POLICY AND GUIDELINES FOR THE DISPOSAL OF

UNSERVICEABLE PROPERTY OF DBP LEASING

CORPORATION

Chapter I
GENERAL PROVISIONS

1. Name. – This shall be known as the Policy and Guidelines for the Disposal of Unserviceable
Properties of DBP-Leasing Corporation (DBP-LC).

2. Coverage and Application. – The rules, regulations, processes and procedures contained
herein shall uniformly apply and shall be observed by all employees of the Corporation in the
management and upkeep of disposable and unserviceable properties of the Corporation.

The provisions of this Policy and those in the Government Auditing Code of the Philippines or
P.D. No. 1445 and Department of Budget and Management (DBM) Circular as well as
pertinent regulations, issuances, policies and executive memoranda shall be applicable
suppletorily.

3. Scope and Limitations. – This Policy applies only to personal properties such as supplies,
materials and equipment purchased or owned, stocked and used by the Corporation in its
operations. Real property and records are excluded.

4. Purpose. – The enactment and adoption of this program has the following purpose and/or
function:

a. To comply with the existing laws, rules, regulations, and/or policies of the
National Government, particularly the Bangko Sentral ng Pilipinas (BSP),
Commission on Audit (COA), and DBM, with respect to the proper procedure
in the disposal of unserviceable properties as would be defined herein;

b. To strategize the management and upkeep of the different assets and

properties of the Corporation to maximize its economic life, ensuring that the
assets and properties are used;

c. To establish appropriate control mechanism that will oversee the

implementation of a sound compliance with Disposal of Unserviceable
Government Property of the Corporation;

d. To prevent further deterioration of the government property;

e. To discontinue the cost of maintenance of government property.

5. Definitions.—The following terms shall have the corresponding meanings:

a. “Abandoned Property” refers to any personal property in the possession of any

government agency without a known owner.

b. “Acquisition Cost” refers to the price at which the property was acquired, which also
include related expenses incurred during the acquisition/ construction of the property
such as taxes, license fees, permit fees and clearance fees.

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 c. “Appraisal” refers to the process of estimating the fair market value of a property as of
a specified date, supported by relevant or factual data.

d. “Appraised Value” refers to the opinion of value rendered by an appraiser based upon
an interpretation of facts and beliefs relating to the an estimate of value, as of a
specified date.

e. “Beyond Economic Repair” refers to the condition of the assets or property where the
cost of repair and maintenance becomes excessive and/or disadvantageous to the
government when factors as maintenance expenses, replacement cost of spare
parts, repair, frequency of breakdown, and alternative modes such as rental of
equipment or outright replacement are considered.

f. “Corporation” refers to DBP Leasing Corporation.

g. “Disposal” refers to the third and last phase of the supply management chain after
procurement and utilization. This shall also refer to the act of the Corporation in
removing any asset in the inventory and/or in the books of the Corporation, as
economic life and benefit of the assets or property have been fully exhausted, or the
upkeep and/or maintenance would not be cost efficient, or when the continued use,
upkeep or possession of the assets or property would cause danger to other assets,
property or personnel of the Corporation.

h. “Floor Price” is the minimum amount by which an asset or property may be sold. The
amount shall not be less than to 5% of the value of the property or asset.1

i. “Obsolete Property” refers to property that has lost its efficacy due to technological
advancement, change of procedures, and/or recognition/completion of project.

j. “Offeror/s” refers to one who makes an offer to another. A unilateral contract consists
of a promise on the part of the offeror and performance of the requisite terms by the
offeree. Acceptance of the offer terminates the power of revocation that
the offeror ordinarily has.

k. “Partnership” refers to the an agreement between to two or more persons, in pursuit

of an endeavor. It shall exists when two or more persons bind themselves to
contribute money, property, or industry to a common fund, with the intention of
dividing the profits among themselves.

l. “Unserviceable Property” refers to the condition of the assets or property where it is

beyond repair and has no more utilization potential.

m. “Useful Life” refers to the period over which the asset is expected to be available for
use by an entity or the number of production or similar units expected to be attained
from the properties by an entity.

n. “Waste Materials” refers to any materials unused and rejected as worthless or

unwanted.

