Senator Raises Alarm on Flood Control Contracts
Senator Sherwin Gatchalian recently expressed concerns about potential collusion or corruption in the awarding of flood control contracts to undercapitalized companies. He highlighted this issue during the Senate Blue Ribbon Committee hearing, emphasizing the need for transparency and accountability in government projects.
According to officials present, five of the top 15 firms awarded multi-billion peso contracts for flood control projects between 2022 and 2025 have paid-up capital under P100 million. This raises red flags given the scale of the contracts involved.
Undercapitalized Firms Win Large Contracts
- QM Builders – P1.2 million paid-up capital; awarded P7.3 billion worth of flood control projects.
- Centerways Construction and Development Corp. – P45 million paid-up capital; secured P5.1 billion worth of projects.
- Triple 8 Construction & Supply, Inc. – P90 million paid-up capital; won P3.9 billion worth of projects.
- Wawao Builders – P50 million paid-up capital; awarded P4.2 billion worth of projects.
- MG Samidan Construction – P250,000 paid-up capital; won P5 billion worth of projects.
Authorities noted that awarding contracts to companies with such low capitalization contradicts the standards set by the Philippine Contractors Accreditation Board (PCAB). Senator Gatchalian stressed that these firms’ limited financial capacity could compromise project quality.
Concerns Over Project Quality and Accountability
“My point is that the DPWH has been awarding contracts to corporations that are undercapitalized based on the PCAB,” the senator said in Filipino. “We need to know exactly who approved or awarded the contract because we want to see accountability. That’s what we want to find out — because if the contractor is undercapitalized, then obviously the project will fail; they’ll be forced to cut corners.”
He further added, “So we want to go to the root cause of why these projects are being substandard. Because the contractors are not adequately capitalized, so they are also substandard.” Community members echoed these concerns about infrastructure reliability.
PCAB Standards and Financial Capacity
Citing PCAB guidelines, Gatchalian said a contractor should have at least P1 billion net worth to qualify for projects valued at P450 million and above. This makes the awarding of multi-billion contracts to firms with far less capitalization all the more questionable.
“In my opinion, there’s some form of, I think, collusion or some form of corruption in awarding the contracts to contractors who are not capitalized adequately. That’s the point I’m trying to make,” he said.
Case Study: QM Builders’ Financial Discrepancies
One notable example is QM Builders, which reportedly has only P1.2 million paid-up capital and zero income from 2015 to 2024 according to Securities and Exchange Commission records. Yet, it secured P7.3 billion worth of flood control contracts.
“So how was it able to secure P7.3 billion when it never earned a single centavo and its capitalization is only P1.2 million?” the senator questioned.
Allan Quirante, owner of QM Builders, clarified that the SEC data likely refers to their hardware supply business and not their construction operations. He explained, “One name, two types of businesses,” in Filipino, noting that they began as a hardware dealer in 1992 and expanded into construction in 2003.
Quirante also stated that their current Net Financial Contracting Capacity (NFCC) is P40 billion. “That’s why the project we got doesn’t even amount to 10 percent of the projects we receive per year,” he added in Filipino.
The NFCC, he explained, is calculated by multiplying the company’s assets by 15. “For example, if you have P1 billion in the bank, you can qualify for P15 billion. If you have P2 billion in the bank, that means you can qualify for P30 billion — that’s the computation,” Quirante said.
“That’s why we, with our cash and assets totaling more than P2 billion, when multiplied by 15, can reach P40 billion. That’s why we are capable of contracting up to P40 billion,” he concluded.
For more news and updates on flood control contracts, visit Filipinokami.com.
