.

----------------------------·
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MANUAL
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DIS PO SAL
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GOVERNMENT. PROPERTY
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Systems and Procedures Bureau

'-· DEPARTMENT OF BUDGET AND MANAGEMENT
'i
Malacafiang, Manila
I ,
 Republic of the Philippines
i' SYSTEMS AND .PROCEDURES BUREAU
I
Departme ntof .Budget and Management
Malacanang, Manila

i
I

January 28, 1992

THE HONORABLE SECRETARY

Department of Budget and Management'
Malacanang, Manila

1 Sir:·

We are submitting herewith the final copy of the Manual on the Disposal of
· Government Property which the Systems and Procedures Bureau prepared .
pursuant to its mandate under Executive Order No. 285, together w~h the National
Budget Circular officially endorsing the use of the Manunl by all concerned. _

The Manual is an improved version of a looseleaf material on disposal

guidelines earlier developed by the Bureau for DBM's internal use in connection
with disposal activities that the Department's Regional Offices and SPB itself are
1,mdertaking but which some other agencies have already been using even in the
absence of an official endorsement. The Circular will provide the necessary
imprimatur and, hopefully, widen the Manual's dissemination and utilization.

Respectfully submitted:

{:~'t--ti;.t.A
~~ANCISCO D. LOPE<
t). I r-~·
.Information Systems Analyst II

,-
'
A~~-~
t' FE VERZOSA-ICO
Chief Management Specialist
~t~;;;-
Chief Management Specialist
'-
! ?<-:r; <---
JOSEFINO R. ANGELES
Director
I:

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF BUDGET AND MANAGEMENT
MALACANANG, MANILA

NATIONAL BUDGET CIRCULAR NO. 425

January zs , 1992

TO ALL HEADS OF DEPARTMENTS, BUREAUS, OFFICES AND

AGENCIES OF THE NATIONAL GOVERNMENT; STATE
UNIVERSITIES AND COLLEGES; GOVERNMENT-OWNED OR
CONTROLLED CORPORATIO NS; AND ALL OTHERS
CONCERNED

SUBJECT MANUAL ON THE DISPOSAL OF GOVERNMENT PROPERTY

1.0 With the abolition of the Supply Coordination Office (SCO) pursuant to Executive
Order No. 285 dated July 1987, the function of disposal of obsolete, forfeited,
abandoned and surplus supplies, materials and equ' 'ment has been transferred
to the different line departments and agencies, subject ,o the guidelines developed
by the Systems and Procedures Bureau (SPB) of the Department of Budget and
Management (DBM) and existing laws.

2.0. Pursuant' to this directive, a Manual on the Disposal of Government Property is

hereby issued to guide agencies in their disposal undertakings.

3.0 The Manual was prepared taking into consideration existing laws and policies
governing disposal, the guidelines issued by the defunct Supply Coordination
Office and pertinent rules and regulations of the Commission and Audit.
Refinements and supplements were introduced by DBM to enhance relevance and
practicality of the guidelines. This was done as a result of observations obtained
from actual exposure of SPB staff and DBM Regional offices to disposal activities.

4.0 As manuals are supposed to be dynamic, improvements on the guidelines may be

introduced from time to time as we are able to develop better disposal methods.
Agencies are encouraged to present their suggestions or recommendations to
DBM in this regard.

5.0 It is hoped that the Manual on the Disposal of Government Property will be helpful
to all concerned.

G ILLERMO N. CARAGUE
Secretary of Budget and Management
,.
'

-------------------------
r MANUAL
on

DISPOSAL
OF
GOVERNMENT PROPERTY
-------------------------
 TABLE OF CONTENTS

PARTI INTRODUCTION

A. Background and Purpose 1

.B. Legal Bases 1

c. Agency Coverage 2
D. Scope of Guidelines 2
E. Definition of Terms 3

PART II DISPOSAL ACTIVITIES/PROCESSES

A. Creation of the Disposal Committee

1.0 Organization 5
2.0 Functions 5
3.0 Secretariat Services 6
4.0 Designation of DBM Representative 6
B. Determination of Disposable Property 6
c. Submission of Disposal Documents

1.0 Inventory anc:t Inspection Report 7

2.0 Report of Waste Materials 7
3.0 Invoice Receipt of Property 7
D. Inspection

1.0 Objective 7
2.0 Conduct of Ocular Inspection ·7

i .

.
 J. Negotiated Sale 22

K. Awarding of Bids 22

L Payment 23
M. Claiming of Award 23
N. Taxes, Customs Duties, Costs or Charges 24
ANNEXES

Annex A - ll')v$ntory and lns~ection Report

(General Form No. 17-A) ·
L

Annex B • Report of V'Jaste Materials

I
(General Form NO. 64-A)

Annex C • l11vd1ce R(}ceipt fcir Property

(General Form No. 30-A)

Annex 0 - Table of Estimated Service Life

Annex E ·- Annual Average of US$ Guiding Rate

,_

!....

