SOP Library
SOP NO:
GS-PD24
(List of Exhibits/Attachments)
Missi
on
:
Finance and Administration
Area:
General Services (GS)
Activity:
Purchasing/Inspection and Fixed Asset Disposition (GS-PD)
Title:
Strengthening the Systems on the Divestment of NFA Identified Non-Performing Real Properties
Date Approved/Issued:
12/19/2017
Date Effective:
11/19/2017
Digest:
I. TERMS OF REFERENCE
A. Rationale
B. Objective
C. Scope
D. Basis
II. IMPLEMENTING GUIDELINES
V. DEFINITION OF TERMS
1. Divestment – to deprive or dispossess especially of property, authority, or rights.
2. Market Value- the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
3. Real Property – as used in the herein guidelines, this shall be defined as that provided in Articles 415 and 426 of the New Civil Code of the Philippines.
4. Non-Performing Real Property – land and land improvements, buildings and structures which are either idle, not strategically located, with no potential use for NFA operations, or those which are no longer economical to maintain, as identified by NFA.
5. Appraisal – is the valuation of real property with due consideration to relevant laws and valuation standards as determined by the NFA’s in house appraiser and/or an independent appraiser.
VI. IMPLEMENTING GUIDELINES
For the information, guidance and compliance of all concerned, hereunder is the SOP on the above mentioned subject:
1. Statement of Policies
a. The Central Office Management, through the recommendation of the Asset Rationalization Program Committee (ARPC), shall create a Central Office Special Bids and Awards Committee (C.O. SBAC) on Divestment, through a Special Order. The C.O. SBAC shall be composed of the following:
Chairperson : Deputy Administrator (to be assigned by the Administrator)
Vice-Chairpersons : Asst. Administrator for Marketing Operations
Asst. Administrator for Finance and Administration
Members : Special Assistant to the Administrator
CPMSD Department Manager
TRSD Department Manager
LAD Department Manager
GMOD Department Manager
ASD Department Manager
Regional Manager (where the property is located)
Secretariat : (to be designated)
b. Likewise, the Regional Office Management, through the recommendation of the Asset Rationalization Program Committee (ARPC), shall create a Regional Special Bids and Awards Committee (RSBAC) on Divestment, through a Special Order. The RSBAC shall be composed of the following:
Chairperson : Assistant Regional Manager
Vice-Chairperson : Concerned Provincial Manager
Members : Regional Operations Officer
Regional Engineer
Regional Accountant
Secretariat : (to be designated by the Regional Manager)
c. Corresponding Technical Working Groups (TWG) shall likewise be created, through a Special Order, to assist the C.O. SBAC-Divestment and RSBAC-Divestment in the performance of their functions and to ensure smooth flow of work. The TWGs shall be composed of the following:
Chairperson
Co-Chairperson
Vice-Chairperson
Members
Secretariat
d. Approval of the aforementioned Special Orders shall be in accordance with the existing
NFA Specifications of Authority on Human Resource Matters
.
e. The divestment/disposal of NFA identified non-performing real properties shall be undertaken by the C.O. SBAC-Divestment / RSBAC-Divestment, in accordance with their respective specifications of authorities, whose function shall cover all concerns relative to the divestment of non-performing real properties as stated in the Special Order.
f. The divestment/disposal of identified non-performing real properties shall primarily be undertaken through public auction/bidding after the approval of the NFA Council as recommended by the NFA Administrator.
However, other modes of divestment/disposal may be resorted to in case of failure of bidding as long as it is in accordance with existing laws and approved by the NFA Council as recommended by the NFA Administrator.
g. Should there be new developments that warrant/justify the retention of the previously approved real properties for divestment/disposal, the C.O. SBAC-Divestment / RSBAC-Divestment shall seek another approval of the NFA Council with the recommendation of the NFA Administrator, on the retention of the specific real property.
h. The actual divestment/disposal proceedings of non-performing real properties e.g. auction and other modes of divestment shall be undertaken by the C.O. SBAC-Divestment / RSBAC-Divestment, with the presence of the COA Auditor or authorized representatives.
2.
