Makati subway contractor seeks international arbitration

MANILA, Philippines — The private contractor of the $3.5-billion Makati City Subway Project has sought international arbitration after concluding that the project became unfeasible due to the Supreme Court’s ruling on the jurisdiction of the 10 enlisted men’s barrios or “embos.”

“Continuing with the Makati City Subway Project under the joint venture agreement with the city government was rendered no longer economically and operationally feasible due primarily to the Supreme Court’s decision declaring some subway stations and depot to be under the jurisdiction of Taguig,” Philippine Infradev Holdings Inc. said in a disclosure with the Philippine Stock Exchange yesterday.

“Arbitration proceedings have thus been commenced with the Singapore International Arbitration Centre to enable an impartial resolution of the agreement with Makati,” it added.

The subway system was a public-private partnership project between Infradev and the Makati city government that cost $3.5 billion or P194 billion to construct.

The project, which broke ground in 2018, featured 10 stations running from the Ospital ng Makati in Barangay Pembo to Ayala Avenue along EDSA.

The train depot was envisioned to be located in Barangay Cembo.

The Supreme Court, however, halted construction activities after ruling in 2022 that Taguig has rightful jurisdiction over the 10 embos and Fort Bonifacio. The high tribunal affirmed its decision in June 2023.

The 10 embos pulled out of Makati’s jurisdiction were Cembo, Comembo, East Rembo, Pembo, Pitogo, Post Proper Northside, Post Proper Southside, Rizal, South Cembo and West Rembo.

In January 2024, now outgoing Makati Mayor Abby Binay said the subway system was “not meant to be” since the initial alignment would put five stations and the train depot under the ownership of Taguig.

“It would not be intracity anymore because Taguig is another city already, so maybe this project is not meant to be,” she told reporters.

“It’s not economically viable anymore if the subway only has five; the contractor would lose money,” she added.

Infradev suspended construction activities in 2023.

The firm has “completed the excavation and shoring works of the first phase of the underground walkway construction and concrete pouring of two mat foundations,” it said in its annual report published yesterday.

The first phase involves three stations located along Sen. Gil J. Puyat Avenue, Dela Rosa Street and Urban Avenue.

Had the project proceeded as scheduled, the subway was supposed to be operational this year.

It was estimated to ferry 27,000 passengers per hour per direction or 700,000 passengers daily.

The subway was also designed to be linked to the Metro Rail Transit Line 3 via EDSA Ayala and Guadalupe and the Metro Manila Subway Project via University of Makati.

As of 2024, Infradev has booked impairment losses of P44 billion from the disruption in the Makati City Subway Project, divided into P39 billion in intangible assets and P5 billion for construction in progress.

New contractor

Binay yesterday said “while the project by the original proponent will not push through, we are currently under negotiations with another group.”

She refused to identify the new contractor.

“If it will not become a subway, it can be a monorail above ground, so that we can still push through with the idea of building a local mass transportation within Makati,” Binay said on the sidelines of the Alyansa para sa Bagong Pilipinas campaign rally in Quezon province.

The Makati city government is willing to go through arbitration in Singapore for an impartial resolution to the dispute, Binay said.

“When the Supreme Court decision came out, the proponent, which will shell out the capital infrastructure, had indicated that the original design is no longer financially and economically viable. Part of our contract is to go through arbitration, which will determine what will be at stake for both parties, rather than us settling this between parties,” she said.

Meanwhile, Sen. Alan Peter Cayetano denied that the city government of Taguig opposed the implementation of the subway project.

“It is unfortunate and truly disappointing that the project may no longer push through, especially considering its potential to address long-standing urban mobility challenges,” said Cayetano, whose wife Lani is Taguig mayor.

“Taguig has always been open to projects that can provide real benefits to the public – and this includes the proposed subway. Records show that the officials of Taguig and the Cayetanos do not look at the proponents of projects, but rather the benefits that it brings to the public,” he added.

But Taguig was also not consulted about the project, Cayetano said of his political clan’s turf.

“To clarify, I checked with city officials and there has never been a dispute from the side of Taguig. The City of Taguig never rejected the project; in fact, we – the city, and even my Senate office – were never formally consulted about it to begin with,” Cayetano said.

The office of Sen. Nancy Binay – who is running for Makati mayor – has not yet issued a statement on the aborted project.

Meanwhile, Senate public works committee chair Ramon Revilla Jr. lamented the move of Infradev to back out of the project.

He hoped the project may still push through, even though the contractor has already tossed the shovel on the projected subway.

“I hope the two local governments of Makati and Taguig can find a way to make this work,” he added. — Marc Jayson Cayabyab