THE Commission on Audit has recommended that the Development Bank of the Philippines Leasing Corp. (DBPLC) impose stricter conditions on the safekeeping of repossessed or surrendered properties after three brand-new heavy equipment in a cancelled rental deal were found to have been “extensively used” while supposedly in storage.
State auditors said that despite not earning a penny while lying idle in storage, three Caterpillar heavy machineries — a soil compactor, a motor grader, and a wheel loader — newly-acquired in 2017 were discovered to have sustained substantial wear and tear, thereby losing value through depreciation.
Records showed a private firm was granted a finance lease by the DBPLC for the three Caterpillar heavy equipment in 2017 but it defaulted on lease amortization payments in 2018 and 2019. The 2022 audit report did not name the private firm, referring to it only as the lessee.
The Caterpillar machineries were delivered mint-new to Barangay Mabayo, Moron, Bataan but on December 11, 2019, the lessee executed an affidavit of voluntary surrender on all three leased equipment.
The same affidavit stated that “considering the size and weight of the subject leased assets, it would be impracticable for the DBPLC to take actual physical possession,” hence it was agreed between the parties that all three would remain in the lessee’s compound.
However, this was with the understanding that they would be deactivated and kept under protective covering and security watch.
A third-party appraiser company engaged by the DBPLC to appraise the leased properties submitted an appraisal report on July 8, 2022 stating that while the three heavy equipment were delivered onsite brand-new and had supposedly not been used up to being repossessed in 2019, there were signs that they were heavily operated.
The appraiser reported, “From year 2017 up to year 2019 the units were not used. From 2020 up tothe present, as alleged, the equipment were extensively used for various projects resulting on the decrease in market value.”
Specifically, the inspector listed the Caterpillar Motor Grader and the Caterpillar Wheel Loader as having “manifestation of significant depreciation due to extensive utilization and operation.”
On May 19, 2022, the DBPLC issued a demand letter noting the appraiser’s findings as well as the discovery that the equipment were hotwired to “bypass the ignition switch.” It said the keys were taken away on purpose to ensure that the equipment units would be inoperable.
The lessee denied that the equipment were used.
On a second inspection, the audit team accompanied by the DBPLC assistant vice president for operations and the account officer handling the lessee’s account confirmed the signs of utilization of the motor grader and wheel loader.
They also jotted down observations that there were scratches on the body of the equipment and a step ladder to the driver’s seat of the motor grader was broken — all indicative that the equipment were operated.