Preparation / Review and Evaluation / Acceptance of the Proposed Divestment Plan
a. NFA Provincial Offices shall review the Five-Year Divestment Plan approved by the NFA Council. The Provincial Office shall then re-evaluate and revisit their non-performing real properties included therein and prepare a complete Divestment Plan, in coordination with the Regional Office, for each non-performing real property.
b. Other non-performing real property which are not included in the approved Five-Year Divestment Plan but also needs to be divested should also have a separate Divestment Plan likewise to be submitted for approval following the provisions of this SOP.
c. The proposed Divestment Plan shall include the following:
c.1 Complete Staff Work – shall include evaluation of the marketing, financial, socio-economic and legal aspects (legal impediments / encumbrance and confirmation of ownership) of the property which shall be coordinated with concerned Central Office departments such as CPMSD, TRSD, LAD, GMOD and ASD. The following documents shall be submitted:
c.1.1 Copy of the Original owner’s duplicate copy of Transfer Certificate of Title (TCT), free from liens and encumbrances
c.1.2 Correct Technical Description in TCT
c.1.3 Lot Plan/Site Development Plan with vicinity map
c.1.4 Tax Clearance
c.1.5 Justification for Divestment
c.1.6 Latest BIR Zonal Valuation
c.2 Proposed mode of divestment (should be most advantageous to the agency in accordance with item VI.6 [Modes and Process of Real Property Divestment / Disposal]).
c.3 Appraisal / Reports:
NFA Provincial/Regional Offices must submit Five (5) Reference Valuation.
c.3.1. In-House Market Valuation to be conducted by TRSD with due consideration of the following :
i. BIR Zonal Value of the property
ii. Scheduled Market Value of land and improvements as per Tax Declaration
iii. Acquisition Cost of the property (if available)
iv. Accumulated Depreciation of improvements
v. AccountingNet Book Value at the time of appraisal
vi. Other important and relevant information or data acquired (i.e. current price of comparable properties in the neighborhood, potential uses and developments in the area) which will assist the in-house appraiser in arriving a reasonable market value in undertaking the appraisal or valuation of the property.
c.3.2 Scheduled Market Value that can be found in the Tax Declaration
c.3.3 Zonal Value of the property as per BIR Zonal Valuation
c.3.4 COA Appraisal (as much as possible)
c.3.5 Appraisal by Government Financial Institutions (LandBank/DBP) or Third Party Appraisal / Appraisal Company accredited by the Bangko Sentral ng Pilipinas (BSP).
The Provincial Office shall request TRSD to conduct an In-House Appraisal of the property to be divested/disposed and request their corresponding Regional Bids and Awards (BAC) to commission a Third-Party Appraiser to determine the Market Value of the property.
c.4 Suggested Floor Price for the property based on the above valuation / appraisal reports
c.5 Timetable of divestment
c.6 Other relevant information e.g. informal settlers, encroachment, easement, etc.
c.7 Other pertinent documents on the property to be divested
d. The prepared Divestment Plan for each non-performing real property shall be submitted to the Regional Manager for review and evaluation. If the Regional Manager finds the divestment plan meritorious, he/she shall recommend it for acceptance of the Asset Rationalization Program Committee (ARPC) Chairperson who will then endorse it to the Corporate Planning Management Services Department for further evaluation.
e. The CPMSD, in coordination with concerned departments, shall conduct the final CSW to consider marketing, financial, socio-economic and legal aspects of the property. CPMSD shall submit its recommendation to the ARPC Chairperson.
f. Upon review of the CPMSD’s evaluation, final CSW and recommendation, and it is found meritorious, the ARPC shall recommend the divestment of the property to the NFA Executive Committee members and the Administrator who will then recommend it for approval of the NFA Council.
3.
Specifications of Authority
The Specifications of Authority on the divestment or disposal of non-performing real properties are as follows:
a. Authority to divest or dispose NFA real properties, regardless of amount:
Recommending Authority – NFA Administrator
Approving Authority – NFA Council
b. Undertake actual divestment of real properties which had been approved for divestment or disposal:
b.1
P
50.00 Million and below –Regional Bids & Awards Committee (RSBAC) – Divestment
b.2 Above
P
50.00 Million – Central Office Special Bids & Awards Committee (SBAC) – Divestment
c. Award of Sale of real properties which had been approved for divestment or disposal:
c.1
P
50.00 Million and below:
Recommending Authority – Chairperson of RSBAC – Divestment
Approving Authority – Regional Manager
c.2 Above
P
50.00 Million:
Recommending Authority – Chairperson of Central Office SBAC –
Divestment
Approving Authority – NFA Administrator
4.
Divestment Undertaking
After the approval of the divestment plan, the concerned Divestment Committee (C.O. SBAC / RSBAC) shall now undertake the implementation of the divestment. CPMSD shall endorse the approved Divestment Plan (all documents) to the concerned Divestment Committee.
5.
Appraisal/Valuation of Non-Performing Real Properties
a. In the appraisal/valuation of non-performing real properties, the followingshall be considered:
a.1 Government Financial Institutions (LandBank/DBP) Appraisal or Third-Party Appraisers/Appraisal Company accredited by the BangkoSentral ng Pilipinas (BSP)
a.2 COA Appraisal
a.3 Conduct of In-house Market Value Appraisal conducted by TRSD
a.4 Scheduled Market Value that can be found in the Tax Declaration
a.5 Zonal Value of the property as per BIR Zonal Valuation
b. The appraisal / valuation should be equal to or higher than either the net book value, the principal loan, or total government exposure as mentioned in COA Circular No. 89-296 dated January 27, 1989.