'
'- iii
 PAR1" I

INTFIODUC1'1vN

A. Background and Purpose

Property disposal is the third and ia:,;t phe;;;e in the supply management
cycle where. the first two phases consist of procurement.and utiiization and
maintenance. Disposal occurs when a piece of Gqulpmeilt or property can no
longer provide effi_cient service or, though st!li working, has been rendered
useless due to obsolescence.

Disposal proceedings should be immediately initiated to avoid further

deterioration of the property and consequent depreciation in its value. A
systematic and timely disposal will yield benefits :n terms of, among others, a
higher appraised value and by enabli'lg storage areas available for other
purposes.

To fa¢11itate the disposal of the increasing. quantity of unserviceable

equipment and property, the heads of the various departments/agencies have
been authorized to dispose of such equipment and property. Together with
· such authorization, a uniform procedure cf f'.JVernment property disposal is
prescribed.

This manual aims to serve as a Qi!ide to ar;encies by providing

Informative and prescriptive materials on tho legal provisions, responsibilities
, procedures, conditions and requirements concorning disposal actions.

B. Legal Bases

Disposal activities are governed primarily by the following issuances:

1.0 Executive Order No .. 888, Series of 1983

Executive Order No. 888 dated March 18, 1983 stipulates, among
othera:

1.1 the authority of the Ministers (now Secretaries) and Heads of

Ministries (now Departments/Agencies) to dispose of their
respective unserviceable equipment and disposable property;

1.2 the creation of a Disposal Committee in each department/agency

to be composed of the representatives. of the owning
department/agency, the Bureau of Su~ply Coordination and the
Commission on Audit;

i
 1.3 the creation of Regional Disposal Committees composed of the
representatives of the regional offices of the owning
department/agency, the Bureau of Supply Coordination, and the
Commission on Audit;

1.4 the duties of the Disposal. Committee and the Regional Disposal
Committee;

1.5 the submission of disposal documents and the modes of disposal.

2.0 .Executive Order No. 285, Series of 1987

Executive Order No. 285 dated July 25, 1987, on the other hand,
provides, among others:

· 2.1 the abolition of the General Services Administration and the transfer of
its functions to appropriate government agencies;

2.2 the mandate of the Systems and Procedures Bureau of the Department
of Budget and Management to develop guidelines relative to disposal of
government property;

2.3 the reconstitution of the Disposal Committee which shall now include the
representative of the Department of Budget and Management in lieu of
the Supply Coordination Office .

. c. · - Agency Coverage
The guidelines prescribed in this manual shall apply to departments and
agencies of the national government including their respective regional/field
offices, state universities and colleges, and government-owned or controlled
corporations.

D. Scope of Guidelines

1.0 The guidelines contained herein shall refer to the disposal of government
property which are unserviceable, obsolete, forfeited, abandoned, excess
or surplus to the needs of the government, or junk or scrap materials.
As used in this manual, government property refers to persona l property
such as supplies, materials and equipment purchas ed or owned, stocked
and used by the government in its operations.

2.0 Disposal of the following property are likewise covered by these

. guidelines but shall be done in coordination with appropriate government
agencies:

2
 2.1 Museum materials acquired and preserved solely for exhibition;
and antique property and works of art, which shall be referred to
the National Museum for the determination of its disposition and
. appraisal of value;

2.2 . Documents submitted for copyright, in coordination with the

National Library; and

2.3 Models submltted in connection with applications for patents, In

coordination with the Bureau of Patents, Trademarks and
Tl:'lchnology Transfer.

3.0 Excluded from the coverage of this manual are:

3.1 Real Property, which shall be governed by the DBM-DENR-

DPWH Joint Circular No. 1 dated September 30, 1989. Disposal.
of real property shall be dona in coordination with the Department
of Environment and Natural Resources.

3.2 Records, which shall be governed by the DECS Department order

No. 13-A dat9d h;l::ruary 3, 1988.

E. Definition qt Terms
The following terms which are uned to refer to disposable government
property are defined, thi.Js: ·

1.0 Abandoned Property· any personal property in the possession of any

government agency without a known owner.

2.0 Beyond.Economical Repair - when the cost of repair a.nd maintenance

becomes prohibitive and disadvantageous to the government considering
such factors as:

2.1 m.a:intanance expanses

2.2 downtime
2.3 replacement cost of spare parts
2.4 frequency of breakdown
2.5 alternative modes such as rental of equipment or.
outright replacement

3.0 Economically ·Repairable • that which can be rehabilitated and

maintained at a cost economical to the agency, considering the five (5)
factors mentioned in item 2.0 above.

3
4.0 Equipment~ any property, other than land, structures and fixed facilities,
having a useful life greater than one year, the cost of which amounts to
P1 ,500 or more (per COA Circular No. 86-2008) and which when used
does not suffer any material or substantial change or alteration in size
or form.

