MANILA, Philippines (UPDATED) – President Rodrigo Duterte and his Cabinet had initially agreed to appeal the Supreme Court (SC) ruling clarifying the sources of internal revenue allotment (IRA) for local governments, but this plan was put on hold after Duterte had a meeting with Batangas Governor Hermilando Mandanas, petitioner in the case.

“I confirm that in the last Cabinet meeting that it was agreed upon that there will be a motion for reconsideration filed, but there has been a supervening event since,” said Presidential Spokesperson Harry Roque on Thursday, July 26.

He was holding a press conference in Ipil, Zamboanga Sibugay.

Duterte apparently discussed the SC ruling with local executives on July 13 during a gathering of the League of Municipalities of the Philippines in Davao City.

“The President, during the league of mayors’ meeting in Davao, talked to the mayors about the ruling and the President also had occasion to talk to the party litigant in that case, Governor Mandanas,” said Roque.

The spokesman, who was present at the meeting, said Mandanas had explained that the SC ruling “will not result in a budgetary deficit because it will not entail additional budget amounts.”

“So it’s transferring money from one pocket to another, so I think the matter will be discussed anew in the next Cabinet meeting,” said Roque.

Mandanas also supposedly assured Duterte that the ruling is not retroactive, hence the government does not need to reimburse local government units (LGUs) for their share from previous years. The national government need only pay LGUs their “just share in taxes” once the decision is deemed final and executory.

Roque reiterated on Saturday, July 28, that Malacañang “will appeal the ruling.”

Budget Secretary Benjamin Diokno said on Wednesday, July 25, that the government has to appeal the SC ruling, and argued that it would “constrain” the national budget and may lead to an “unmanageable public sector deficit” of 6%.

“Our credit rating will fall. International confidence will go down. And we need to cut down significantly on our Build, Build, Build program,” Diokno said in a mix of English and Filipino last July 12.

It’s not clear if Duterte has made a final decision on the matter. Roque said it would be discussed again in the August Cabinet meeting.

In a July 4 ruling, the SC decided on a 6-year-old petition filed by Mandanas. The petition said the national government did not release P500 billion worth of LGUs’ “just share” from national taxes from 1992 to 2012.

Mandanas had asked the government to adjust its proposed 2019 budget based on the ruling.

Under the proposed 2019 national budget, the IRA amounts to P575.52 billion. This can increase to as much as P732 billion should the SC decide the ruling must be implemented in 2019. – Rappler.com