Abby’s P8.9B Legacy vs. Nancy’s Fiscal Fury: Makati’s Subway Settlement War

By Louis ‘Barok‘ C Biraogo — July 12, 2025

MAKATI’S subway settlement dispute isn’t just another political squabble—it’s a ₱8.9 billion question that could bankrupt the Philippines’ wealthiest city or set a dangerous precedent for municipal governance nationwide. As Mayor Nancy Binay and her predecessor Abby Binay trade accusations over this controversial deal, thousands of families face displacement while taxpayers foot an escalating bill that legal experts warn violates fundamental procurement laws.

1. Shocking Origins of the Crisis

The Makati subway project, once hailed as a game-changer for urban mobility, was obliterated by the Supreme Court’s 2021 ruling in Taguig City v. City of Makati (G.R. No. 235316), which stripped Makati of ten EMBO barangays, including critical subway sites. This gut-punch rendered the project economically and operationally dead, as declared by Philippine InfraDev Holdings Inc. (PhilDev).

In April 2025, PhilDev launched a $1.7 billion arbitration claim at the Singapore International Arbitration Center (SIAC). On June 20, 2025, the Makati City Council, under then-Mayor Abby Binay, passed Resolution 2025-031, greenlighting a $160 million (P8.9 billion) settlement. Signed on June 23, 2025—mere days before Abby’s term ended—the deal committed Makati to payment within 90 days, with a crushing $30 million (P1.7 billion) penalty for failure.

Mayor Nancy Binay, sworn in on July 1, 2025, is fighting to halt the SIAC ruling, branding the settlement “legally flawed” and “grossly disadvantageous” due to missing budget allocations and risks to city operations. Abby counters, touting P30 billion in reserves and subway assets worth $1.6 billion.

2. Legal Showdown: Unmasking the Deal’s Flaws

A. Procedural Bombshells

Midnight Deal Mayhem

The settlement’s eleventh-hour signing screams “midnight deal,” a tactic frowned upon in governance. While no law outright bans such moves, the Supreme Court’s ruling in Verceles v. COA (G.R. No. 211553, 2016) declares contracts without appropriation void, with officials liable under the Government Auditing Code (PD 1445, Sec. 103). The Local Government Code (RA 7160, Sec. 305, 352) demands transparency, and the rushed June 23 execution, sans public consultation, likely flouts these mandates.

Budget Black Hole

Nancy Binay, backed by City Legal Officer Ava Mari Ramel, claims no 2025 budget allocation exists for the P8.9 billion, as confirmed by the City Budget Department on July 3, 2025. RA 7160, Sec. 324, mandates appropriations for contracts, and Sec. 337 caps disbursements at available funds. Abby’s assertion of P30 billion in reserves, reported by Inquirer, lacks evidence of specific appropriation. Verceles reinforces that unappropriated funds are off-limits without a supplemental budget, casting doubt on the deal’s procedural legitimacy.

B. Substantive Landmines

Contract on Trial

The Civil Code (Arts. 1380–1382) allows rescission of unconscionable contracts. The settlement’s $30 million penalty and P8.9 billion cost—80% of Makati’s H2 2025 budget—could be deemed grossly disadvantageous, especially given the project’s post-ruling worthlessness. RA 3019 (Anti-Graft Law, Sec. 3(e)) prohibits deals causing undue injury to the government, and the settlement’s lopsided terms may trigger this violation.

Arbitration Armageddon

Under RA 9285 (Alternative Dispute Resolution Act), Philippine courts can block arbitral awards violating public policy (Sec. 19). The lack of appropriation and fiscal harm could justify this exception, as supported by Gonzalez v. Climax Mining Ltd. (G.R. No. 161957, 2005), which requires arbitration to align with domestic law. Nancy’s SIAC deferral request leverages this principle.

C. Ethical Governance Under Siege

RA 6713 (Code of Conduct, Sec. 4) demands transparency and accountability. The settlement’s secretive execution and scant documentation—a “small box” of papers, per transition team head Cristian Robert Lim—breach these standards. Nancy’s fact-finding committee, announced in Rappler, is a vital step toward accountability, probing potential misconduct.