5.0 Exosss Property - that which Is beyond the requirement of the owning
agency but may still be needed in some other government agencies.

6.0 Expendable Property-that Which may be consumed, spent, or used-up,

such as, supplies.

7.0 J=orfelted Property· that which is acquired by summary prdcess or by

order of the court pursuant to any law in the Philippines.

8.0 Materials~ are expandable commodities used by the government In the

process 6f manufacture or construction including parts or remnants from
destroyed or damaged fixed assets.

9.0 Non-expendable Property • that Which cannot be consumed, spent or

used-up, such as, equipment.

10.0 Obso!ete Pto{J'lrty - tpat which has lost its efficacy eitHe,r due to·
technological advancement, change of procedures, raol'gal'Uzation of
office, or eotnplation of project.

1.1.0 Sctap/Junk • fragments of diseardad materials that. has no value except

for Its basic material contents and which cannot be reprocessed and re-
used In the operations of other government property.

12.0 Supplles- are expandable commOditias which are normally consumed

within a year In connection with government operations.

13.0 Surplus Property - excess personal property no longer needed by the

government. ·

14.0 Unserviceable Property- that which is beyond repair and has no more
utilization potential. ·

4
 PART II

DISPOSAL ACTIVITIES/PROCESSES

A. Creation of the Disposal Committee

1.0 .Organization

The creation of a Disposal Committee In each department and

agency is provided in E.O. 888. On the other hand, E.O. 285 stipulated
the reconstitution of the Disposal Committee as follows:

Owning Department or Agency Chairman

Commission on Audit Member
Department of Budget and Management Member

The Regional Disposal Committees are organized in the same

manner, with representatives from the following:

Regional Office of Owning Dept/Agency Chairman

DBM Regional Office Member
COA Regional Office Member

2.0 Functions

2.1 · Disposal Committee/Regional Disposal Committee

The functions of the Disposal Committees and the

Regional Disposal Committees as provided in E.0. 888 are the
following:

a. Inspect or authorize the department's/agency's field offices

to inspect the unserviceable equipment and property to
verify justification for disposal;

b. Set the final appraised value of all disposable property

considering obsolescence, market demand, physical
condition and result of previous biddings for similar
property;

c. Recommend to the Head of the Department/Agency for

approval, the manner of disposal;

d. Conduct public biddings for the sale of disposable property

on an "as .is, where is" basis and .to recommend
corresponding award,

5
 Recommendations of Disposal Committees in the regions
and in agencies attached to certain Departments shall be subject
to the final approval of the Head of the Department concerned.

2.2 Chairman and Members of the Committee

The Disposal Committee Chairman calls the meeting of the

Committee and initiates the activities in the dispo13al process. In
cases of conflicts or differences among the Committee members
especially regarding varying appraised values, the Chairman shall
make the final decision as to which recommendation shall . be
submitted to the Head of the Department/Agency for approval.

The members are clothed. with the authority to make

decisions in behalf of their respective offices during the various
committee deliberations. The members are expected to
undertake inspection, appraisal and valuation activities as a group
or individually, and participate in the bidding and awarding
activities.

3.0 Secretariat Services

A Secretariat and technical staff to be manned from existing

personnel of the agency shall be formed to handle all the Committee's
technical and administrative matters as well as the. safekeeping and
. systematic filing of Committee documents and records.

4.0 Designation of the DBM Representative

- .

The DBM representative to the Disposal Committee shall be

designated by an authorized DBM official upon submission by the
agency of a letter requesting such designation.

B. Determination of Disposable Property

Any or all of the following conditions shall constitute disposable property:

1.0 Property which can no longer be repaired or reconditioned;

2.0 Property whose maintenance cost/costs of repair more than outweighs.

the benefits and services that will be derived from its continued use;

3.0 Property that has become obsolete cir outmoded because of changes in
technology;

4.0 S~rviceableproperty that has been rendered unnecessary due to change

in the agency's functions or mandate;

6
 5.0 Unused supplies, materials, and spare parts that were procured in
excess of requirements; and

6.0 Unused supplies and materials that has become dangerous to use
because of long storage or use of which is determined to be hazardous.