6. Rules of Interpretation. – The words and terms used in this Manual shall adopt its
conventional meaning, unless the words or terms used have technical meaning as defined by
law, in which case, the technical meaning shall prevail.

1
Based on the set residual value as defined in COA Circular No. 2007-004; 13 December 2017

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 In case where the meanings, either conventional or technical, give rise to more than one
probable interpretation, the word shall adopt the technical meaning as contemplated by law,
rules, regulations, or policies, taking into consideration the intent of the laws, rules,
regulations, or policies on disposal of unserviceable properties.

Should there be uncertainty as to the words or terms used and to the intent of the provisions
of this program, the words or terms, as constructed in the sentence or phrase shall be
interpreted liberally with the goal of achieving compliance with the laws, rules, regulations, or
policies, and overall protection to the interest of the Corporation.

Chapter II
DISPOSAL COMMITTEE

1. Authority to Dispose and Composition of the DBP-LC Disposal Committee. -- Pursuant

to existing laws on the matter, the full and sole authority and responsibility for the disposal of
property and other assets or property owned by the Corporation shall be delegated to the
Disposal Committee, which is created under this policy.

The Disposal Committee shall be composed by at least three (3) persons. The Head of the
Support Services Units (SSU) of the Corporation shall be the Ex-Officio Chairperson of the
Committee

The PCEO shall appoint the members of the Disposal Committee for a term of one (1) year
beginning January of every year.

2. Duties and Functions. – The Disposal Committee shall have the following powers, duties,
and functions:

a. Identify obsolete and unserviceable properties and create a monitoring mechanism to

streamline the identification process;

b. Require the submission by the concerned groups/units of the properties to be

disposed of, and all the necessary documents pertaining thereto;

c. Inspect groups/units to identify unserviceable equipment and verify the justification for
the disposal;

d. Initiate disposal processes in compliance with the appropriate laws and regulations
on the same and conduct public biddings for the sale of disposable property when
applicable;

e. Set the final appraised value of all disposable property considering obsolescence,
market demand, physical condition and result of previous biddings for similar
property;

f. Recommend to the President the appraised value and the manner of disposal of the
disposable property;

g. Ensure compliance with all auditing and reportorial requirements pertaining to the
disposal of the unserviceable or obsolete properties. This includes the recording of
the negotiation process in case of disposal of properties through negotiated sale as to
be discussed in Chapter IV of this Manual;

h. Keep abreast of future laws, rules, regulations, issuances, executive orders and
memoranda regarding the disposal of obsolete or unserviceable properties.

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 3. Committee Secretariat. -- A Secretariat shall be established to assist the Committee in its
duties and functions. The Secretariat shall be tasked to provide technical support and
discharge administrative functions.

The Committee Secretariat shall also be the final repository of all the files and documents of
the Committee.

The PCEO shall also appoint the members of the Committee Secretariat whose term of office
shall be co-terminus with the members of the Committee.

Chapter III
PRE-DISPOSAL ACTIVITIES

1. Conduct of Inventory. – The SSU is required to conduct and maintain an inventory of all the
assets and/or property of the Corporation. To this, the Annual Inventory of the Corporation
shall be completed on or before April 30 of every year.

A spot inventory may be conducted any time by the Administrative Assistant of the Support
Services Unit (SSU) when the need arises or the circumstances so warrant, to identify, which
properties are no longer serviceable or necessary in the conduct of the Corporation’s
business.

A copy of the inventory shall be sent to the Disposal Committee for review and/or reference.

