The Commission on Audit (CoA) has flagged the Department of Human Settlements and Urban Development (DHSUD) over P12.95 billion in escrow funds earmarked for socialized housing projects that have sat unused, citing weak monitoring and regulatory oversight.

In its 2025 annual audit report, state auditors said the accumulated deposits had remained idle, limiting the agency's contribution to national shelter initiatives under the Balanced Housing Development Program. The idle balance is significant because the escrow mechanism is one of the tools the balanced housing policy relies on to turn compliance into actual shelter projects.

“The absence of an effective monitoring, utilization and documentation of the escrow fund transactions resulted in weak regulatory oversight,” the auditors said, adding that this contributed to the nonuse of the funds and the failure to implement projects.

According to CoA, the escrow funds were intended to support incentivized compliance projects under the government's balanced housing policy, but deficiencies in monitoring and documentation prevented the department from effectively tracking how they were used. The lapses sit within DHSUD's broader regulatory mandate, which the same audit also measured — from acting on developers' license-to-sell applications to reviewing local comprehensive land use plans.

Auditors also found that P1.92 billion in disbursements from escrow accounts between 2018 and 2025 lacked complete supporting documents, raising questions over whether the money had been properly spent.

Separately, CoA flagged P66.72 million in interest and non-interest subsidy payments under the Pambansang Pabahay para sa Pilipino Program that were released without independent validation and sufficient supporting documents. The payments were made contrary to audit rules and program guidelines, particularly requirements to validate beneficiaries and document their eligibility, the commission said.

Auditors likewise cited delays in the release of P56.59 million in emergency shelter assistance to 3,705 disaster-affected beneficiaries under the Integrated Disaster Shelter Assistance Program. Processing and distribution ran 68 to 343 days beyond the timelines prescribed under agency guidelines.

“Consequently, the delivery of immediate and provisional shelter assistance to disaster-affected households was delayed,” CoA said, noting that the lapses undermined the program's goal of providing timely emergency relief.

Other findings included P52.18 million in doubtful accounts receivable arising from administrative sanctions, P22.81 million in undocumented expenditures and P4.21 million in uncorrected accounting errors.

Despite these findings, CoA rendered an unmodified opinion on DHSUD's 2025 financial, meaning the auditors concluded the statements were fairly presented in accordance with applicable accounting standards.

DHSUD management agreed to implement the audit recommendations, which include establishing a centralized database for escrow transactions, creating a review committee to validate beneficiary eligibility, and enforcing transition guidelines for disaster assistance. Those fixes target the specific gaps auditors cited, and their rollout will be the immediate marker of follow-through.

CoA noted, however, that the agency still carries outstanding recommendations from previous audits: of 48 recommendations issued in the prior year's audit report, 20 have been implemented while 28 remain unimplemented — a backlog that gives the latest commitments a benchmark to clear.

For 2025, DHSUD received P3.18 billion in allotments out of P3.2 billion in total appropriations. It incurred P1.68 billion in obligations and P1.58 billion in disbursements, leaving P1.51 billion in unobligated allotments at year-end.

On performance, the department developed nine housing strategies, exceeding its target of six, but fell short on providing security of tenure through presidential proclamations, covering 213 families against a goal of 858. It acted on only 70% of license-to-sell applications within the prescribed period, below its 94% target, though its land-use planning review exceeded its target after evaluating 108 comprehensive land use plans and zoning ordinances.

The audit comes as President Ferdinand R. Marcos, Jr. this month vowed to accelerate state-backed housing projects, saying his administration would prioritize building “entire communities” with schools, markets and health facilities rather than bare shelters.

Speaking at the inauguration of the 1,099-unit St. Barts Southville Heights housing project in San Pablo City, Laguna province on Sept. 15, the President said housing for families displaced by the Philippine National Railways South Long-Haul Project would serve as a model for future resettlement efforts.

The government has so far completed only 1,900 housing units under Mr. Marcos' flagship housing program, Housing Secretary Jose Ramon Aliling told a House of Representatives hearing on Sept. 1 — well short of the 6 million homes pledged in 2022. He added that the target would be scaled down to 300,000 units through 2028 from 6 million. Read against that backdrop, the audit findings on idle escrow money, unvalidated subsidies and slow disaster assistance sketch the administrative side of a housing push now being recalibrated. — Pexcel John Bacon