SOP NO: GS-PD14 (List of Exhibits/Attachments)

Mission: Finance and Administration

Area: General Services (GS)

Activity: Purchasing/Inspection and Fixed Asset Disposition (GS-PD)

Title: Revised SOP on the Disposal of Unserviceable Fixed Assets and Materials (Junk
Properties)

Date Approved/Issued: 05/29/1997

Date Effective: 06/01/1997

II. IMPLEMENTING GUIDELINES

1. Evaluation of Fixed Assets

1.1 Fixed assets shall be evaluated semi-annually (March and September) or whenever
management, thru GSD, deems it necessary to determine which are :

1.1.1 Serviceable and to be retained or which are to be enhanced for income generating
projects through efficient and effective administration.

1.1.2 Unserviceable fixed assets to be disposed at highest value possible.

1.2 For a fixed asset to be considered unserviceable, any of the following conditions must be
present:

1.2.1 The item is considered junk or beyond economical repair. Beyond economical repair
shall mean that the cost of repair is more than 60% of the acquisition cost at current prices.
However, for motor vehicles, National Budget Circular No. 446 (series of 1995) shall be
implemented.

1.2.2 The item is already obsolete or no longer needed for NFA operations.

1.2.3 The item is no longer economical to use or maintain.

1.3 If unserviceable, items for disposal shall be retained, whether temporarily or permanently, the
office concerned shall prepare a justification indicating its intended purpose for retaining the items.
Also a proposed work program on its utilization shall be accomplished and submitted directly to the
Disposal Committee. The concerned office shall be responsible in maximizing utilization of the
properties either thru its own use or reporting idle properties to Central Office for proper
relocation.

2. Disposal of Unserviceables

Disposal of unseviceable properties shall be done semi-annually (every June and November) or otherwise
depending upon the volume, condition of the properties, etc. Disposal shall be done on a "where is" basis.

Unserviceable properties shall be disposed in the manner most advantageous to the Agency and to
promote the interest of the general public which may either be one of the following modes:

2.1 Sale thru Public Bidding - unseviceable properties, equipment and materials are sold at public
auction to the highest bidder under the supervision of the Disposal Committee with due
consideration to the following:

2.1.1 After advertisement thru printed notice in the official gazette or in any newspaper of
general circulation for not less than three (3) consecutive days.

2.1.2 If the value of the property does not warrant the expense of publication, by notice
posted in three (3) public places where the property shall be sold. Bidders may also be
solicited thru mailed "Invitation to Bid".
 2.1.3 Public Bidding shall be done on an "as is" "where is" basis. Items for bid shall be
grouped in "lots of similar properties" to draw greater interest from prospective buyers,
thus, higher bid price may be obtained.

2.1.4 Bids must be accompanied by bidders bond of at least 10% of the total bid price in
cash, manager's check or cashier's check, which shall be receipted by a provisional receipt
only.

2.1.5 The winning bidder shall effect full payment within three (3) working days upon
receipt of Notice of Award of Sale, otherwise the bidder's bond shall be forfeited.

2.1.6 The winning bidder shall withdraw the items bidded within five (5) working days from
receipt of authority to withdraw. Otherwise, the award may be cancelled and the bond
forfeited.

2.1.7 NFA officials and employees shall not be allowed, directly or indirectly to participate in
the public bidding of unserviceable properties, equipment and materials.

This prohibition shall continue to apply for a period of one (1) year even after resignation,
retirement, or separation from the agency.

2.2 Negotiated Sale - In the event second public auction fails, the properties may be sold at a
private sale at such price to be fixed by the Disposal Committee and may be reviewed by the COA.

2.3 Trade-in - The unserviceable properties may be traded in for properties needed by the agency.
The trade-in value shall be negotiated at a price not less than its appraised value or at which the
asset may be disposed following the two previously mentioned modes. Approval of this mode of
disposition shall follow the specification of authority in II.4.

2.4 Unserviceable properties may be exchanged with properties of other government agencies or
other government controlled corporation which are of use with the NFA. The value of properties to
be received in exchange shall not be less than the appraised value of the properties being given
away.