2. Determination of Disposable Property. – Any or all of the following conditions shall

constitute a property or asset disposable:

a. When the asset or property is broken or no longer functional and can no longer be
repaired or reconditioned;

b. When the maintenance, upkeep and/or repair costs becomes prohibitive and/or
disadvantageous to the government considering factors such as:

i. Maintenance cost is more expensive than the cost of acquiring a new unit
ii. Availability of the replacement parts;
iii. Replacement cost of spare parts; and
iv. Frequency of breakdown;

The costs of wages and man-hours to be dedicated in restoring or repairing the asset
or property shall also be included in the cost computation.

c. When it has lost its efficacy either due to technological advancement, change of
processes or procedures, recognition or completion of project or when in the opinion
or findings of an expert such equipment has been rendered obsolete;

d. When serviceable property that has been rendered unnecessary due to change/s in
the unit/office/group’s functions or mandates;

e. Those unused supplies, materials and spare parts that were produced in excess of
requirements;

f. Those unused supplies and materials that has become dangerous to use because of
long storage or use which is determined to be hazardous or may cause injury;

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 g. When a property is deemed unusable due to change in office location, organizational
structure, manpower, and/or business set-up;

h. When the property or asset has been fully depreciated;

Properties determined to be more than five (5) years old are presumed to be obsolete and the
SSU shall recommend its Disposal to the Committee after a thorough cost-benefit analysis.

The Disposal Committee may require the Inspectors of the Operations Group or any other
entity or persons possessing expertise on the items recommended for disposal, to inspect and
validate the inventory list submitted by the Administrative Assistant.

3. Initiation of Disposal Procedures. – The Disposal Committee shall recommend to the

President the proper mode of disposal, taking into consideration the value, salability, utility of
the asset, as well as the mode of disposal that would be most beneficial to the Corporation.

The President may adopt, modify or reject the recommendation of the Disposal Committee or
require further justification for the mode chosen by the Disposal Committee.

Chapter IV
APPRAISAL AND VALUATION OF DISPOSABLE PROPERTY

1. Duty to Appraise and/or Establish the Value Disposable Property. – It shall be the duty of
the Disposal Committee to require the conduct of an appraisal, in cases where applicable,
and/or establish the value of the Disposable property.

Only one appraisal shall be necessary to establish the disposal value of the property or asset,
unless any applicable law provides otherwise.

2. Basis in the Computation of the Appraised Value. – The computation of the appraised
value shall be based on the generally accepted formula taking into consideration the
property’s actual physical condition, the relevant reference price information, and the changes
in the value of the property caused by depreciation or those caused by the changes in the
purchasing power of the Philippine Peso.

The computation of the appraised value may also refer to the revised formulae on appraisal of
government properties released by the appropriate agency of the government but in no
instance shall the approved value of the property for sale be lower than the floor price as
defined herein.

The Disposal Committee, in coordination with the DBP-LC Finance Group is tasked to create
an appraisal guideline to streamline the computation of the appraised value of the
unserviceable property.

Chapter V
MODES OF DISPOSAL

1. Modes of Disposal. – Unserviceable property and assets may be disposed thru the
following modes:

a. Sale of Property. – As much as practicable, the preferred mode of disposal is sale

thru public auction described below.

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 i. Thru Public Auction. – In conformity with existing state policy, the disposal
of government property as contemplated herein shall be undertaken primarily
thru public auction. Such mode of disposal shall observe and adhere to
established mechanics and procedures in public bidding in the manner
specified in Chapter VI of this Manual.

ii. Thru Negotiated Sale. – In case of failure of public auction, disposal thru
negotiated sale may be resorted to and undertaken by the Disposal
Committee for justifiable reasons and as demanded by the exigencies of the
service. The mechanics and procedures for negotiated sales are specified in
Chapter VII of this Manual.

b. Condemnation or 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 is disposed beyond economic
recovery. Destruction shall be made in the presence of at least two (2) of the
members of the Disposal Committee.

c. Barter. – Is a modified form of transfer of property wherein the corporation exchanges

one of its disposable asset for another piece of property. The value of the property
being transferred may or may not be equivalent to that being received. However, the
outcome of the transaction shall be for the advantage of the Corporation.

In effecting barter of property, the PPE Schedule of Property shall be prepared by

Finance Group for the Disposal Committee. The disposable property shall only be
delivered to the other party upon receipt of the other party’s property. The other party
shall deliver to the Disposal Committee any and/or all evidence of ownership of the
property subject to exchange.

