The cancellation of the project, which was first approved by the government of then President Gloria Macapagal Arroyo, was not related to a territorial dispute with China in the South China Sea, said Interior Minister Manuel Roxas.
"We informed China and Sinomach Corporation that we cannot continue with the North Rail (project)," Roxas said in a media briefing.
Sinomach is a subsidiary of China National Machinery and Equipment Corp. Group (CNMEG).
Roxas, who is also the head of the Philippines' ruling party, had meetings on the weekend with China's Vice President Xi Jinping and other top officials in Nanning, China.
Roxas said the Philippines would still pursue the high-speed rail project connecting the capital to northern provinces under revised terms and conditions.
The project was financed by China's Export-Import Bank based on an agreement with the Philippines' Finance Department, Roxas said.
But he said the awarding of the contract under the previous administration did not follow the procurement law and no public bidding had been held when it was awarded to state-owned Sinomach in 2003.
"There is so such thing as an executive agreement. All procurement by government must comply with the procurement law. So, this contract was not really effective," Roxas said.
China EximBank offered to fund the project via a soft loan in 2003 which fell due at the height of a dispute between the Philippines and China over a South China Sea shoal in June.
Roxas said the government had not made a decision to stop the project at that time. The Philippines would repay the loan within two years, he said. (Reuters)
