Course Description:

The course deals with the

procedures, principles and
different approaches in the
appraisal
of
government
property for disposal

Course Objectives:
Upon completion of the course, the participants
should be able to:
Have a working knowledge on appraisal;
State the different approaches and aspects in
the appraisal of property;
Explain the applicable provisions of law rules
and regulations on appraisal and disposal;
Enumerate the procedures on appraisal and
disposal, and
Identify the documents to support appraisal
and disposal activity.

L ISTEN
E NRICH
A SK
R ESPOND
N EVER SLEEP

DISPOSAL OF
GOVERNMENT
PROPERTY
ENGR. WILMA A. DELORIA
Sr. TAS COA 9
Lecturer

Phases of Property and Supply Management

Acquisition

Utilization

Disposition

DISPOSAL /
DISPOSITION
- the end of the
life cycle of a
government
property

Destruction or Sale of
Unserviceable Property
has become unserviceable for
any cause
is no longer needed

Sec. 79 of PD 1445
GAAM 502

Section 79 of PD 1445 - 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 unsalable, it may be destroyed in their
presence. 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 BAC in the presence of the
auditor
concerned
or
other
duly
authorized
representative...... 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.

COA Memorandum 95-088 and

COA Circular 95-006

3.3.1 The unit head may attend the same as

observer. His observations shall be inputs in the
post-audit.

3.4.1
The
negotiated
sale
of
unserviceable property
and other assets shall
no longer require the
prior approval of this
Commission.

COA Circular 95-006

Section 6.09
A copy of the Inspection
Report of unserviceable
property and equipment
shall be submitted to the
Head of the Auditing
Unit immediately after
inspection conducted by
management.

COA Circular 95-006 Section 6.10

Management shall furnish the
Auditor with a copy of the
schedule or notice of opening
of bids and condemnation /
destruction of government
property at least five days
before the scheduled time.

Disposal Objectives
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

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 Agencys
functions/mandate
In excess of requirements
Has become dangerous or hazardous to

Authority and
Divestment or

Responsibility for
Disposal

is lodged in the agency

head or governing bodies.
COA Cir. 89-296
sect. 4;
EO No. 888 sect. 1
GAAM 501

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/agency
or department manager.
Members
Head of Administrative Unit;
Head of Property Unit

Creation of Disposal Committees and

Secretariat (Section 364 of PSM in LGU)
For Local Government Units
Chairman -- Local Chief Executive
Members
Treasurer
Accountant
Budget Officer
General Services Officer
Head of Requisitioning Office

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, IIR/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, IIR/WMR, 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. Pre-qualify bidders -10% bond,
latest FS, ITR, Business Permit.
5. Constitute the BAC on Disposal
to conduct the public bidding.

Bids and Awards

Committee on Disposal
Members:
One representative each from
Legal or Administrative,
Finance, and
Technical
Offices

MODES OF DISPOSAL
Public Bidding Sealed Public Bidding
Public Auction by Viva Voce

Negotiated Sale
Transfer
Barter
Donation
Condemnation/Destruction

Mechanics and Procedures in Public Bidding

adequate publicity and notification
sufficient time frame between publication and

date of auction
opportunity to inspect the property
confidentiality of sealed proposals
bond of 10% and other pre-qualification
requirements
fair evaluation of tenders and proper
notification of award

Unsuccessful Public Bidding

If the sale through public bidding is unsuccessful,

a rebidding shall be scheduled.

Bidding may be declared unsuccessful in any of
following:

There is no offeror
There is only one offeror
If all the offers/tenders are not complying or
unacceptable
Complying bidders failed to meet the minimum bid
price/floor price
In case of failure of the second bidding, the Disposal Committee
may dispose of the property through negotiation.

Adjustment of Appraised Value when Auction

If after
exposure of the property to public auction, as
Bids
are Low

required under sect 79 of PD 1445, the highest bid

falls below the government floor price the agency
shall:

Determine whether the difference is excessive.

The amount of deviation of the highest bid from

the floor/reference value is considered excessive
when it is greater than 10% of the
floor/reference value plus the cost of calling
another public auction.

Adjustment of Appraised Value when Auction

Bids are Low
If the difference is found not excessive, the
agency shall continue with the sale of the
unserviceable properties. If the difference is
found to be excessive, the agency shall call for
another public auction with the
floor/reference value reduced by 10%.
If the second auction still fails, i.e., the
highest bid is still excessively lower than the
reduced floor/reference value, then the sale
may be negotiated with the highest offeror.

Sale thru Negotiation

There was failure of 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 or the floor
price whichever is higher.

Transfer of property between

government agencies (with or
without cost) - Invoice/Receipt of
Property
Barter ( exchange for another
piece of property)-I/R or deed of
exchange
Donation ( to charitable, scientific,
education or cultural associations,
NGOs) deed of donation
Condemnation/Destruction
(valueless, unsalable or hazardous
property)

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.
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.

F L O W C H AR T
Property Officer

1. Prepares the
detailed list of
unserviceable
property, I & I
Report, and WMR.
If property is eqpt.,
attached the Eqpt.
Ledger Card.