2.5 Donation - Unserviceable properties may be given to selected institution gratuitously with the
approval of the Administrator. The duly approved I & I Report shall be accompanied by a Fixed
Asset Issuance Report to be acknowledged by the donee/beneficiary. Detailed policies and
procedures regarding donations are contained in the Revised SOP on Donations and Grants.

2.6 Destruction - That mode of disposal in which unsaleable junk assets are burned after proper
approval/authority and witnessed by the following:

Central Office:

Technical Audit Div.-IAS, DAS, and COA as observer

Field Office :

Administrative, Accounting and COA as observer.

3. Fixed Assets Disposal Committee

3.1 A Disposal Committee shall be created for both Central and Field Offices to determine the fair
market value of the unserviceable properties and to undertake the actual disposal thereof.

3.2. The Disposal Committee shall be reconstituted per Executive Order No. 309 - Reconstituting
the Disposal Committee created under EO 285. The Committee shall be composed of the following:

Chairman - Proj. Director, SPO Asst. Reg. Mgr. Prov'l. Mgr/OIC

Members: GSD Representative Reg'l. Adm. Officer Prov'l. Adm. Officer
TSD Rep. Reg'l. Engineer Prov'l. Engineer
DAS Rep. Reg'l. Accountant Prov'l. Accountant
IAS-TAS Rep.
Observer: AO Rep. COA Rep. COA Rep.
COA Rep.

4. Specification of Authority
The approval of the Inventory and Inspection Report (Exhibit A) and Award of Sale for
unserviceable properties shall follow hereafter specification of authority based on the acquisition
cost of the aggregate properties for disposal. Donations of whatever kind and value shall be
approved by the Administrator.

4.1 Approval of Inventory & Inspection Report:

a. CENTRAL OFFICE

below P500.00 -

R - Division Chief, GSD-PSMD

A - Dept. Manager, GSD

P500,000 to below P 1M -

R - Dept. Manager, GSD

A - Asst. Administrator for Finance and Administration

P1 M to below P 3M -

R - AAFA
A - Deputy Adm. for Finance and Adm.

P3 M and above

R - Dept. Adm. for Finance and Adm.

A - Administrator

b. FIELD OFFICE

b.1 Provincial Office

P500,000 and below -

R - Adm. Officer/APM
A - Provincial Manager

Above P500,000 to below P 1M

R - Provincial Manager
A - Asst. Regional Manager

P 1 M and above

R - Asst. Regional Manager

A - Regional Manager

b.2 Regional Office

Below P 1M -

R - Regional Administrative Officer

A - Asst. Regional Manager

P1 M and above

R - Asst. Regional Manager

A - Regional Manager

4.2 Approval of the Award of Sales

a. CENTRAL OFFICE

below P 1M -

R - Chairman, Disposal Committee

 A - Asst. Adm. for Finance and Adm.

P1M to below P 3M -

R - Chairman, Disposal Committee

A - Dep. Adm. for Finance & Adm.

P3M and above -

R - Chairman, Disposal Committee

A - Administrator

b. FIELD OFFICE

Regardless of amount

R - Chairman, Provincial/Regional
Disposal Committee
A - Regional Manager

5. Documentation and Reporting

5.1.1 Items for disposal shall be properly documented with the duly approved and pre-numbered
Inventory and Inspection Report supported by equipment appraisal report and photographs
showing two views if practical.

5.1.2 I & I Report shall include the appraised value and shall be supported with an appraisal report.
The actual condition and current market/resale value of the property especially motor vehicles shall
be considered in the appraisal.

5.1.3 The Inventory and Inspection Report (I & I Report) shall be prepared by the Supply Officer
and shall be distributed only after the physical disposal has been effected.

Central Office

Copy 1 - DAS - General Accounting Div.

2 - GSD-PMSDS
3 - GSD-PMMS

Field Office

Copy 1 - Regional Accountant/Provincial Accountant

2 - GSD - PMMS
3 - Supply Officer

5.2 Receipt for Returned Property - (Exhibit B and B.1) -

5.2.1 The Receipt for Returned Property (RRP) shall be prepared by the employee who
wishes to surrender property accountability previously covered by MR. The property shall be
inspected by a Property Inspector from IAS to determine its true condition. Properties
returned shall be classified by the Property Inspector either as serviceable or unserviceable
in which case necessary action shall be recommended.