C. Subm_isslon of Documents Pertaining to Disposable Property

Accountable officials in possession of unserviceable property shall submit

to the Disposal Committee, through their respective heads of offices, the
following accomplished forms, as appropriate:

1.0 Inventory and Inspection Report (I & I Report, otherwise known as

General Form No. 17-A). This form covers semi-expendable materials
and equipment and non-expendable supplies and should be
accompanied by any of the following as the case maybe: [See Annex A]

1.1 Individual survey report, duly certified by the Supply Officer and
Head of Agency;

1.2 List of missing spare parts, duly certifier· by the Supply Officer
and Head of Agency;

1.3 Stencils of chassis and engine numbers of motor vehicles; and

1.4 Current photographs in two (2) positions.

2.0 Report of Waste Materials (RWM otherwise known as General Form No.
64-A). This form covers expendable materials, supplies, and
consumables including spare parts, empty containers, remnants from
destroyed or damaged fixed assets. [See Annex BJ

3.0 Invoice-Receipt for Property (IRP otherwise known as General Form No.
30-A). This form covers government property transferred from another
agency which has become unserviceable, and duly recommended for
disposal by the head o_f the agency. [See Annex CJ

D. Inspection

1.0 Objective. Inspection is aimed at obtaining a first hand observation of

the physical and operational condition of the property and their
marketability or ability to attract prospective buyers.

2.0 . Conduct of Ocular Inspection. Inspection may be done separately by

each member of the Disposal Committee or as a group, where
practicable. In the conduct of ocular inspection, the following activities
shall be performed, where applicable;

7
 2.1 Verify stated serial number, motor number, property number, and
other specifications necessary for establishing correct
identification of the property.

2.2 Determine the physical condition/general appearance of the

property relative to:

a. the equipment being operational, economically repairable

or beyond economical repair;

b. the availability of spare parts and the general

obsolescence of the equipment; and

c. the quality, degree and extent of maintenance and repair

done on equipment.

2.3 In cases where the equipment is declared to be junk, the total

estimated weight per lot should be determined to form as basis
of the appraised value. The cost per unit of the property/supplies
inspected will depend on the kind of material appraised.

E. Appraisal

1.0 Objective. The objective in computing the appraised value of the

property for disposal is to set the government's minimum selling price so
that the government shall receive fair compensation for the items sold.
The Disposal Committee members, including the owning agency, shall
each prepare its appraisal report.

2.0 Basis of the Computation. After having conducted the ocular inspection
and regardless of the mode of disposal to be undertaken, the appraised
value shall be computed using as basis the information/data appearing
in the Inventory & Inspection Report, Report of Waste Materials and
Invoice-Receipt for Property.

The following basic variables are to be used:

year of acquisition
cost of acquisition
replacement cost

3.0 Formulae. In the computation of the appraised value, any of the formulae
·as enumerated below in versions may be used depending on the
information available.

8
3.1
Version 1 this is used for all types of
property where the acq\.!isi tion cost and year of
acquisit ion are known.

APPRAISED VALUE = RUV x CF x CFF x NQ. of Units

where,
R
RUV = (AC - SV) x ----- + SV
L

3.2
Version 2 this is used for all types of
property where the acquisit ion cost and year of
acquisit ion are unknown but the replacem ent cost
can be establis hed.

APPRAISED VALUE = RC x CF x UF x No. of Units

3.3
Version 3 this is used for all types of
property where the acquisit ion cost is unknown,
but year of acquisit ion and replacem ent cost can
be establis hed.

APPRAISED VALUE = RC x AF x CF x No. of Units

Legend:

RUV - Remaining Use_ful Value

CF - Conditi.on Factor
CFF - Currency Fluctuation Factor
AC - Acquisition Cost
SV - Salvage Value
R - Remaining Useful Life
L - Estimated Service Life
AS - Actual Service
. RC - Replacement Cost
UF - Usage Factor
AF - Age Factor

9
 4.0 Definition of Terms (as used in the formulae):

4.1 ACQUISITION COST (AC), refers to the price or amount at

which
the property was purchased or acquired.

4.2 REPLACEMENT COST (RC), refers to the current market

,
price
· of a similar new equipment; or if the equipment is no
longer
available in the market due to product obsolescence, the
market
price of a similar equipment which can functionally repla
ce the
item appraised.
.- 4.3 CURRENCY FLUCTUATION FACTOR (CFF), or P to
$ rate
APPRAISAL YEAR over P to $ rate ACQUISITION YEAR
, as
used in Version 1, refers to the U.S. Dollar reference rate
relative
to the Philippine Peso at the time of appraisal/acquisition.
[See
Annex D for Annual Average of US$ Guiding Rate]

4.4 ESTIMATED SERVICE LIFE (L), as used in Version 1, refers

to
the length of service life that may be expected from a partic
ular
equipment assuming normal utilization. [See Annex "E" for
Table
of Estimated Service Life of Equipment/P· 1perty]

4.5 ACTUAL SERVICE (AS), is defined as the age

of the
equipment/property from date of purchase, or the differ
ence
betw.een the year of disposal and the acquisition year.

4.6 REMAINING USEFUL LIFE (R), as used in Version 1, refers

to
the difference between the Estimated Service Life (L) and
the
number of years of actual service (AS) of the property.
If the
computed R is less than zero, R is assigned a value of zero.

4. 7 SALVAGE VALUE (SV), is equivalent to ten percent (10%

) of the
acquisition cost of the equipment/property.