6.
Modes and Process of Real Property Divestment/Disposal
Non-performing real properties shall be disposed through the most advantageous and expeditious mode to the agency and the terms of disposition which may either be of the following:
a. Sale Through Public Bidding:
The divestment or disposal of non-performing real properties shall primarily be undertaken through public bidding which shall be in accordance with the established mechanics and procedures taking into consideration all existing laws and guidelines which shall include but not limited to: COA Circular 89-296 and RA 10752, as are otherwise applicable. The property shall undergo public auction under the supervision of the Divestment Committee and awarded to the highest bidder / offeror with due consideration to important factors as follows:
a.1 Adequate publicity, exposure and notification in order to attract the greatest number of interested parties.
Non-performing real properties to be auctioned shall be advertised thru public notice in the official gazette/Philgeps or in any newspaper in general circulation for not less than three (3) exposures either in consecutive days or weeks as the agency finds more appropriate. It may also be published to any regional or local newspaper for more exposures.
A Notice of Sale/ Bidding Announcement shall be posted in a conspicuous space within the subject property in the form of a billboard or tarpaulin visible to the riding public.
Announcement through the NFA Website
a.2 Time frame of twenty (20) calendar days shall cover publication and date of bidding. In case of failed bidding, the C.O. SBAC / RSBAC shall have the discretion to schedule the succeeding bidding.
a.3 Opportunity afforded to interested parties to inspect the subject real property.
a.4 Bond and other pre-qualification requirements to guarantee performance.
a.5 Fair evaluation of tenders and proper notification of award.
a.6 The NFA reserves the right to reject any or all of the tenders if found disadvantageous to the interest of the agency.
a.7 Bidding / auction process:
a. Publication/Posting of Invitation To Bid
b. Issuance of Bidding Documents
b.1 Terms of Reference
b.2 Registration Form
b.3 Bid Security
b.4 Letter of Intent
c. Inspection of Property by bidders
d. Pre-bid conference
e. Submission of bids/offers
f. Opening of bids/offers
g. Evaluation of sealed bids/offers
h. Post-qualification process
i. Issuance of Notice of Award
a.8 Attached is the pro-forma Terms of Reference (TOR-
Exhibit 1
) and bidding requirements i.e. Deed of Sale (
Exhibit 2
), Registration Form (
Exhibit 3
), and Bid Offer (
Exhibit 4
).
b. Sale Through Negotiation:
In the event of failure of bidding or for justifiable reasons and as demanded by the exigencies of services, disposal or divestment thru negotiated sale may be resorted to and undertaken by the Divestment Committee taking into consideration the following factors:
b.1 There was a failure of bidding. There is a failure of public bidding in any of the following instances:
(a) There is no bidder;
(b) There is only one offeror/tender. In this case, the submitted offer or bid shall not be opened and outright failure of bidding shall immediately be announced;
(c) The Winning Bidder/Offeror refused to accept the award or enter into contract with NFA in accordance with Article VI, Section 7 of the TOR, in which case the winning bidder/offeror’s security bond shall be forfeited in favor of the NFA;
(d) All offers/tenders are non-complying or unacceptable. A tender is non-complying or unacceptable when it does not comply with the prescribed legal, technical and financial requirement for pre-qualification as provided in the Terms of Reference and Guidelines on the Divestment of NFA-Non Performing Real Properties; and
(e) The happening of a fortuitous event or any reason beyond the control of NFA, including but not limited to change in government policy, which prevents the completion of the contract or unduly delays its conclusion.
b.2 Negotiation Process:
(a) After the conduct of at least two (2) failed biddings, the negotiation may be conducted provided, however, that proper coordination/communication between the offeror/s and the NFA shall be undertaken to ensure that the NFA gets the best price.
(b) The negotiation may be conducted singly, i.e., on a one-on-one basis, or in group, provided that due communication between the offerors and the government is established with a view to ensuring that the government gets the best price.
(c) To prevent possible collusion among unscrupulous parties, a record of the proceedings of negotiation must be maintained by the Divestment Committee.