OF

AGENCY OFFICIALS

I & I Report 1-3

Eqpt. Ledger Card 1
Pictures 1-2
-

D I S PO S AL

OF

Reviews/Evaluates
the documents

Data/
Documents
Complete

Y
E
S

1. Conducts the insp.

& appraisal
2. Prepares the
Appraisal Report

Appraisal Report 1-3

Eqpt. Checklist 1-2
I & I Report 1-3
Eqpt Ledger Card 1
Pictures 1-2

Submits the Disposal

Program

NO

Schedules the bidding

Approves the
Disposal Program

Conducts the
bidding

Provides the following data

on I & I Report:
- Unit Cost
- Total Cost

Evaluates
the bids

Failed
Bidding

NO

/ Tech. Services Office

Forwards the
documents to
TSO/Technical
Staff for appropriate action

YES

Conducts the bidding

Evaluates the bids
Failed
2nd
Biddin
g
YES

NO

Appraisal Rep. 3
Eqpt. Checklist 2
I & I Report 3
Pictures 2

Negotiates
the sale
Post Audit

- Net Book Value

Recommends
the award

1. Reviews attached
Document s
2. Conducts Insp. &
Appraisal
3. Prepares
Appraisal Review
Report

Indorses the
Information /
notification

- Accumulated Depreciation

LEEZS/051304Th

COA

Auditor

Appraisal Report 1-2

Eqpt. Checklist 1
I & I Report 1-2
Eqpt Ledger Card 1
Pictures 1

Supplies/Attaches
the additional
data/documents

PROPERTY

Admin. Officer / Accounting / Disposal Committee / BAC ON DISPOSAL / Director/HODE /

2. Takes pictures of
the subject property.
Data/
Documents

THE

Approves
the award

COA Appraisal
Review Report 1-2
Appraisal Rep 3
Eqpt. Checklist 2
I & I Report 3
Pictures 2

Matrix of Differences
ACQUISITION DISPOSITION

Need

Not needed

PPMP/APP

IIR/WMRDispo Plan

BAC/TWG

Disposal Com./BAC

ABC ceiling

Appraised V floor

Lowest CR Bid/HRRB

Highest Offer

Single CR Bid

At least 2 bidders

Modes (Procurement)
PB, LSB, Negotiated
Proc., Direct C,
Shopping, Repeat O

Modes: Public
Auction, Negotiated
Sale, Transfer, Barter,
Donation, Condemnation

Inventory and Inspection Report of

Unserviceable Property (Annex A)

Annex A

INVENTORY AND INSPECTION REPORT OF UNSERVICEABLE PROPERTY

As of ___________________
Fund: _________________________________________________

INVENTORY
Date
Acquired

Particulars

Property No.

Quantity

Unit Cost

CERTIFIED CORRECT BY:

INSPECTION
Total Cost

Accumulated
Depreciation

Net Book
Value

Remarks

Appraised
Value

Disposition

I CERTIFY that I have inspected each

and every article enumerated in this
report

VERIFIED BY:

Name and Signature

Name/Signature-Head of the Accounting Unit

Position and Designation

Position and Designation

Date

Date

Remarks

I CERTIFY that I have

witnessed the inspection of
the articles enumerated in
this report

Name and Signature of Inspector

Position and Desigantion

Date

Name and Signature of Witness

Date

APPROVED BY:

Authorized Official

Date

page 1/2

Inventory and Inspection Report of

Unserviceable Property (Annex A)
INVENTORY AND INSPECTION REPORT OF UNSERVICEABLE PROPERTY
(IIRUP)

INSTRUCTIONS
A. This report shall be accomplished as follows:
As of - period covered by the report
Letter Head and logo of the agency
Fund - fund name/code
INVENTORY:
a. Date Acquired - date of acquisition
b. Particulars - a brief description of the Property, Plant and Equipment
(PPE)
c. Property No. - assigned property number by the Property Custodian
d. Quantity - quantity of PPE
e. Unit Cost - unit cost of the PPE
f. Total Cost - quantity multiplied by the unit cost of the PPE
g. Accumulated Depreciation - total amount of depreciation charged to the
PPE
h. Net Book Value - the difference between the total cost of the PPE less
the accumulated depreciation
i. Remarks - brief information on the condition of the property
j. Certified Correct by/Date - name and signature of the Property Officer/
Custodian who prepared the report/date of the report
k. Verified by/Date - name and signature of the Head of the Accounting Unit
who verified the propriety of the Unit Cost, Total Cost, Accumulated
depreciation and Net Book Value/date when verified
5. INSPECTION:
a. Appraised Value - appraised value of the PPE
b. Disposition - different modes of disposing the PPE such as sale, donation
destruction, etc.
c. Remarks - additional information on the condition of the property
inspected
d. Inspected by/Date - name and signature of the inspector and the date of
inspection
e. Witnessed by/Date - name and signature of the witness/date when
witnessed

B.

1.
2.
3.
4.

C.
D.

E.

F.

The "INVENTORY" portion shall be accomplished by the Property

Unit. While the "INSPECTION" portion shall be accomplished by a
Technical Inspector where technical knowledge is needed for the
determination of the true condition or appraised value of the property
and to be witnessed by member of a committee created for that
purpose.
The assets shall remain in the books until these are sold/disposed.
When the property is sold, this report, together with the sales report
and other supporting documents shall serve as basis in preparing the
JEV to drop the assets from the books.
All Property Acknowledgement Receipt (PAR) covering the PPE
shall be cancelled so that the end user shall be relieved from his/her
accountability over the property.
The report shall be prepared in two (2) copies by the Property
Officer/Custodian and serves as a basis for preparing a JEV to adjust
the accounts affected. This shall be distributed as follows:
Original - Accounting Unit
2nd copy - Property Officer's/Custodian's file

page 2/2

The End