4.8 PHYSICAL CONDITION (PC), refers to the condition

of the
property at the time of inspection relative to such obse
rvable
factQrs as form, physical state, general appearance, degre
e of
deterioration/ obsolescence, completeness of comp
onents,
marketability of the property/components and other
similar
observable factors.

4.9 CONDITION FACTOR (CF), as used in all versions, refers

to the ·
value, used for computational purposes, corresponding
tot he
Physical Condition. of the equipment/property.

10
 PHYSICAL CONDITION CF VALUE

EXCELLENT 0.80
VERY GOOD O. 70
GOOD 0.60
SATISFACTORY 0.50
ADEQUATE 0.40
FAIR 0.30
POOR 0.20
VERY POOR 0.10

4.10 USAGE FACTOR (UF), as used in all versions, refers to whether

the equipmenVproperty has been used or not at the time of
disposal. If the property has not been used, UF is assigned a
constant value of 0.90; otherwise, it is equal to the values
assigned to the Condition Factor (CF).

VALUES OF THE USAGE FACTOR:

a) If UNUSED 0.90

b) If USED, and the physical condition is:

PHYSICAL CONDITION UF VALUE

EXCELLENT 0.80
VERY GOOD · 0.70
GOOD 0.60
SATISFACTORY 0.50
ADEQUATE 0.40
FAIR 0.30
POOR 0.20
VERY POOR 0.10

4.11 AGE FACTOR (AF), as used in Version 3, refers to the remaining

economic value of the property relative to its estimated useful life.
[See Annex E ·for Table of Estimated Service Life of
Equipment/Property]

The value of the AGE FACTOR (AF) is determined by

evaluating first the Depreciation and reckon the corresponding
value of the Age Factor (AF). The computation for the value of
Depreciation (D) is:

D=L -AS
L

11
 If Dis: Value of AF is:

1 D < =-1.00 0.100

2 -1.00 < D < = -0.90 0.118
3 -0.90 < D < = -0.80 0.136
4 -0.80 < D < = -0.70 0.155
5 -0.70 < D < = •0.60 0.173
6 -0.60 < D < = -0.50 0.191
7 -0.50 < D < = -0.40 0.209
8 -0.40 < D < = -0.30 0.227
9 -0.30 < D < = -0.20 0.245
10 -0.20 < D < = -0.10 0.264
11 -0.10 < D < = 0.00 0.282·
12 D = 0 0.300
13 0 < D < 0.50 D +0.400
14 D > = 0.50 0.900
5.0 Bample Computations

5.1 Version 1

APPRAISED VALUE = RUV x CF x CFF x No. of Units

RUV = (AC - SV) x R/L + SV

Given:
Year of Acquisition: 1960
Year of Disposal: 1991
Acquisition Cost: p 50,000.00
Estimated Service Life: 20 years
No. of Units: one (1)
Physical Condition: poor

Step 1. Compute Remaining Useful Life (R)

A= L-AS

= 20 - (1991 - 1960)
= 20 - 31
= -11

Since· the value of R is negative, R is assigned a value of

ZERO (0).

R = · .0
12
Step 2. Compute for the .salvage Value (SV) .
.
SV = 10% x Acquisition Cost

= 10% x p 50,000.00

= p 5,000.00

Step 3. Compute for the Remaining Useful Value (RUV)

RUV = (AC -SV) x _B_ + SV

L

= (50,000 - 5,000) x __Q_ + 5,000 '

20

= (45,000) x 0 + 5,000

= 5,000

Step 4. Compute for the Currency Fluet· 1tion Factor

(CFF)

CFF = Peso to Dollar rate appraisal year

Peso to Dollar rate acquisition year

= P21.80
p 2.50

= 8.752

Step 5. . Conve rt Physic al Condi tion to equiva lent

numerical value using CF Table

CF value for POOR = 0.20

.
Step6. Compute for the Appraised Value

APPRAISED VALUE = RUV X CF X CFF X No. of units

= 5,000 x 0.20 x 8.752 x 1

=p 8?52.00

13
5.2 Version 2

APPRAISED VALUE = RC X CF X UF X No. of Units

Example No. 1 (Usage Factor= Used)

Given: Year of Acquisition: unknown

Acquisition Cost: unknown
Replacement Cost: p 50,000.00
No. of Units: one (1)
Physical Condition: fair
Usage Factor: used

Step 1. Convert Physical Condition to equivalent numerical

value using CF Table

CF value for FAIR = 0.30

Step2. Convert observed Usage Faclor to equivalent

numerical value using UF Table

UF (used) value for FAIR = 0.30

Step 3. Compute for the APPRAISED VALUE

APPRAISED VALUE= RC x CF x UF x No. of units

=p 50,000 x 0.30 x 0.30 x 1

=p 4,500

Example No. 2 (Usage Factor = Unused)

