THE Philippine National Railways (PNR) owes its security services provider half a year’s worth of unpaid service amounting to P16,851,666 regardless of the absence of a document proving the existence of a formal contract.
This was the pronouncement made by the Commission on Audit in its decision released last week granting the petition for compensation filed on January 25, 2022 by Easternforce Security Agency Corp (ESAC) against the PNR for unpaid billing covering the period of January to July 2021 (excluding the entire month of March).
aRecords showed that ESAC won the contract for security services for PNR North on May 31, 2018 for the railway segment of Tutuban to Malolos Alignment worth P30.27 million. The contract duration for August 1, 2018 to July 31, 2020.
Before the first contract expired, the PNR issued a Contract Time Extension in favor of ESAC effective July 31 to December 31, 2020.
Without receiving any contract extension, the security agency continued deploying security guards for the railway segment until July 2021. But in a subsequent letter to the PNR, the ESAC requested clarification on the terms of the contract and how to process demands for payment which were not heeded.
Instead, on August 4, 2021, the general manager of the railway firm denied the request for payment for any period beyond December 31, 2020 on the ground that after the said date, any existing contract between the PNR and ESAC had expired.
Nevertheless, the security firm was told that the proper recourse available to it was to file a claim for compensation with the COA.
While admitting that ESAC deployed security guards from January to February 2021 and again from April to July 2021, the PNR said it cannot violate the Government Procurement Reform Act (RA 9184) by paying for services beyond the effectivity of the original contract.
COA Chairperson Gamaliel Cordoba and Commissioners Roland Café Pondoc and Mario Lipana held that ESAC has a valid claim under the principle of quantum meruit, which means that a claimant deserves reasonable payment for work and labor.
“Under the principle of quantum meruit, a contractor is allowed to recover the reasonable value of the thing or services rendered despite the lack of written contract, in order to avoid unjust enrichment. In several cases, the Supreme Court applied the principle of quantum meruit to compensate the services already rendered, notwithstanding the absence of or defect in the contract,” the COA said.
Likewise, it noted that ESAC was able to submit sufficient proof in support of its claim including the latter of former PNR general manager Junn Magno denying ESAC’s request for payment, certified copies of the statement of account and certified copies of the daily time records of the security personnel who were rendered duty.
“It was sufficiently proven that ESAC had the actual work performed and services rendered and that PNR had benefited from them,” the COA said.
