UPDATED GUIDELINES IN THE EQUIPMENT LEASING OPERATION WITH SCHEDULES OF RENTAL RATES

The equipment leasing operation of this Department as a complement of
the equipment management system necessitates the charging of rental
pursuant to Section 17 of P.D. No. 17 In order to generate funds that
will take care of the long-term program of repair, maintenance and
rehabilitation of the existing department’s equipment fleet as well as
purchase of new equipment and modern facilities for the establishment
and/or maintenance of necessary Base/Area Shops, storage depots, and
other equipment aids and facilities for the infrastructure projects in
the government.

In view hereof the lease/rental of all infrastructure equipment (i.e.
Land Based and Floating Equipment under the enclosed Schedule A & B
respectively) of this department on a fully maintained basis, without
fuel and operator shall be subject to the following terms and
conditions:

1.  For Department Field Operating Units Undertaking Projects by Administration of Force Account

1.1  Usage of equipment shall be documented by submitting
an Equipment Request and Rental Order (ERRO) duly accomplished by the
following personnel of the DPWH, namely:

1.1.1    The District/City/Project Engineer or Project Manager
as the Lessee shall Initiate and sign ERRO as the requesting officer
with certification of authorized field accountant as to availability of
funds for payment of rental;

1.1.2    Same shall be recommended for approval by the Regional Equipment Engineer and approved by the Regional Director;

1.1.3    Approved ERRO should be retained by the concerned RES
and copy of approved ERRO shall be furnished the AES for compliance and
billing purposes.

1.2  Rental Timing/Charging:

1.2.1    A rental day is defined as a continuous eight (8)
hours workable period within twenty-four (24) hours excluding meal-time.
Usage in excess of eight (8) hours within a rental day shall be
considered overtime and rental shall be charged whether the equipment is
operated or idle.  This in effect will discourage hoarding of the units
for optimum utilization.

1.2.2    Three (3) months term ERRO — ERRO must be submitted on
a quarterly basis; thereafter same shall be renewed on quarterly basis.
 Equipment used for highway maintenance activities shall be charged
rental with a maximum monthly billing of one hundred twenty (120) hours
per month whether the equipment is used or not.  Any excess utilization
beyond 120 hours shall be considered “rental free” but should be
reported for purposes of performing equipment preventive maintenance.

1.2.3    Month-to-month term ERRO — ERRO for highway
construction equipment shall be charged a minimum of one hundred twenty
(120) hours per month whether the equipment is used or not. Actual
operating hours in excess of the first 120 hours shall be charged
rental.

1.2.4    Day-to-day ERRO — A minimum rental corresponding to
one (1) day (8 hours) shall be charged. The usage in excess of eight (8)
hours shall be considered overtime and rental shall be charged for each
hour of overtime or a fraction thereof.

1.2.5    Rental may be suspended under the following conditions;

1.2.5 .a.       During official shutdown due to major repair
provided that the Regional/Area Equipment Engineer is notified
accordingly within one day of breakdown; otherwise, claim for rental
suspension for the period in question shall not be allowed. Should the
period of shutdown exceed two (2) calendar days or more, the equipment
should be returned to the AES/RES for repair and custody.

1.2.5 .b.       Preventive maintenance and/or servicing time
as certified necessary by the Regional/Area Equipment Engineer, in which
case, the maximum allowable deduction is eight (8) hours or one working
day.

1.3  Payment of equipment rentals:

1.3.1    For accounting purposes the rental charges shall be
filled at the close of each calendar month. If the use of the equipment
is for a shorter duration billing will be done upon
completion/termination of the lease period. The billing shall be
supported by a duly accomplished Utilization Report.

1.3.2    To expedite the preparation and payment of the rental
bill that cannot be served on time because of the delay in the
submission of Utilization Reports, the procedure outlined in Ministry Order No. 24 Series of 1985 shall be followed:

1.3.3    Any department field officer/employee shall be held
administratively liable for technical malversation or violation of
existing regulations if he diverts the amount intended for equipment
rental as provided for in the approved ERRO.

