The new local government of Makati City announced Tuesday it will form a team to investigate a multibillion-peso subway deal, aiming to prevent financial waste and safeguard city finances.

During a press briefing, newly appointed City Legal Officer Ava Mari Ramel and Transition Team head Christian Robert Lim outlined the timeline surrounding the P8.96-billion settlement between Makati City and Philippine Infradev Holdings Inc., the private partner in the now-defunct Makati Subway project.

Lim stated that Infradev filed a notice to terminate the joint venture agreement in March 2025 and initiated arbitration proceedings in Singapore the following month. The Singapore International Arbitration Centre (SIAC) was chosen as per the dispute clause in the original 2019 joint venture agreement.

He also cited that even before outgoing Mayor Abby Binay-Campos left office, her administration had moved to finalize the settlement. The City Council passed a resolution 20 June authorizing the agreement, which was signed 23 June and submitted to the arbitration center for approval.

However, Lim said that then-Mayor-elect Nancy Binay’s transition team repeatedly requested information on the arbitration status between May and June but was not fully informed. He added that the full settlement agreement was only disclosed to the new mayor upon her assumption of office on 30 June.

The legal team argues the agreement — obligating the city to pay Infradev $160 million or approximately P8.96 billion — is financially unsustainable and potentially unlawful.

Ramel highlighted that Makati’s approved budget for the remainder of 2025 is only P8.4 billion, which already covers salaries, social services and other city expenses. “There is no available appropriation to cover the settlement amount,” she said, citing a 3 July budget department certification.

She also pointed to punitive clauses in the agreement, including a 2.5 percent monthly interest penalty for delayed payments beyond 90 days and an additional $30 million or roughly P1.68 billion in liquidated damages if Makati fails to settle its dues within 120 days.

“These penalties could push the city’s liabilities under the deal to over P11.28 billion — far beyond what the city can afford,” Ramel stressed. The agreement also includes a warranty that funds were properly allocated, an assurance the current administration intends to verify.

The Makati Subway System, initially envisioned as a 10-kilometer line from EDSA-Ayala to Ospital ng Makati, broke ground in 2018. In 2019, the Makati City government awarded the public-private partnership (PPP) deal to Philippine Infradev Holdings Inc. and its Chinese partners: Greenland Holdings Group, Jiangsu Provincial Construction Group Co. Ltd. Holdings Ltd., and China Harbour Engineering Company Ltd.

Construction halted in 2022 following a Supreme Court ruling that transferred jurisdiction of several areas, including Cembo, Comembo, East Rembo, Pembo, Pitogo, Post Proper Northside, Post Proper Southside, Rizal, South Cembo, West Rembo, and Fort Bonifacio, to Taguig City.