The Development Bank of the Philippines is sitting on more than P4 billion in overdue contractor loans from a program built to fund the Duterte administration's Build, Build, Build drive, and state auditors say basic safeguards were simply not followed before the money went out the door.
The Commission on Audit found that overdue loans under the Infrastructure Contractor Support program, or ICONS, reached 61.4% of the P6.67 billion still owed to the state bank. DBP's board finally shut the program down on June 3, 2026, but the closure leaves taxpayers exposed to billions in debt the bank may never recover.
What was ICONS and how did it go wrong?
Launched in 2017, ICONS let contractors borrow against payments they expected from government infrastructure projects. The idea made sense on paper: builders need cash long before project owners pay up, and DBP was supposed to bridge that gap using assigned receivables as security.
For the arrangement to work, the bank had to verify that construction was actually moving. Its own rules required loans to be released in stages, with account officers visiting project sites before disbursing funds and monitoring borrowers continuously. Auditors found those steps were often skipped.
A P300-million lesson in lax checking
One case tells the story. In August 2019, DBP approved a P300-million credit line for a contractor handling five projects for a government-owned corporation. The two biggest projects, each worth more than P217 million, were reported as roughly 75% and 81% complete. The bank released the money without verifying any of it.
There was no verification of the actual project accomplishment prior to loan release of the loans, as required by the Circular.
By June 2020, three months after drawing the full amount, the contractor was already behind on payments. When DBP finally checked with project engineers in March 2021, the verified accomplishments fell far short of what had been reported. Two projects had been terminated for delays the previous September. As of December 31, 2025, not a single peso of principal had been collected, and the bank has set aside the full amount as an expected loss.
Completed projects, unpaid loans
The problems did not stop there. Another contractor still owed P490.46 million at the end of 2025 even though the projects backing its loans were finished between 2017 and 2021. Auditors found the contractor had subcontracted most of the work, keeping an average stake of just 3.5% of contract costs, and kept requesting extensions instead of repaying.
Collections moved at a crawl. At DBP's Albay lending center, a borrower defaulted in June 2021, but the first demand notice went out by email only in July 2025, more than four years later. That borrower still owes P97.24 million of an original P100-million loan. In Tacloban, foreclosure has yet to begin on a P82.21-million loan overdue since September 2021, because the lending center has no full-time lawyer and its cases sit with the Zamboanga legal team.
What has DBP done about the bad loans?
COA recommended investigating possible negligence among officers who handled ICONS loans, with administrative or legal cases where warranted. DBP said its management committee has directed the Legal Services Group to investigate possible negligence in the credit administration of the accounts flagged.
Patience, however, has been in short supply. The bank's board ordered an inquiry into its 20 largest nonperforming loans as early as January 19, 2022, including the P300-million ICONS account. It took until June 3, 2026, more than four years later, to terminate the program itself.
The wider picture is not reassuring either. DBP's gross nonperforming loan ratio rose from 7.05% in December 2025 to 9.52% in March 2026, easing slightly to 9.17% by June, according to Bangko Sentral ng Pilipinas data. How much of that comes from ICONS remains unclear.
For a government bank tasked with financing development in the provinces, from Albay to Tacloban to Zamboanga, these findings should sting. Public money deserves better than rubber-stamped loan releases and demand letters sent four years late. The Marcos administration has pressed state banks to clean up their books and fund real growth; this report shows exactly why that pressure is warranted. DBP has yet to formally respond to questions about its recoveries and the 2022 inquiry, though a representative said the bank stands by the explanations it submitted to COA.
Frequently asked questions
How much in ICONS loans are overdue?
State auditors found more than P4 billion in overdue ICONS loans, amounting to 61.4% of the P6.67 billion still owed to the Development Bank of the Philippines under the program.
Why did DBP terminate the ICONS program?
DBP's board approved the termination of ICONS on June 3, 2026, citing the high level of overdue loans under the contractor lending program launched in 2017.
What did the Commission on Audit recommend?
COA recommended investigating possible negligence among DBP officers and employees handling ICONS loans, and urged the bank to move faster in recovering unpaid loans, especially from borrowers still operating or with real estate pledged as collateral.