Subway to Nowhere: Makati’s P200B Transit Tragedy

By Louis ‘Barok‘ C. Biraogo — May 5, 2025

WHEN Makati and Philippine Infradev Holdings Inc. shook hands on a P200-billion subway deal, they forgot one tiny detail: a map. Now, a Supreme Court ruling has turned their grand transit dream into a jurisdictional nightmare, leaving 700,000 daily commuters stuck in traffic and arbitration-happy Infradev clutching a P44-billion impairment. This is the story of how a boundary dispute detonated a transportation time bomb—and what might still save the day.

Forensically Examining the Legal Failures

A Joint Venture Agreement Blind to Borders

The Joint Venture Agreement (JVA) between Makati City and Infradev was a masterclass in optimism but a disaster in foresight. The contract, inked in 2018, failed to account for the simmering Makati-Taguig territorial dispute over the 10 “embo” barangays—Pembo, Comembo, Cembo, South Cembo, West Rembo, East Rembo, Pitogo, Rizal, Post Proper Northside, and Post Proper Southside. These areas, critical to the subway’s depot and stations, were assumed to remain under Makati’s control. Spoiler: they didn’t.

The Supreme Court’s 2021 ruling, finalized in 2022, handed these barangays to Taguig based on historical and documentary evidence. The JVA’s fatal flaw? No contingency for jurisdictional shifts. A force majeure clause addressing territorial changes or a mandatory rerouting protocol could have saved it. Instead, the contract’s silence left Infradev free to cry “unfeasible” and bolt for arbitration. This wasn’t just sloppy drafting; it was malpractice-level negligence. Did the parties think the dispute, ongoing since the 1990s, would magically resolve itself?

Worse, the JVA ignored the Local Government Code (RA 7160), which mandates amicable settlements for boundary disputes. A clause requiring pre-arbitration mediation via the Department of the Interior and Local Government could have forced Makati and Taguig to negotiate before the project imploded. Instead, the contract left 700,000 commuters as collateral damage.

Arbitration or Abandonment?

The JVA’s arbitration clause, pegged to the Singapore International Arbitration Centre (SIAC), was a predictable choice for a PPP with Chinese funding ties. SIAC’s neutrality and expertise in cross-border disputes made it appealing. But was it optimal? Hardly. For a public infrastructure project, the SIAC’s opacity undermines accountability. The Construction Industry Arbitration Commission (CIAC), a Philippine body specializing in infrastructure disputes, would have ensured local expertise and public scrutiny. Alternatively, the Philippine courts, while slower, could have prioritized national interest over Infradev’s profit motives.

SIAC arbitration, governed by the Alternative Dispute Resolution Act (RA 9285), will likely focus on whether the SC ruling constitutes a force majeure event excusing Infradev’s non-performance. But its distance from Filipino stakeholders risks a disconnect. A CIAC or court process could have compelled inter-LGU cooperation or rerouting studies, keeping the public’s needs front and center. Instead, Infradev’s arbitration gambit feels like a prelude to abandoning ship.

Demolishing the “Feasibility” Claim

Infradev’s Exit Strategy Masquerading as Economics

Infradev’s claim that the subway is “no longer economically and operationally feasible” reeks of opportunism. The company’s May 2025 disclosure cites the SC ruling’s impact on the project’s alignment, but let’s unpack the numbers. Infradev reported a P44-billion impairment in 2023, including P5 billion for unfinished work and P39 billion for intangible assets. This suggests financial distress predates the SC’s finality, hinting at deeper mismanagement or a bad deal gone sour.

Compare this to the Metro Manila Subway, a P488-billion, 33-kilometer project under construction despite complex alignments across multiple LGUs. Its feasibility hinges on government backing and phased implementation, not jurisdictional purity. Infradev’s failure to explore rerouting or negotiate with Taguig suggests a lack of commitment. The company’s pivot to SIAC arbitration—rather than proposing a revised alignment—looks like a calculated exit, not a good-faith effort to save the project.