5.2.2 Separate RRP control number shall be maintained for junk properties and serviceable
ones. Such control number shall be used for cross-reference purposes and shall be indicated
in the I & I Report.

5.2.3 The RRP shall be distributed as follows:

Central Office

Copy 1 - Employee
2 - GSD - PMSDS
3 - GSD - PMMS
4 - DAS - GAD

Field Office

Copy 1 - Employee
 2 - Supply Officer
3 - Accounting

5.2.4. List of Serviceable Returned Properties shall be circularized nationwide.

5.3 Report of Waste Material (Exhibit C) -

The Report of Waste Material (RWM) evidences the surrender of worn-out or obsolete parts of
semi-expendable items for replacement/disposal based on the inspection report of the Property
Inspector. Waste Materials with resale value shall be stored temporarily and later offered for bid
and those without value shall be destroyed immediately.

Separate files for the above shall be maintained, each assigned with corresponding control number
series.

Central Office

Copy 1 - DAS - Claims and Inter-Branch Acctng. Div. *

2 - GSD - PMSDS
3 - GSD - PMMS

Field Office

Copy 1 - Accounting Unit

2 - Supply Officer
3 - Property Inspector

* Supporting paper to voucher if parts are for purchase

5.4 Fixed Asset Issuance Report

This report (FAIR) is used to document the issuance of fixed assets by the supply officer under any
of the following instances; i.e. transfer, sale, donation or other forms of issuances.

Central Office

Copy 1 - Recipient
2 - DAS - GAD
3 - GSD - PMMS
4 - PMSDS/Supply Officer

Field Office

Copy 1 - Recipient
2 - Accounting Unit
3 - Supply Officer

5.5 Quarterly Report on the Disposal of Unserviceable Fixed Assets and Materials(Exhibit D)
This report shows the amount of proceeds generated from items disposed and a list of remaining
items for disposal. It should be supported by an approved I & I Report, Appraisal Report, Minutes
of Meeting and Minutes of Bidding attended by the Disposal Committee. It shall be prepared by
field officers and submitted directly to C.O. - GSD - PMMS five (5) days after end of each quarter.

5.6 Quarterly Consolidated Report on the Disposal of Unserviceable Fixed Assets and
Materials (Exhibit E)

This report shall be prepared by C.O. - GSD-PMMS and shall be based on the report (Exhibit D)
submitted by the field offices. It shall contain the total proceeds generated for the quarter/year by
the central and field offices.

6. Accounting Entries:

6.1 Entry to record/reclassify the property based on RRP:

DR: Junk Assets xxx
DR: Accumulated Depreciation xxx
CR: Fixed Asset xxx

6.2 Entry to write-off assets in the books based on I & I Report, FAIR and RCD:
 6.2.1 Bid price equal to the book value of the asset

DR: Cash with Collecting Officer xxx

CR: Junk Assets xxx

6.2.2 Bid price is less than the book value of the asset

DR: Cash with Collecting Officer xxx

DR: Loss on Sale of Fixed Assets xxx
CR: Junk Assets xxx

6.2.3 Bid price is more than the book value of the asset

DR: Cash with Collecting Officer xxx

CR: Junk Asset xxx
CR: Gain on Sale of Fixed
Assets xxx

6.2.4 If the fixed asset was not previously classified as junk assets:

DR: Cash with Collecting Officer xxx

DR: Accumulated Depreciation xxx
DR: Miscellaneous Expense (Loss) xxx
CR: Fixed Asset xxx
or CR: Miscellaneous Income xxx
(Gain on Sale of Fixed Assets)

6.3 The entry to record trade-in shall be based on FARR, FAIR and disbursement voucher:

6.3.1 If value of newly acquired fixed asset is bigger than the value of junk asset:

DR: Fixed Assets (new) xxx

CR: Junk Asset xxx
CR: Voucher Payable xxx

6.3.2 If no reclassification to Junk:

DR: Fixed Assets (New) xxx

DR: Accumulated Depreciation xxx
*DR: Retained Earnings xxx
CR: Fixed Asset (old) xxx

*To correct adjust previous charges to Depreciation Expenses.