3. Clash of Titans: Dissecting the Binay Sisters’ Battle

Nancy Binay’s Battle Cry	Abby Binay’s Defense
No Funds Allocated: No 2025 budget for P8.9B, violating RA 7160, Sec. 324.	Council’s Green Light: June 20 resolution (2025-031) grants authority (GMA News).
Fiscal Catastrophe: Payment guts 80% of H2 2025 budget, risking services.	Cash Cushion: P30B reserves; supplemental budget feasible (Inquirer).
Sneaky Midnight Deal: June 23 signing lacks scrutiny, flouting RA 6713 (Tribune).	Big Savings: $160M vs. $1.7B claim saves P8B (PhilStar).
Predatory Penalties: $30M clause is unconscionable under Civil Code.	Asset Jackpot: Secures $1.6B in subway assets (PhilStar).

Nancy’s Case: A Legal Slam Dunk?

Nancy’s arguments are rooted in RA 7160’s fiscal discipline and Verceles’s precedent on appropriation. The midnight deal claim, while not illegal, aligns with RA 6713’s ethical mandates. The budget strain—P8.9 billion vs. P8.4 billion available—threatens RA 7160, Sec. 16’s welfare mandate. Her SIAC deferral push faces hurdles, as RA 9285 favors arbitration, but public policy arguments hold weight.

Abby’s Defense: Strategic Genius or Reckless Gamble?

Abby’s reserve claim and council resolution provide procedural cover, but without appropriation evidence, they falter under RA 7160. The $1.7 billion-to-$160 million savings is persuasive, but the asset value ($1.6 billion) is speculative post-SC ruling. The lack of transparency undermines her case, risking RA 6713 violations.

4. Battle Plan: Solutions to Defuse the Crisis

Legal Counterstrikes

Courtroom Blitz:

File a certiorari petition under Rule 65 with the Regional Trial Court or Supreme Court, alleging grave abuse of discretion (Verceles). Seek a TRO to pause SIAC enforcement, citing RA 9285’s public policy exception (Gonzalez).

COA Crackdown:

Request a Commission on Audit review to disallow unappropriated expenditures under PD 1445, Sec. 103, holding officials liable.

SIAC Showdown:

Argue before SIAC that the settlement violates RA 7160’s appropriation rules, invoking the New York Convention’s public policy clause via RA 9285.

Policy Power Moves

Renegotiation Gambit:

Negotiate with PhilDev to extend payments, slash penalties, or swap debt for equity in subway assets (Bilyonaryo).

Legislative Lockdown:

Push Congress to amend RA 7160, banning major contracts during transitions. Urge the City Council to reject the settlement or mandate a transparent supplemental budget (PhilStar).

Accountability Assault:

Bolster the fact-finding committee to probe graft under RA 3019, filing charges with the Ombudsman if irregularities are found (Rappler).

5. Fallout: Fiscal Ruin and Social Injustice

Fiscal Apocalypse

The P8.9 billion settlement, plus penalties, devours 80% of Makati’s H2 2025 budget (P8.4B vs. P11.3B needed). This violates RA 7160, Sec. 16’s welfare mandate and risks fiscal collapse, as warned by Ramel (Rappler). Verceles underscores that unauthorized spending undermines local autonomy.

Marginalized Communities Betrayed

Makati’s poorest residents, dependent on programs like the Yellow Card healthcare initiative, face service cuts. RA 7160, Sec. 16, prioritizes basic services, and diverting funds could deepen inequality, violating constitutional welfare principles (Art. II, Sec. 9).

Governance in Chaos

The Binay sisters’ feud politicizes a fiscal crisis, eroding trust. The midnight deal exposes RA 7160’s gaps, demanding reforms to curb transition-period abuses (Tribune).

6. Verdict: A Call to Arms for Accountability

Key Takeaway

The Makati subway settlement teeters on shaky legal ground, with Nancy’s appropriation and transparency concerns outweighing Abby’s savings narrative. The deal’s procedural flaws and fiscal risks demand judicial intervention to protect public funds and uphold RA 7160’s principles.

Recommendations

Storm the Courts:

File for certiorari and a TRO to nullify the settlement and delay SIAC, leveraging Verceles and RA 9285.
Demand a COA audit to expose financial irregularities.

Rework the Deal:

Renegotiate with PhilDev for sustainable terms, prioritizing Makati’s fiscal health.

Fortify Governance:

Empower the fact-finding committee to pursue RA 3019 charges if warranted.
Advocate RA 7160 amendments to ban transition-period contracts.

Shield the Vulnerable:

Safeguard funding for essential services to protect marginalized communities.

Ripple Effects

This scandal threatens Makati’s governance credibility and fiscal stability. Resolving it through transparent legal channels will set a precedent for accountable local governance, balancing private contracts with public welfare.

Key Citations

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.