Given: Year of Acquisition: unknown

Acquisition Cost: unknown
Replacement Cost: p 50,000.00
No. of units: one (1)
Physical Condition: Very Good
Usage Factor: Unused

Step 1. Convert Physical CQndltlon to equivalent numerical

value using CF table

CF value for VERY GOOD= 0.70

14
 Step2•. UF ~or unused property/~ constant·.

· UF.;. 0.90 . ;-_:

· Step3. Compute for the APPRAISED VALUE

APPRAISED VALUE= RC X CF X UF X No.of units

=p 50,000 x 0.70 x 0.90 x 1

=p 31 ,500.00

5.3 Version 3

EPRAISED VALUE = RC X AF X CF X No. of Units

Given: Year of Acquisition: 1975

Year of Disposal: 1991
Acquisition Cost: unknown
Replacement Cost: p 50,000.00
Estimated Service Life: 20 years
No. of units: one (1)
Physical Condition: Satisfactory

Step 1. Convert Physical Condition to equivalent numerical

value using CF Table

CF value for SATISFACTORY= 0.50

Step 2. · Compute for the Depreciation (DJ

D = L - AS
L

= 20 - (1991 - 1975)
20

= 20 - 16
20

= 0.20

15 .
 Step 3.. Convert Depreciation (D) to equivalent Age Factor.(AF)
value using AF Table

AF value for D = 0.20 is row 13 of AF Table:

If D is: Value of AF is:

0 < D < 0.50 D + 0.400

Thus,

AF = D + 0.400

= 0.20 + 0.400

= 0.60

Step 4. Compute the APPFIAISED VALUE

APPRAISED VALUE= RC X AF X CF X No. of units

= p 50,000 x 0.60 x 0. 50 x1
=p 15,000.00

.F. Setting of Minimum Value

1.0 Once all items listed in the I & I, RWM or IRP have been computed, and
the Total Appraised Value is determined, an Appraisal Report shall be
prepared by each representative, and forwarded to the requesting
agency through the Disposal Committee Chairman for appropriate
consideration.

2.0 In case of conflict in appraisal, the Disposal Committee shall deliberate

on the appropriate appraised value that the government shall set as the
minimum bid price. If the Committee cannot arrive at a consensus, the
Chairman shall adopt an appraised value which he deems most
advantageous to the government, based on either of the following:

2.1 the highest appraised value submitted by a Committee member

2.2 the average of the submitted appraised values plus 10%

3.0 The minimum value shall be set depending on how the property shall be
sold i.e., by piece, by lot or by all lots.

I -
16
'

-
 4.0 The minimum value set shall be good only for six months. If the
property remains unsold after six months, a reappraisal must be
conducted.
' ' . .. '

G. · Modes ofDlsposal ·

The Disposal Committee shall recommend to the head of the agency the
proper mode of disposal. Property may be disposed in any of the following
modes, as appropriate and deemed most advantageous to the government.

1.0 Condemnation/Destruction of Property

Valueless, unsalable or hazardous property may be condemned

and destroyed by pounding, burning, breaking, shredding, throwing or
any other method by which the property is disposed beyond economic
recovery. Destruction shall be made in the presence of the Disposal
Committee.

2.0 Transfer of Property

Upon the initiative of the owning agency ·• r upon submission of

request to the owning agency, property recommended for disposal may
be transferred to another government agency. Transfer shall be done
either with or without cost. Cost in this case refers to payment based on
the appraised value of the property.

In effecting the transfer of property, the Invoice Receipt for

Property (IRP or General Form No. 30-A) must be prepared by the
owning agency and transmitted together with the property to the recipient
or requesting agency.

3.0 Barter

Barter is a modified form of Transfer of Property wherein an

agency transfers property to another government agency in exchange
for another piece of _property. The value of the property being
transferred may or may not be equivalent to that being received.

In effecting barter of property, the Invoice Receipt of Property

(IRP or General Form No. 30-A) shall be prepared by each party and
transmitted together with the property to the other party.

4.0 Donation of Property

Property recommended for disposal may be donated to charitable,

scientific, educational or cultural associations on exceptional and
meritorious cases with the approval of the COA and the DBM.

17
 5.0 Ss/e of Property

5.1 Public Bidding. As a general rule, the disposal of governme

nt
·.·property shall be through sale by public bidding. Public
bidding
may be done through sealed public bidding or
when
circumstances warrant, by viva voce.

a. Sealed Public Bidding. Sealed public bidding is

characterized by the submission of sealed bids by
prospective buyers, whereby the time, date and place of
opening of bids is indicated in the Invitation to Bid; the
evaluation of bid tenders by the Disposal Committee; and
the awarding to the. highest complying bidder. The
detailed procedures in public bidding are described in
PART Ill.

b. Viva Voce. Disposable property of insignificant value or

such nature that requires immediate disposal shall be sold
through public auction by viva voce to be conducted by the
Disposal Committee. Other situations/cases for viva voce
are those involving the disposal of ·aste materials and/or
spare parts of insignificant value.