1.4  Discounting of rental rates:

1.4.1    For a more realistic rental rate that can viably
support the operation and maintenance of all infrastructure equipment,
the discount of rental rates prescribed under Memorandum Circular No. 5 series of 1983 and condition D of Ministry Order No. 21, series of 1986 are hereby amended as follows:

1.4.1 .a        The maximum discount shall not exceed
twenty-five percent (25%) for equipment used by the Field Operating
Units/Offices of this Department undertaking projects by administration
or force account.

1.4.1 .b        Discounting rates in the aforecited Ministry
Order and Memorandum Circular as tabulated below are applicable only to
land-based equipment using the rental rates in Schedule “A”:

AGE (Based on Acquisition Date)	PNEUMATIC MOUNTED UNITS	CRAWLER-MOUNTED UNITS
2 years old	0%	0%
3 years old	0%	0%
4 years old	5%	5%
5 years old	10%	10%
6 years old	15%	15%
7 years & older	25%	25%

NOTE: Other construction and maintenance
equipment and accessories shall follow the discounting rates under the
column of pneumatic-mounted equipment. All newly rehabilitated equipment
at the start shall be entitled to a ten percent (10%) discount rate and
subsequent rates thereafter.

1.5  Release of equipment without ERRO:

1.5.1    During a time of emergency involving danger to life
and property, the equipment may be issued to end-users even without
prior approval of the ERRO subject to the following conditions

1.5.1 .a        Immediately after or during the issuance of
subject equipment, it shall be the responsibility of the District/City
or Project Engineer to comply with all equipment rental rules and
regulations.

1.5.1 .b        Subject equipment shall be exclusively used
for the purpose as requested and same shall be returned to the issuing
office after the completion of the purpose.

1.6  Lease/rental of material processing plants:

Idle/underutilized plants under the custody of Regional offices
may be leased to a private contractor or aggregate supplier in
consonance with Department Order No. 151, series of 1989,
subject however to public bidding among others, terms and conditions to
be incorporated in the Contract of Lease of Equipment and submission of
requirement as called for by the above Department Order. Said contract
or lease shall be coursed through the Utilization Division, BOE for
review and evaluation and recommended by the BOE Director for approval
by the Secretary or the Undersecretary concerned.

1.7  Request for rent-free use of equipment:

1.7.1    The request for authority on Rent-Free Basis of
equipment used by the field operating units of the DPWH shall conform to
the existing policy and guideline as prescribed by BOE Memorandum dated 12 August 1987, approved by the DPWH Undersecretary concerned.

1.7.2    Funds allocated to ERRO for payment of rentals which
are temporarily used for calamity related projects should be replenished
as soon as the calamity funds are released to the concerned Regional
Offices.

2.  Lease of DPWH Equipment to Other Government Entity, Local or National.

2.1  Authority to lease equipment to other government entities on
“Short-Term” duration of one (1) month is hereby delegated to all
Regional Directors pursuant to Department Order No. 59, Series of 1988.
After the originally approved lease period of one (1) month expires,
the same may be extended for another thirty (30) calendar days subject
to certification from the REE concerned that the original lease period
of one (1) month and extension of another thirty (30) calendar days are
fully paid for under the advance payment arrangement.

2.2  Issuance of equipment shall be made after the lease/ERRO is
approved and same shall be withdrawn after the termination of the lease
period.

2.3  Should the LESSEE desire to use the equipment for more than a
sixty (60) days, the same period shall be made with prior clearance
from the Secretary or Undersecretary concerned, subject, however, to the
execution of a lease contract by and between the Regional Director
concerned as Lessor and the other government agency as Lessee, to be
approved by the Secretary or Undersecretary concerned.

3.  Lease of Equipment to DPWH Private Contractors —

3.1  Private contractors undertaking DPWH Projects may be allowed to lease the equipment on short-term lease pursuant to Department Order No. 61, series of 1988 on Job-Order Basis ..

3.2  For a lease period of DPWH Equipment of more than one (1)
month the contractor shall secure prior authority from the Secretary or
Undersecretary concerned. For a longer lease duration of more than one
month, an Equipment Lease Contract shall be executed, the same to be
supported with a Surety Bond to guarantee the replacement cost of the
lease equipment in case of loss, cost of repairs that are not due to
normal wear and tear, and cost of replacement of missing parts, tools,
attachments, and accessories originally issued with the equipment.