Parties shall also execute the proper deed or document/s of conveyance upon
exchange of property.

d. Donation of Property. – Property recommended for disposal may be donated to

charitable, educational, another government agency, or cultural associations on
exceptional and meritorious cases, and after execution of a Deed of Donation.

The cost of the donation, including taxes, registration costs and cost of transfer of the
property shall be shouldered by the donee.

In compliance with Section (4) of R.A. 3019 otherwise known as the Anti-Graft and Corrupt
Practices Act, employees of DBP-LC are disqualified from being parties/ beneficiaries in the
modes of disposals defined in subsections (c) and (d).

Chapter VI
PUBLIC AUCTION REQUIREMENTS

1. Public Auction Viva Voce. – Disposable property that requires immediate disposal,
regardless of the amount, shall be sold thru public auction by viva voce to be conducted by
the Disposal Committee. Other situations for viva voce are those involving the disposal of
waste materials and/or spare parts or assets of insignificant value.

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 The Disposal Committee, if it deems necessary, may set guidelines for the conduct of public
auction.

2. Mandatory Conduct of Public Bidding. – The conduct of a Public Bidding shall be

mandatory in case the value of the items to be disposed exceeds Pesos One Hundred
Thousand (P 100,000.00), per piece or per lot.

3. Who may Participate in the Public Bidding. – Any person, partnership or corporation
complying with the prescribed rules and regulations herein and in subsequent
pronouncements and enactments of the Disposal Committee may participate in the Public
Auction.

4. Conduct of Public Bidding and Auction. – The Disposal Committee shall prepare the rules
and regulations of the public auction, as well as the qualifications of those who will be allowed
to participate in the public auction, subject to the approval of the President.

5. Accomplishment and Submission of Bids. – Any qualified bidder shall accomplish a bid
tender in the manner to be specified by the Disposal Committee. In compliance with the DBM
Manual on the Disposal of Unserviceable Property, the following must be clearly indicated in
the Bid Tender:

a. The description of the items 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 the Residence Certificate number of the bidder;

e. Acceptance to terms and conditions offered regarding bidders bond, when necessary,
payment, default and delivery.

The Disposal Committee has the discretion to add to or qualify the abovementioned requirements.

6. Mechanics and Procedures.—Disposal shall observe and adhere to established mechanics

and procedures in public bidding, namely:

a. Adequate publication and notification so as to attract the greatest number of

interested parties;

b. Sufficient time frame between publication and date of auction;

c. Opportunity afforded to interested parties to inspect the property properties to be

disposed;

d. Confidentiality of sealed proposals;

e. Bond and other pre-qualification requirements to guarantee performance; and

f. Fair evaluation of tenders and proper notification award.

It is understood that the Corporation reserves the right to reject any or all of the tenders.

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7. Publication Requirements. – Publication of the public bidding as defined in Par. 2 of this
Chapter is required for a period not less than two (2) consecutive weeks in any newspaper of
general circulation in the applicable bulletin boards and/or website.

However, where the value of the property does not warrant the expense of publication, by
notices posted for a like period in at least three (3) public places in the locality where the
property is to be sold in line with Section 79 of P.D. 1445.

8. When to Conduct Pre-biding. – A pre-bid conference may be called to clarify bidding

procedures and other matters when the disposal through sale warrants.

9. When to conduct re-bidding. – In case of failure of bidding, a re-bidding shall be scheduled

to avoid further damage to the properties subject for disposal.

After two (2) failed biddings, the Disposal Committee may cause the disposal of the property
thru negotiated sale in compliance with the general guidelines set in Chapter VII of this Policy,
or thru other modes of disposal deemed most advantageous to the Corporation.

Chapter VII
NEGOTIATED SALE

1. When Negotiated Sale may be Resorted to. – Negotiated Sale may be resorted to when:

a. The appraised or book value of the asset or property is less than Pesos One Hundred
Thousand (P 100,000.00). In case there is a variance between the book value and
appraised value, the benchmark price shall be the higher valuation; or

b. Sale thru public auction failed twice.