Legal Finality vs. Practical Paralysis

The SC’s ruling is legally airtight, grounding its decision in historical evidence and denying Makati’s reconsideration plea. But its practical fallout is catastrophic. The subway’s depot in Barangay Cembo and stations near the University of Makati and Ospital ng Makati now sit in Taguig, derailing the original route. Could this have been salvaged? Absolutely. Inter-LGU cooperation, mandated by RA 7160, could have facilitated a joint Makati-Taguig task force to redraw the alignment. The national government, via the Department of Transportation (DOTr), could have stepped in with funding or technical support, as it did for the Metro Manila Subway.

Instead, political posturing and Infradev’s inertia left the project dead. Makati’s Mayor Abby Binay has voiced frustration with Taguig’s lack of cooperation, while Infradev’s arbitration move sidesteps collaborative solutions. The SC’s logic earns a B-, but its failure to foresee this transportation time bomb deserves an F.

Brutally Realistic Solutions

Makati’s Monorail Pivot: Vision or Vaporware?

Mayor Binay’s announcement of a new intra-city railway—likely a monorail—sounds promising but smells like political face-saving. A monorail, confined to Makati’s borders, avoids Taguig’s jurisdictional quagmire but raises red flags. Where’s the funding? The original subway leaned on Chinese loans; a new project needs transparent PPP backing or national support. Timeline? Feasibility studies alone could take a year, with construction stretching to 2030. Integration with MRT-3 is critical but unaddressed—will this be a standalone vanity project or a functional transit link?

Makati must publish a concrete plan by Q3 2025, detailing costs (est. P50-100 billion), a 5-year timeline, and MRT-3 connectivity. Without specifics, this is just Binay’s attempt to dodge blame for the subway’s collapse.

Public Lifelines: BRT and Beyond

While Makati dreams of monorails, commuters need relief now. A Bus Rapid Transit (BRT) system on Ayala Avenue—modeled on the EDSA Busway—could be rolled out in 12-18 months for P5-10 billion. Dedicated lanes, modern buses, and MRT-3 integration would ease congestion for 200,000 daily riders. The DOTr’s BRT expertise makes this a no-brainer. Longer-term, extending the Pasig River Ferry or integrating with the Metro Manila Subway could bridge Makati and Taguig.

The absurdity of a boundary dispute paralyzing transit demands national intervention. The DOTr should convene a Metro Manila transit task force, forcing Makati and Taguig to cooperate or face funding cuts. Commuters shouldn’t pay for bureaucratic turf wars.

Future-Proofing PPPs

To prevent another Makati subway fiasco, PPP contracts need ironclad protections. Here’s a model framework:

Jurisdictional Contingency Clause: “In the event of a change in territorial jurisdiction affecting project assets, parties shall jointly develop a revised alignment within 90 days, with costs shared per the original equity split. Failure to agree triggers mediation via the DILG.”
Force Majeure Specificity: “Jurisdictional changes shall not constitute force majeure unless they render 50% or more of the project alignment inoperable, as certified by an independent engineer.”
Public Accountability Rider: “All disputes involving public infrastructure shall prioritize CIAC arbitration or Philippine courts to ensure transparency, unless otherwise justified by international funding requirements.”

These clauses would force collaboration, deter premature exits, and keep the public’s interest first.

Verdict

Makati (D+): Binay’s monorail talk is proactive but vague. Failing to anticipate the territorial dispute’s impact was a leadership lapse, though her push for alternatives shows grit.
Infradev (F): Arbitration-happy and quick to abandon ship, Infradev’s P44-billion write-off exposes financial mismanagement. Their “feasibility” excuse is a flimsy cover for a bad bet.
Supreme Court (B- for logic, F for foresight): The ruling was legally sound but ignored its ripple effects on 700,000 commuters. A nudge toward inter-LGU cooperation could have softened the blow.

The Makati subway’s collapse is a cautionary tale of legal naivety, corporate cowardice, and judicial tunnel vision. While arbitration drags on, Makati must fast-track its monorail and BRT plans, and the national government must stop LGUs from holding commuters hostage. Otherwise, Metro Manila’s transit dreams will stay buried underground.

Disclaimer: This is legal jazz, not gospel. It’s all about interpretation, not absolutes. So, listen closely, but don’t take it as the final word.