DISPOSAL OF

GOVERNMENT
PROPERTIES

11 August 2023
Legal Bases

• Sec. 79 of PD 1445 or the Audit Code of the Philippines Destruction of

Unserviceable Property
• National Budget Circular No. 425 dated 20 January 1992
• Manual on the Disposal of Government Property
• BFP Memorandum Circular No. 2014-006 dated 15 July 2014
Disposal defined
• It is the end of life cycle of a government property
Property subject to Disposal
• Unserviceable property
• Confiscated / seized property
• Property under distraint / levy / garnishment
• Unclaimed motor vehicle
• Real Property
• Valueless Records / documents
Property subject to Disposal
1. Unserviceable property
Determining Factors:
 Property, which can no longer be repaired or reconditioned;
 Property whose maintenance cost of repair more than 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 a change in the
agency’s function or mandate;
 Unused supplies, materials, and spare parts that were procured in excess of
requirements; and
 Unused supplies and materials that have become dangerous to use because of long
storage or use of which is determined to be hazardous
Property subject to Disposal
1. Unserviceable property
Pertinent Documents:
 Inventory and Inspection Report of Unserviceable Property for semi-expendable
materials and equipment and non-expendable supplies, accompanied by any of the
following, whichever is applicable;
- Individual survey report, duly certifies by the Supply Officer and the HoA
- List of missing spare parts duly certified by the Supply Officer and HoA
- Stencils of chassis and engine numbers of motor vehicles; and
- Current photographs in two positions.

 Waste Materials Report for expendable materials, supplies and consumables including
spare parts, empty containers, and remnants from destroyed or damaged fixed assets.
Property subject to Disposal
1. Unserviceable property
Why the need to dispose of unserviceable property
 To avoid continuing carrying cost
 To prevent further deterioration, thereby obtaining a fair return in
case of sale
 To relieve accountable officers of unnecessary accountability
 To make available space for the agency
Property subject to Disposal
2. Confiscated / Seized Property
Definition
 are those which came into the ownership and possession of the government as a
result of its implementation and enforcement of laws and regulation
Why Dispose
 To avoid accumulation and loss of their economic value as well as to generate
revenue for the government
Examples:
 Timber and other forest products
 Property in Customs Custody
 Narcostics and Dangerous Drug
Property subject to Disposal
3. Property under Distraint / Levy / Garnishment
Definition
 Refers to the personal and/or real property of a taxpayer forfeited to the
government for failure to pay taxes

Note
 Whenever a delinquent taxpayer fails to settle his tax liabilities, the
government thru the BIR may issue and execute warrant of distraint, levy
and/or garnishment of properties of the said taxpayer. The government is
likewise authorized to administer, control and dispose of such properties
Property subject to Disposal
4. Unclaimed Motor Vehicles
Definition
 Refers to recovered stolen motor vehicles by the different law enforcement
agencies of the government. Due to the absence of claimants and that the
real owners can no longer be determined those recovered vehicles
remained unclaimed.
Rationale
 To avoid accumulation and further deterioration of those motor vehicles as
well as the incidence of unnecessary maintenance expenses to the
government, disposal of said vehicles has been authorized.
Property subject to Disposal
4. Unclaimed Motor Vehicles
Definition
 Refers to recovered stolen motor vehicles by the different law enforcement
agencies of the government. Due to the absence of claimants and that the
real owners can no longer be determined those recovered vehicles
remained unclaimed.
Rationale
 To avoid accumulation and further deterioration of those motor vehicles as
well as the incidence of unnecessary maintenance expenses to the
government, disposal of said vehicles has been authorized.
Property subject to Disposal
4. Valueless Records / Documents
Definition
 Include all records, materials that has reached their prescribed retention
periods and usefulness to the agency or the government as a whole
Record defined
 Refers to information, whether in its original form or otherwise, including
documents, signatures, seals, texts, images, sounds, speeches, or data
complied, recorded, or stored, as the case may be (1) in written form on
any material; (2) on film, negative, tape or other medium so as to be
capable of being reproduced; or (3) by means of any recording device or
process, computer or other electronic device or process.
Property subject to Disposal
4. Valueless Records / Documents
Disposal shall be guided by RA 9470
 All government offices shall prepare and submit a records disposition
schedule in the prescribed form, which shall upon approval of the
executive director shall govern the disposition of all records of that
government office.
 The National Archives shall develop a general records disposition schedule
that shall prescribe the disposal of public records common to all
government offices.
 Request for Authorization: No agency shall destroy or sell any record
without having first secured authority from the Director of RMAO
Property subject to Disposal
4. Valueless Records / Documents
Disposal shall be guided by RA 9470
 Request for Authorization: No government department, bureau, agency
and instrumentality shall dispose of, destroy or authorize the disposal or
destruction of any public records, which are in the custody or under its
control except with the prior written authority of the executive director.
Modes of Disposal
1. Condemnation / Destruction of Property
Through 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. Transfer of Property
Upon initiative of owning agency or submission of request to
owning agency, this may be done either with or without cost. Cost
herein refers to payment based on the appraised value of property.
Modes of Disposal
3. Barter
An agency transfers property to another government agency in
exchange for another piece of property. The value of the property
transferred may or may not be equivalent to that being received.