2. Conduct of Negotiated Sale. – In conducting negotiated sale, the following factors must be
put into consideration:

a. The sale may be conducted singly or in group(by lot) provided that due
communication between the offerors and the Corporation is established with a view to
ensuring the Corporation shall receive the most competitive offer;

b. To avert possible confabulation among unscrupulous parties, a record of the

proceedings of the negotiation must be maintained. Know Your Client procedures as
defined in Money Laundering and Terrorist Financing Prevention Program (MLPP) of
the Corporation shall be observed;

c. It is understood that the price agreed upon at the negotiation shall not be lower than
the floor price as fixed by the Corporation.

d. The price or the offer most advantageous to the Corporation shall be accepted.

3. Negotiated Sale after Second Failed Bidding. – Negotiated sale shall be conducted after
the second public auction failed. After the second failed public auction, the Disposal
Committee have the option to reevaluate the terms and conditions of the sale, including but
not limited to the residual value of the property, and to adjust it accordingly.

4. Other requirements. – Bid bonds may be required from all the participants in the described
above. The Bid bond shall not be less than ten percent (10%) of the offer. The disposal

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 committee shall have the option to forfeit bid bonds submitted by the winning party, in case of
default or failure to comply with the conditions of the sale.

Chapter VIII
AWARDING OF BIDS

1. Preference of Awards. – In awarding the bid, the following guidelines are binding:

a. Award shall be given to the highest compliant bidder;

b. When two (2) or more compliant bidders made identical offers, and one (1) of the
offerors is an employee of DBP-LC, the bid shall be awarded to the DPB-LC
employee;

c. When two (2) or more compliant bidders made identical offers, and two (2) or more of
them are employees of DB-LC, public auction viva voce between the DBP-LC
employees shall be resorted to at a price not less than the offered bids;

d. The same process specified in subsection (c) of this paragraph shall be applied when
two (2) or more compliant bidders made identical offers and none are employees of
DBP-LC;

e. 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;

f. In case of deferment of award, a temporary receipt shall be issued by the Finance

Group 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 retuned upon presentation of the receipt immediately after awarding
of the winning bidder.

Deferment of award shall not exceed five (5) working days from date of opening of bids.

Chapter IX
POST DISPOSAL ACTIVITIES

1. Applicability of Rules and Regulations of the Commission on Audit (COA). – All modes
of disposal, processes, and/or award shall be subject to the applicable rules of the
Commission on Audit.

2. Reportorial Requirements. – Upon the disposal of the property, the pertinent portions of the
Inventory/ Inspection Report (IRR), Waste Material Report (WMR), and Property
Acknowledgment Receipt (PAR), whichever is applicable, shall be submitted by the Disposal
Committee to the COA. A summary of the conduct of mode of disposal undertaken shall be
accomplished by the Disposal Committee.

Copies of the above reportorial requirements shall be provided to DBP-LC’s Management

Committee.

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3. Dropping from the Books of Accounts. – The reports above described shall be the basis
for the dropping of the property from the books of accounts and for taking up the proceeds
from the sale of property. The procedure for the above action shall follow the current policies
and memoranda of DBP-LC on auditing of properties.

4. Archiving of Official Files/ Records.—The disposal and archiving of official files and
records shall be undertaken by the Central Records Division in accordance with the
prescribed rules and regulations of the National Archives of the Philippines.

Chapter X
TRANSITORY REQUIREMENTS

1. Immediate Actions. – Within 90 days from the time this Policy is approved and adopted for
implementation, the Disposal Committee shall conduct the following:

a. Creation of Secretariat;

b. Creation of procedure for the conduct of public auction bidding; and

c. Company-wide orientation of all personnel.

2. Reserve Powers of the Disposal Committee. – The Disposal Committee reserves the right
and power to interpret the provisions of this Policy and to supplement the provisions stated
herein by way of issuing protocols or guidelines; provided, that the issuance shall implement,
expound or relate matters which are included, contemplated, or necessarily with the intents,
germane or inherent to the nature and implementation of this Manual; provided further, that
the said issuances are not irrelevant and alien to the subject matter of the Manual.

3. Effectivity. – This Manual shall immediately take effect after approval.

-Nothing Follows-

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