5.2 Negotiated Sale. Negotiated sale is another mode of sale

of
property which is resorted to as a consequence of failed
public
bidding. (Details on this are described in PART 111]

H. Dropping from the Books of Accounts

Upon disposal of property, the pertinent portions of the

Inventory &
Inspection Report, Report of Waste Materials or Invoice-Re
ceipt for Property,
whichever are applicable,shall be accomplished. These repor
ts shall be the
basis for dropping the property from the books of accounts
and .tor taking up
the proceeds from sale of property.

18
 PART Ill

GUIDELINES/PROCEDURES IN THE SALE OF PROPERTY

A. Preblddlng Requirements

1. .Preparation of the Invitation to Bid (/TB). The ITB is prepared by the

owning agency and signed by the agency head or any authorized official.·
The ITB must contain the following: .

a. The name of the owning agency:

b. Sufficient descriptive information on the items/lots for bidding,

such as:

location of the property to be disposed

quantity
name of items
specifications, where necessary

c. Date, time and place of pre-bidding conf< 1nce, if necessary;

d. Date, time and place of submission and opening of bids;

e. Information on bidding requirements such as accomplishment of

the bid tender, submission of bid bonds, terms of payment and
claims, among others.

f. Reservation or option on the part of the government to accept or

reject any or all bids.

3. Publication of the /TB. The ITB must be published in a newspaper of

general circulation if the cost of such publication does not exceed 50%
of the value of the property. Otherwise, substitute publication may be
availed.of, by posting copies of the ITB in conspicuous public places in
the ~rea where the property is located or where the bidding will be
conducted. Copies of the ITB may also be sent by mail or personal
delivery to prospective bidders.

4. Schedule of Bidding. Bidding shall be scheduled on a date not less than

seven (7) working days from date of issuance/publication/posting of the
ITB.

B. Who may Participate In Public Bidding

Any person, partnership or corporation complying with the prescribed

rules and regulations may participate in the sale by public bidding.

19
c. Accomplishment and Submission of Bids

1. Preparation ofthe Bid Tender. Any qualified bidder shall accomplish his
· Bid Tender, clearly indicating the following, among others:

a. The description of the items/lots with the corresponding bid offer

clearly indicated in figures and in words

b. The name and signature of the bidder

c. The business or residence address of the bidder

d. The business license number or Residence Certificate number of

the bidder

e. Terms and conditions offered regarding bidders bond, payment,

default and delivery

2. A bidder shall accomplish the Bid Tender in at least three (3) copies,
preferably typewritten. Bid tenders should be properly signed and
submitted to the Chairman of the Disposal Corn" ittee on or before the
time scheduled for the opening of the bids. The envelope containing the
bid tender should be sealed and addressed properly and correctly.

2.1. If the items are being sold by lots, bidders shall submit bid
· tenders for different lots in separate envelopes.

2.2. If the items are being sold by lots and all lots where interested
buyers may offer a bid for each lot or a single bid for all lots, the
bid tender shall be submitted in only one envelope.

3. Erasures or interlineations should be avoided or duly initialed by the

bidder.

D. Bid Bond

1. Bid bond per item/lot, as the case may be, which shall accompany the
bid tender or is presented at the time of the opening of bids, shall be
required from each bidder and should be at least 10% of the minimum
bid price set by the government.

2. Bid bonds should be in the form of cash, manager's check, or cashier's

check acquired from a reputable bank within the area where bidding is
to be held.

20
 E. Defective Bids

Bids that are not in prescribed form (e.g. unsigned bids) and/or those not
accompanied or guaranteed by bid bonds at the time of opening bids are
considered defective bids.

Defective bids are automatically disqualified. However, exceptional

cases may occur where a defective bid may be favorably considered by the
Disposal Committee. The defective bid may then be rectified in the presence
of the bidders and members of the Disposal Committee.

F. Withdrawal of Bids

1. A bidder may be allowed to withdraw a .bid tender before the time of

opening of the bids. His bid shall be returned unopened.

2. After the opening of the bids, no bidder shall be allowed to withdraw his
offer unless the following conditions are met:

a. There Is a mistake in the offer.

b. The mistake refers to the object or principal conditions of the

proposal.

c. The reason for such mistake must be conclusive and convincing .

.G. Opening of Bids

All bids shall be opened at the time, date and place set in the invitation
to bid under the direction of the Disposal Committee and in the presence of the
COA Auditor. Bidders or their duly authorized representatives may witness the
proceedings.

The bid tender sha!I be signed by the members of thi:i Disposal

Committee immediately <'!fter it is opened and announced in order to confirm
compliance with the requirements of the bidding.