(d) It is understood that the concluded price in the negotiation shall not be lower than the floor price determined by the NFA or the highest offeror submitted at the failed bidding, whichever is higher.
c. Swapping/Exchange/Barter:
c.1 This mode of divestment is the direct exchange of consideration without the use of money and without reference to price or the exchange of goods of one character for goals of another, may be with other government agencies or government-owned and/or controlled corporations. This shall be resorted to where there is an offer that would redound to the interest of and is advantageous to the NFA.
c.2 Process: (Provisions
of
RA 10752 as are otherwise applicable)
Instead of being paid the money value of NFA’s property, the NFA may request the acquiring government entity/ agency to exchange or barter an old abandoned government road or other government property near the project with NFA’s real property. The NFA may consider this mode, subject to the provisions of relevant laws, RA 10752 with due regard to due process and without prejudice to the interest of NFA.
d. Sale Through Negotiation With Other Government Agencies:
d.1 The subject non-performing real property may be sold through negotiated sale to other government entities/agencies at a price not lower than the floor price approved by the NFA Council. The provision of the R.A. 10752 if applicable
shall be followed.
d.2 Process:
(a) The process of negotiated sale shall be applicable as provided in B.2 hereof in case the negotiated sale shall be performed outside the modes and scope of RA 10752;
(b) The process of negotiated sale shall be adopted as provided in RA 10752 and its IRR in case the buying government entity/agency invoked the application of RA 10752;
The compensation herein shall be determined in accordance with the IRR of 10752
on compensation under Negotiated sale
which is the sum of the:
Current market value of the land;
Replacement cost structure and improvements therein; and
current market value of crops and trees therein.
(c) In both processes (a & b), the compensation shall be determined with due regard to due process and that which is most beneficial to the NFA.
8.
Pre-Disposal/Report to COA
To facilitate audit of the divestment / disposal of non-performing real properties, the Divestment Committee shall furnish the Resident Auditor of at least twenty (20) days before the advertisement of the call for public bidding with a copy each of the following:
a. Program of divestment with time schedule
b. List of NFA non-performing real properties approved for divestment
c. Appraisal Report prepared by in-house and/or Third Party Appraiser
d. Disposal procedures to be adopted
The Divestment Committee shall furnish the COA Auditor with a copy of schedule or notice of opening of bids, at least five (5) days before the scheduled date.
9.
Specific Responsibilities of Concerned Departments
a. Provincial Office
Identify non-performing real properties which need to be divested.
Evaluate the rationale of divesting the property.
Conduct Complete Staff Work on the non-performing real property.
Request the RBAC to commission a Third-Party Appraiser to determine the market value of the property.
Conduct an in-house appraisal on the property, in coordination with TRSD.
Prepare Divestment Plan and submits it to the Regional Manager for review.
b. Regional Office
Review the Divestment Plan prepared by the provincial office.
Recommend the Divestment Plan for acceptance of the ARPC Chairperson.
c. ARPC
Review the Divestment Plan for each property and recommend it to the EXCOM members and the Administrator.
d. Regional SBAC (RSBAC) – Divestment
To undertake actual disposal / divestment proceedings of non-performing real properties worth P50 M and below.
e. Central Office SBAC (C.O. SBAC) - Divestment
To undertake actual disposal / divestment proceedings of non-performing real properties worth above P50 M.
f. CPMSD
Evaluate the Divestment Plan to be recemmended for acceptance of the ARPC.
g. TRSD
Conduct in-house appraisal
h. LAD
Provide the legal research and prepares legal documentations including review of contracts and other legal documents relative to divestment of the property.
i. GMOD
Provide data on operations-related activities, such as but not limited to warehouse capacity and utilization.
j. ASD
Provide information on the book value of the property, reconcile financial and physical records and report the same on NFA financial statements.
10.
Budget for the DivestmentActivities
The C.O. SBAC- Divestment and RSBAC-Divestment shall program their activities and request annually their budgetary requirement to cover expenses to be incurred in the divestment of identified non-performing real properties. The budget shall cover, but not limited to the following:
a. Real Property Tax Payment
b. Third-Party Appraisal Fees
c. Publications and Announcement Expenses
d. Legal cases, if any
e. Demolition Expenses
f. Relocation/Disturbance Compensation of Squatters
g. Miscellaneous Expenses
h. Contingencies
11. Process Flow for the Request for Approval to Divest Non-Performing Real Property (
Exhibit 5
)
All NFA rulings and/or issuances inconsistent herewith are deemed superseded. Any provisions of these guidelines that are inconsistent with existing national and local laws, shall be deemed amended to conform with those existing laws.
LT. COL. JASON L.Y. AQUINO (Ret) PA
Administrator
III. RESPONSIBILITIES
IV. FLOW CHART
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EXHIBITS
Exhibit 1 - Terms of Reference
Exhibit 2 - Deed of Sale
Exhibit 3 - Registration Form
Exhibit 4 - Final Bid/Offer-Letter
Exhibit 5 - Process Flow : Request for Approval to Divest Non-Performing Real Property
Exhibit 1 - Terms of ReferenceExhibit 2 - Deed of SaleExhibit 3 - Registration FormExhibit 4 - Final Bid/Offer-LetterExhibit 5 - Process Flow : Request for Approval to Divest Non-Performing Real Property