUMENTS
(Do not include the ff:)
•Functional/Organizational Charts
• Annual Statements of A/P
•Feasibility studies w/c were
• Books of Final Entry (SL/GL)
implemented
•Cashflow charts
•Agency policy issuances/Resolutions
•Expense ledgers
•Manuals
•Financial Statements
•Minutes of Board/Exec. Meetings
•Lists of Remittances
•Press releases about the agency
•Official Cashbook
•Reorganization Records
•Registers (Checks/Warrants)
•Standard Operating
Procedures/Manuals •Handwriting specimen signature
•OPIF/ •Plantilla/Staffing Patterns
•Decisions/Deeds (Donation/Sale) •Service Cards
 Exercise
CASE STUDY
Unserviceable Property
 
Discuss with members of the group,
why with so many laws and rules put in
place there is still a proliferation of
property and documents to be disposed
off. What measures will you suggest to
higher management to reduce/ eliminate
unserviceable property/ documents?
 Guidelines on the Divestment or Disposal
of Assets (COA Circular 86-264)
1. Constitute the Disposal Committee
- require the submission the list of assets to be disposed
of: program for disposal, IIRUP/RWM, appraisal
documents, disposal procedures to be adopted
- inspect assets
-establish the floor price

2. Furnish the COA Auditor at least five days

before the scheduled bidding with a copy of
program for disposal, IIRUP/RMW, appraisal
documents & disposal procedures
3. Advertise by printed notice
for not less than three
consecutive days in any
newspaper or by notices posted
for a like period in at least three
prominent public places in the
locality.
4. Constitute the BAC on Disposal
to conduct the public auction.
5. Pre-qualify bidders -10% bond,
latest FS, ITR.
 Creation of Disposal Committees
and Secretariat (EO 309)
For National and
Corporate Agencies

Chairman -- not lower than Assistant Secretary for

a department and Assistant Director for a bureau.

Members
• Head of Administrative Unit;
• Head of Property Unit
 P.D.1445 (Gov’t Auditing Code of the
Phil)

Section 79. Destruction or sale of unserviceable

property. – When government property has
become unserviceable for any cause, or is no
longer needed, it shall, upon application of the
officer accountable therefore, be inspected by the
head of the agency or his duly authorized
representative in the presence of the auditor
concerned and, if found to be valueless or cannot
be sold, it may be destroyed in their presence.
 P.D.1445 (Gov’t Auditing Code of
the Phil)
Section 79. Destruction or sale of unserviceable
property. – (con’t)
If found to be valuable, it may be sold at
public auction to the highest bidder under the
supervision of the proper committee on award or
similar body in the presence of the auditor
concerned or other duly authorized
representative of the COA, after advertising by
printed notice in the Official Gazette, or for not
less than three consecutive days in any
newspaper of general circulation,
 Section 79, P.D.1445 (Con’t.)
Section 79. Destruction or sale of unserviceable
property. – (con’t)
When the value of the property does not
warrant the expense of publication, by notice
posted for a like period in at least three public
places in the locality where the property is to be
sold. In the event that the public auction fails, the
property may be sold at a private sale at such
price as may be fixed by the same committee or
body concerned and approved by the
Commission.
Duties of the Disposal
Committee

Inspect/authorize the Department’s/

Agency’s field offices to inspect the
unserviceable property and verify
justification for disposal;
Set the final appraised value of all disposable
property considering obsolescence, market
demand, physical condition and results of
previous bidding/auction for similar
property;
Duties of Disposal
Committee
(Con’t)

Recommend to the head of agency for

approval, the manner of disposal
taking into account pertinent pro-
visions of Revised Adm. Code and
Gov’t. Auditing Code;
Conduct the public auction; and
Recommend corresponding award.
 Policies on PPE Disposal
(PPSAS)
 Gain/Loss from derecognition/disposal of PPE shall
be included in surplus or deficit;
 Gain/Loss shall be determined as the difference
between the net disposal proceeds and the carrying
(acquisition-depreciation-impairment) amount of the
PPE
Fully depreciated PPE remaining in service and the
related accumulated depreciation/impairment losses
shall not be removed from the books of accounts
 Policies on PPE Disposal
(PPSAS)
 Lost PPE shall be reported in the Report of Lost,
Stolen, Damaged, Destroyed Property (RLSDDP)
supported with a Notice of Loss signed by the AO
 A JEV shall be prepared with a charge to Loss of
Assets and Accumulated Depreciation/Impairment
loss credit the PPE account
Set up/record a receivable account representing
an AO’s accountability for the lost property (with a
credit to Other Deferred Credits)
 