The bid tenders are filed for safekeeping by the Secretariat of the
Disposal Committee.

H. The Abstract of Bids

An Abstract of Bids in triplicate shall be prepared during tli0 bidding

proper showing the name of the owning agency, the date, time and place of
bidding, names of bidders with their corresponding amount of bid tenders and
bid QOnds per item/lot, including reason for disqualification where applicable.
The Abstract of Bids shall be signed by the members of the Disposal
Committee.

21
 The purpose of the Abstract of Bids is to show in matrix-summary.form
the individual bidders, their bids and bid bonds . per.·. item/lot, and.
the
confirmation of the Disposal Cornrnittee. Eachmem.berof .the Committee
sha11 · .
.be provided with. a copy .of the Abstract of Bids. ··
·''
I. ·Unsuccessful Bidding

If the sale through public bidding is unsuccessful, a rebidding shall be

scheduled. Bidding may be declared unsuccessful in any of the following
cases:

a. There is no bidding participant

b. Only one (1) bidder submitted a bid tender for each lot.

c. All bidders failed to comply with the terms and conditions prescribed in
the Invitation to Bid.

d. Complying bidders failed to meet the minimum bid price.

In case of failure of the second bidding, the Dk--·osal Committee may

dispose of the property through negotiation.

J. Negot iated Sale

I_ . In case the second public bidding fails, the property may be sold at a
private or negotiated sale. Negotiatior:i within one (1) month from the date
of
the second failed bidding shall be done with the bidders of the first and/or
·- second failed bidding and other prospective bidders (such as those
who
obtained bid forms but did not submit bid tenders) at a price not lower
than
. 80% of the appraised value. If negotiation is done after one (1)
month,
participants in the negotiation shall be expanded to include other potent
ial
buyers aside from those abovementioned.
'I

If negotiation sllail ta%e place after six (6) months from date of second
failed bidding, the prop0rty should be reappraised and sold at not lower
than
90% of reappraised value. ·

Bid bonds shall be required from all participants in the negotiation.

ii

K. Awarding of Bids
:i
i. .l\ward shall be given to the highest complying bidder.

2. When two or more complying bidders made identical offers, public

auction viva voce between those w,ho made identical bids shall be
.
resorted to at a price not less than the offered bids.

22

L
 · 3. Awarding of bids should be done immediately after the opening of.bids
,
if practicable. Bid bonds of losing bidders shall be returned immediately
after the announcement of the winning bidder.

4. · In case of deferment of award, a temporary receipt shall be issued

by
the agency to acknowledge submission of bid tenders. Once the
Disposal Committee completes its deliberations and determines the
winning bidder, bid bonds of losing bidders shall be returned upon
presentation of the receipt immediately after awarding of the winnin
g
bidder. Deferment of award shall not exceed five (5) working days from
date of opening of bids.

L. Payment

1. Upon determination of the awardee, the bid bond shall be considered as

partial payment and the difference between such payment and the
oif&red bid price shall be paid in the form of cash, cashier's check or
manager's check of a reputable bank within the area where the bidding
was held. Full payment shall be made within five (5) working days from
the date of the notice of award. ·

2. In case of failure of full payment within the p1 ascribed period, the

awardee may be penalized through cancellation of the award and
fo1ieiture of the bid bond in favor of the government .

M. Claiming of Award

1. Claims shall be made only by the awardee, after the bid price is fully
paid as evidenced by an official receipt. It shall be effected in the
presence of the reporting accountable officer or his duly authorized
representative and witnessed by the Disposal Committee.

2. The property officer of the owning agency shall accomplish a tally-out

sheet as evidence of actual deliver;,. The tally-out sheet shall be signed
by authorizerJ ag~x:c;· official and the buyer acknowledging receipt of the
items.
I'
I

3. Claims sha!! be made only during o'fficial government working hours.

,,
I'
4. Ciaims shall be made within the period fixed by the Disposal Committee
but not more than 30 days after awarding. Failure on the part of the
awardee to claim the property within the stipulated period, shall have
:i
the effect of cancellation of the award/contract. The award e; ··.11all then
be charged storage fees and other incidental fees/costs or damages, i.e.,
costs incurred in the conduct of another public bidding or negotiation.
If the property remains unclaimed over a prolonged period of time,
ownership of the contracted/awarded property shall automatically revert
to the government. The government shal.1 then have the right to dispos
e

23
'
'I
I
1_

'
i'
- the property through whatever manner the Disposal Comm
ittee deems
most advantageous to. the government. ·
N. Taxes, Cus~()ms Duties, Costs .or Char ges

·The buyer of disposable property shall pay, in addition to

the purchase
price, .any taxes, customs duties, costs or charges of
any kind or nature
whatsoever levied, or to be levied in connection with the
sale of property. All
expenses incidental to the withdrawal of the property shall
be borne by the
awardee .

24