3.3  The leasing of equipment to contractors/private firms shall
be governed by the provisions of the lease contract to be executed
incident thereto. Said contract shall be approved by the Secretary or
Undersecretary concerned.

3.4  Payment of rental must be paid in advance or the Lessee
shall put up a domestic Letter of Credit to guarantee the payment of
rental covering the period of lease.

3.5  The issuance of the leased equipment shall be done only after the approval of the Contract of Lease.

3.6  For a fully maintained lease, the mobilization from the
Lessor’s yard to project site and demobilization costs shall be for the
account of the LESSEE; likewise the Lessee shall be liable for
compensation, lawsuits arising from injury or damage done to any person
or property by reason of the use of the leased-equipment during the
period of the lease.

4.  Leasing of Construction Equipment From Private Lessors —

4.1  In order to accelerate early completion of
rescinded/terminated and similar projects to be undertaken by the
administration, whenever the required equipment is not available at the
DPWH Regional Offices where the project is located, the Regional
Directors /District/ City Engineers or PMO Project Managers may lease
the necessary equipment from Private Lessors subject to the following
conditions:

4.1.1    The equipment rental rates offered by the private lessors should not exceed the latest approved DPWH rates.

4.1.2    Payment of rental shall be for the actual equipment — time used or number of operating hours used.

4.1.3    Certification from the concerned Regional Equipment
Engineers that subject equipment is not available in the region or
nearby regions.

4.1.4    Inspection of Equipment Report re: equipment proposed
to be leased from the private sector, from the Utilization Division, BOE
or Regional/Area Equipment Services, confirming that subject equipment
is in good operating condition.

4.1.5    For land based equipment — submission of ownership documents, picture, and engine and serial numbers.

4.1.6    For floating equipment and pursuant to RA 5173 and LOI-208 (Phil. Merchant Marine Rules and Regulations)
The following document must be submitted, viz: Certificate of
Ownership, Registry and Coastwise License and Certification of
Inspection.

4.1.7    The lease contract for short duration of not more than
thirty 930) calendar days shall be approved by the concerned Regional
Directors. However, lease contract of more than 30 calendar days shall
be approved by the Secretary or Undersecretary-In-Charge upon
recommendation of BOE Director.

4.1.8    Leasing from the private sector shall secure a prior
clearance from the Secretary or Undersecretary-In-Charge if the proposed
lease period is more than 30 calendar days.

5.  Use of DPWH Equipment —

5.1  The policies and guidelines on the utilization of “service vehicles” under a “rental free” basis shall conform to MPWH Memorandum Circular No. 62, Series of 1986 and other approved exemption orders.

5.2  All users of DPWH equipment shall be charged rental without
any exception unless otherwise, authorized/approved by the Secretary or
Undersecretary concerned upon recommendation of BOE Director with the
attendant condition relative thereto.

6.  Issuance of Certificate of Clearance for Equipment Rentals

6.1  In order to preclude accumulation of unpaid equipment
rental, the following end-users shall be required to secure the
Certificate of Clearance:

6.1.1    Incumbent District/City/Project Engineer and Project
Manager before they are allowed to retire shall be required to secure
clearance from the concerned Regional Equipment Engineers having
jurisdiction over the District/City/Project Offices where they are
assigned, that all rentals rendered during their incumbency are fully
paid/liquidated.

6.1.2    For the Department’s Private Contractors, issuance of
Certificate of Clearance as requisite for collecting PARTIAL PAYMENT of
contract of work shall conform to MPWH Memorandum Circular No. 89, series of 1982.
However, for collection of FINAL PAYMENT of contract of work, the
concerned contractor should be required to secure the Certificate of
Clearance from the Bureau of Equipment through the Utilization Division
in addition to the final payment clearance issued by the Resident
Project Engineer and Regional Equipment Engineer concerned. Issuing
offices shall take all necessary steps to insure that all back accounts
if any, must be paid.

This order shall take effect on July 1, 1990 and will remain in force unless modified or amended accordingly.

Any existing orders, circulars, and memoranda inconsistent herewith are hereby revoked.

Adopted: 1 July 1990

(SGD.) FIORELLO R. ESTUAR
Secretary