4. Donation of Property
May be to charitable, scientific, educational, or cultural
institutions.
Modes of Disposal
5. Sale of Unserviceable property
a. Sale thru Public Bidding - general rule
- It may be done thru sealed public bidding or when
circumstances warrant, by viva voce.

b. Sale thru Negotiated Sale – resorted to as a consequence of

failed bidding.
General Procedures / Guidelines in
Disposal
1. The accountable officer shall immediately return the unserviceable
property to the Property Officer.
2. The Property Officer shall file an application for disposal with
appropriate documents to the COA Auditor.
3. The COA Auditor shall inspect the items and determine whether the
items are with or without value and forwards his/her recommendation
to the HoA.
4. The HoA shall forward the documents to the Disposal Committee (DC).
5. The DC shall recommend to the HoA the mode of disposal as
appropriate and deemed most advantageous to the government.
General Procedures / Guidelines in
Disposal
6. If found to be valuable the unserviceable property may be sold at
public auction to the highest bidder.
7. The awardee shall pay, claim and withdraw the property.
- The bid bond shall be considered partial payment and the
difference between such payment and the offered price shall be paid in
cash, cashier’s / manager’s check
- Full payment shall be made within 5 working days from the date
of notice of award
- Claims shall be made by the awardee after the bid price is fully
paid as evidenced by an official receipt.
General Procedures / Guidelines in
Disposal
- Claims shall be made within the period fixed by the DC but not
more than 30 days after awarding. Failure of the awardee to claim
within the stipulated period shall have the effect of cancellation of the
award / contract. …

8. Upon disposal of the property, the pertinent portions of the Inventory

and Inspection Report, Request of Waste Materials or Invoice-Receipt
for Property, whichever is applicable, shall be accomplished. These
reports shall be the basis for dropping the property from the books of
accounts and for taking up the proceeds from the sale of the property.
General Procedures in Appraisal
Objective
There is a need to compute the appraisal value of the property to
set the government’s minimum selling price so that the government
shall receive fair compensation for the items sold.

Procedure:
1. Conduct an ocular inspection of the property to be appraised to
assess its physical condition.
2. Seek reference price information
General Procedures in Appraisal
Procedure:
3. Compute the appraised value following the revised formula on the
appraisal of government properties except real estate, antique
property, and works of art
General Procedures in Appraisal
Preliminary Documentation
1. Inventory and Inspection Report of Unserviceable Property (IIRUP)
2. Waste Materials Report
General Procedures in Appraisal
Inspection Process
Rationale:
- To establish the existence and condition of the property / asset.
- To supplement theoretical computation of value with first hand
information
Process:
1. Identify the property in accordance with its description in the
inventory list or directive
2. Check the condition of the property, determine whether
operational, under repair, or irreparable
General Procedures in Appraisal
Inspection Process
Process:
3. Determine if property is economically repairable and the most probable cost of
its repairs, and current cost of spare parts;
4. Check for damaged, worn-out or missing parts. Careful determination of its
present physical condition shall serve as basis for its depreciation and correct
evaluation / valuation.
5. Verify stated ratings, capacity, model, year of manufacture, serial number,
chassis number, motor number and other technical specifications, and
accessories, if any.
6. Determine the correct date when property has been acquired or its present
age / number of years the property has been actually used or operated
General Procedures in Appraisal
Inspection Process
Process:
7. See if property is obsolete or still being manufactured and if spare
parts are still procurable in the market;
8. Determine quality or degree of maintenance, repair, restorarion or
upgrading made, check logbook, if available;
9. Determine the extent of use, mileage, rate of depreciation, and any
excessive wear and tear;
10.Determine whether property has still market demand; or the
existence of probable buyers in the locality.
General Procedures in Appraisal
Inspection Process
Process:
11. Inspect the location of the properties and the available facilities for
its transportation;
12.See if property is sheltered or exposed to elements and theft;
13.If property is to be disposed of as junk, determine parts which could
be salvaged or profitably used such as engine, dynamo, wheels,
tires, axles, body / chassis, etc. for motor vehicles
General Procedures in Appraisal
Audit Procedure
1. Upon receipt from the HoA of the Inventory and Inspection Report
and Waste material Report, refer this to the Technical Property
Inspector for appraisal;
2. The TSO shall submit the Inspection Report to the Auditor for
transmittal to the Disposal Committee for decision-making.

The TSO shall

- conduct inspection of the unserviceable equipment or property to
verify justification for disposal and determine the existence of the
property
General Procedures in Appraisal
Audit Procedure
The TSO shall
- determine the condition of the property and reasonableness of
the appraised value

- prepare an Appraisal Review Report and submit the same to

the Auditor as a guide in the post-audit of the transaction
Role of COA during Disposal
1. Take into account his/her constitutional duty to examine, audit and
settle all accounts pertaining to the expenditures and uses of
government funds and property;
2. May verbally advise the agency head of any objectionable feature of
the proceedings;
3. May submit written comments to the concerned agency official
which will form part of the bases of his/her action during the post
audit
Role of COA during Disposal
In all modes or instances of disposal of government property or assets,
the proceeding shall be undertaken by the appropriate authority in the
presence of the Auditor or his/her authorized representative who shall
act as intelligent, responsible and articulate witness thereto.