III. RESPONSIBILITIES

1. Supply Officer - C.O. - Property Materials and Supplies Disposition Section (PMSDS)

1.1 Receives returned properties which are documented with RRP.

1.2 Requests inspection of properties returned and on the basis of the Property Inspector's
recommendation, segregates serviceable items from those unserviceable ones. Items which are
still repairable or usable shall be repaired/reissued following the procedures on repair/property
issuance. On the other hand, items which are found junk with no resale value shall be offered for
bid or disposed under the other modes of disposal other than public bidding.

1.3 Forwards to DAS-GAD the RRP for the determination of book value of the junk properties.

1.4 Maintains a separate file of RRP for serviceable/unserviceable returned properties and assigns
separate control number for each.

1.5 Initiates disposal of accumulated unserviceable properties. Accomplishes the I & I Report
indicating therein the required information on the basis of previously prepared RRP.

1.6 Issues FAIR to the winning bidder upon presentation of the Official Receipt as payment for the
property. Submits other copies to DAS/Accounting Unit; Supply Officer (C.O./F.O.).
2. Supply Officer - C.O. Property Monitoring & Maintenance Section (PMMS) -

2.1 Monitors properties and updates inventory records based on Receipt for Returned Properties,
the Inventory and Inspection Report, and Fixed Assets Issuance Report.

2.2 Serves as the data bank for GSD - PMSDS.

2.3 Receives reports on idle properties and relocates the same for maximum utilization.

3. Supply Officer (Field Office) -

3.1 Receives properties returned to storage.

3.2 Requests inspection of properties returned and on the basis of the Property Inspector's
recommendation, segregates serviceable items from those unserviceable ones. Items which are
still repairable or usable shall be repaired/reissued following the procedures on repair/property
issuance. On the other hand, items which are found junk with no resale value shall be offered for
bid or disposed under the other modes of disposal other than public bidding.

3.3 Forwards to Accounting unit the RRP for the determination of book value of the junk properties.

3.4 Maintains a separate file of RRP for serviceable/unserviceable returned properties and assigns
separate control number for each.

3.5 Initiates disposal of accumulated unserviceable properties. Accomplishes the I & I Report
indicating therein the required information on the basis of previously prepared RRP.

3.6 Deletes junk assets from the list of properties insured.

3.7 Prepares Quarterly Report on the Disposal of Unserviceable Fixed Assets and Materials (Exhibit
D) and submits to GSD-C.O.

3.8 Monitors properties and updates inventory records based on Acknowledgment of Returned
Properties, the Inventory and Inspection Report, and Fixed Assets Issuance Report.

3.9 Receives report on idle properties and relocates the same for maximum utilization.

4. Property Inspector

4.1 Inspects and certifies condition of the property returned. Indicates on theRRP recommended
action and signs on the inspection report portion of the ARP.

4.2 Examines properties listed in the Inventory and Inspection Report and attests to the manner of
disposal of the properties.

5. Provincial Manager

5.1 Signs on the Noted By portion of the RRP.

5.2 Approves I & I Report if acquisition cost is P500,000 and below.

5.3 Recommends approval of the I & I Report to the Regional Manager if acquisition cost is above
P500,000.00 to below P1.0 M. Initials the I & I Report.

5.4 Upon receipt of the approved I & I Report, activates Provincial Disposal Committee to
undertake the necessary disposal procedures.

5.5 Prepares the necessary papers in connection with the disposal specified in the
confirmation/memorandum order received from the Regional Manager.

5.6 Heads the Provincial Disposal Committee and informs them of any approval/confirmation of
disposal.

5.7 In the case of disposal thru donation, arranges for the withdrawal/delivery of the items to the
agency institution upon receipt of approval and confirmation. Prepares Memo to effect withdrawal.

5.8 Coordinates sale thru public bidding/negotiates and prepares the necessary papers to complete
the sale.
 5.9 Informs the highest bidder thru a memo of the approval and acceptance of the bid and
arranges full payment.