Inventory and Inspection Report on
Unserviceable Property (IIRUP)
Used to:
 account for PPE that have become unserviceable
 as a basis for disposal 
 as basis for derecognizing unserviceable PPE
Modes of Disposal
1. Sale
- Public auction/bidding
- Negotiated sale
2. Condemnation/ Destruction
3. Transfer
4. Barter
5. Donation
 1. Sale - Public
Auction
As general rule, the disposal of government property shall
be through sale by public auction which may be done
through sealed public bidding or when circumstances
warrant, by viva voce:
a) adequate publicity and notification to attract greatest
number of interested parties (PD 1445)
b) provide sufficient time between publication and
opening of bids;
c) give interested parties opportunity to inspect the
property
d) confidentiality of sealed proposals
e) bond and prequalification requirements to guarantee
performance
f) fair evaluation of tenders and proper notification of
award
 Sale thru Negotiation
There was failure of public auction:
a) when there is only one offer (Shall not be opened)
b) when the offers/tenders are non-complying
(when the technical, legal and financial
requirements or pre-qualification are not met)
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.
 GENERAL PROVISIONS-
2018 GAA
Sec. 14. Sale of Non-Serviceable, Obsolete or Unnecessary
Equipment.

Departments/bureaus/offices, and instrumentalities of

the National Government, are hereby authorized to sell
non-serviceable, obsolete, or unnecessary equipment,
including motor vehicles in accordance with Section 79 of
P.D. No. 1445, E.O. No. 309, s. 1996 and such other
guidelines issued thereon. The proceeds from the sale of
such equipment shall be deposited with the National
Treasury as General Fund pursuant to Section 44, Chapter
5, Book VI of E.O. No. 292.
2. DESTRUCTION OR
CONDEMNATION:
Shall be resorted to only under any of
the following instances:
◦ When the unserviceable property
- has no commercial value,
- cannot be sold (no buyers),
- is hazardous, or
- is beyond economic repair;
- has no willing receiver; or
- is appraised at a value that is less
than the administrative cost of sale.
 Destruction or Sale of
Unserviceable Property
 has become unserviceable
for any cause
 is no longer needed

Sec. 79 of PD 1445
 Valueless property shall be
condemned either by:
Burning
Pounding
Breaking
Shredding
Throwing beyond recovery
Destruction shall be made in the presence of
the disposal Committee.
Disposal of Valueless
records :
 Shall be in accordance with the
guidelines issued by the National Archives
of the Philippines (NAP)
 Upon the approval by the NAP Executive
Director of the request submitted by
government agencies
 Actual disposal shall be witnessed by
representatives of the NAP and COA
3. Transfer
Upon the initiative of the owning
agency or upon submission of request
to the owning agency, property
recommended for disposal may be
transferred to another government
agency/entity.
5. Donation

May be made to charitable,

scientific, educational or cultural
institutions.
institutions
 Exercise: Match col. A with B
Column “A” Col. “B”
1) Equipment needing excessive cost of maintenance due a) unserviceable
to frequent downtimes and few available parts property
2) Approves disposal of government property b) Disposal Committee
3) Resorted to due to failure of public bidding/auction c) Donation
4) Property no longer capable of providing economic d) Head of agency
benefits
5) Mode of transfer to private entity e) Obsolete property
6) Materials that reached prescribed retention period f) negotiated sale
7) Conducts public auction/bidding to determine the sale g) Beyond economic
price most advantageous to government repair
8) He is furnished copy of schedule of public auction h) Destruction of PPE
9) Mode of disposal when appraised value is lower than i) Valueless records
administrative cost of sale
10) Lost efficacy due to technological advancement j) COA Resident Auditor
44
Learning Objectives
At the end of the session, the participants are
expected to be able to:
Identify the assets that should be disposed;
Enumerate the modes of disposal;
Understand the general procedures to be
followed and the documents required in
disposing government property.