6. Regional Manager

6.1 Approves the Inventory and Inspection Report if the aggregate acquisition cost is P 1M and
above.

6.2 Informs the Committee of the approval of the I & I Report/Mode of disposal.

6.3 Returns all copies of approved I & I Report to the Provincial Manager. Likewise, returns
disapproved I & I Report stating reason for disapproval.

6.4 Evaluates committee recommendation regarding the mode of disposal. If approved, prepares a
formal memorandum order to the Disposal Committee thru the Asst. Regional Manager (R.O.) or
the Provincial Manager (P.O.) authorizing the disposal thru the recommended mode. If
disapproved, directs the committee the mode of disposal to be followed.

6.5 Approves the award of sales and informs the Asst. Regional Manager (R.O.) or the Provincial
Manager/OIC (P.O.) of the approval (refer to Specifications of Authority in II.4).

6.6 Approves trade-in of old fixed assets for new ones if found to be advantageous.

6.7 Reviews donation requests. Forwards recommendation for approval to the Office of the
Administrator.

6.8 Approves/disapproves recommendation to destroy unserviceable properties.

7. Accounting Unit/DAS-General Accounting Division

7.1 Determines the book value. Prepares entry to record/reclassify the properties based on RRP.

7.2 Write-off assets in the books based on the duly approved I & I Report/FAIR.

8. Commission on Audit (COA)

8.1 Witness bid proceedings and signs tabulation.

8.2 Witness the disposal of properties.

8.3 Review the new appraisal value set by the Disposal Committee, in case sale thru public bidding
fails.

9. Disposal Committee (C.O. & F.O.) -

9.1 Inspects the unserviceable properties, equipment and materials for a more accurate
determination of appraised value taking into consideration obsolescence, depreciation, prevailing
resale value, physical actual condition and result of previous bidding for similar properties.
Computation of appraised value is not limited to DBM or COA guidelines but also on the actual
condition and/or prevailing re-sale value.

9.2 Accepts bids most advantageous to the agency.

9.3 Advertises items to be bidded in accordance with the policy on bidding.

9.4 Conducts public bidding on an "as is" "where is" basis.

9.5 Receives sealed bids and opens on the specified date and time and in the presence of the
Auditor and participating bidders. Submitted bids must meet requirement is set.

9.6 Tabulates bids obtained.

9.7 Recommends approval of the award of sale to the highest bidder, together with the necessary
attachments, informs winning bidder on the award of sale.

9.8 Accomplishes the report of sale portion of the 1 & I Report.

9.9 Distributes copies of the I & I Report after final disposal/withdrawal of properties.

9.10 In the event sale thru public bidding fails, convenes again to review appreciation. Sets a new
appraisal value and seeks suggestion of COA.

9.11 Requires buyers to submit price quotation whenever sale thru public bidding fails and sale
thru negotiated sale is resorted to.

9.12 In case of trade-in, compares trade-value to appraised value at which the unserviceable/old
asset may be disposed of. If acceptable, coordinates trade-in and prepares necessary documents.
Indicates in the "Remarks" portion of the I & I Report the mode of disposal which is trade-in.

9.13 Arranges for the withdrawal of the items by the trade-in dealer.

9.14 Surveys possible government agencies/government controlled corporations who may wish to
barter assets with the agency. Submits recommendation regarding the barter agreement.

9.15 If and when the mode of disposal decided upon is donation, surveys possible
agencies/institutions who may be possible users/recipients of the properties.

9.16 Selects among the possible agencies/institutions considered as recipient. The committee may
allocate the items among the considered recipients.

9.17 Submits recommendation together with a brief backgrounder of the beneficiaries to the
Regional Manager/GSD Dept. Manager.

9.18 Indicates on the I & I Report the donation and distributes copies accordingly.

9.20 Undertakes actual burning of unserviceable assets in the presence of the designated Property
Inspector, and Accounting representative. Indicates on the I & I Report the mode of destruction
and distributes copies accordingly.

All rulings and/or issuances inconsistent herewith are hereby superseded.