Though the AFP FINANCE CENTERS will be pictured out in bad taste with this page, the writer still has high regard and wholehearted respect to the rank and file who are laboriously working at the AFP FINANCE CENTERS. He certainly has no other purpose in writing up this elementary analysis on how one AFP subunit work but to simply reveal minor systematic defect within, which to his mind very much detrimental to the growth of the entire AFP organization. Instead of being the “relief valve” for the hardworking AFP Personnel, the AFP FINANCE CENTERS had become a direct conduit to profiteering organizations, willing henchmen to the moneymaking and corrupt military leaders and last but not the least becomes a heavy burden to the armed but powerless military personnel.

Without further ado, the author will just tackle three (3) common practices perhaps a decade-old if not a century-old practice on how military Pay & Allowances and other benefits are being handled. First and foremost is the automatic salary deduction agreement entered into by the AFP Leadership and Loan Institutions or commonly known as Loan Sharks in exchange for negligible monthly payola. The traditional financial cut or “commissions” for the incumbent military leaders and the “chief of finance” in exchange of the automatic payroll deduction is nonetheless a professional form of financial exploitation. Though automatic salary deduction is lawfully authorize, it is still immoral for the incumbent military leaders to receive payola because “commissions” will always be taken from the pre-computed and pre-deducted surcharges which will eventually shouldered by the borrower himself. In other words, financial cuts, God’s share, per diems or whatever you call it will further strangulate the financially hard up military personnel even before the money is being put to good and noble purpose.

Let us again examine thru basic computations on how huge this money-making scheme is by taking into consideration that the actual monthly figure to be appropriated to all finance mafia’s is only one hundred pesos (P100) from the total and pre-computed monthly add-on interests. Presuming further that out of the 150 thousand personnel in the AFP, only 100,000 individuals indeed availed of salary loans. It therefore follows that the total collectibles in the entire AFP organization is a monstrous 10 million pesos per month (P100 per month x 100,000 borrowers). By this projection alone, the total yearly “commissions” allocated to the incumbent corrupt military Generals and other finance managers will be totaling to 120 Million pesos (10 M per month x 12 months). It is no wonder military Officers are shoving each other thru the “pasipsip system” just to get juicy positions in the military service. Does this practice reflective of a “hero of the land description” tagged to all military personnel? In fact “hero portrayal” is frequently ab-used during retirement ceremonies of Generals.  If it is pure deception, are we not to blame also in propagating these deceptions directly to the heart of a listening crowd who were gathered around during retirement ceremonies? Now considering that there are only a dozen Generals who are indeed corrupt, will other Officers who opted to pretend of knowing nothing, hearing none, seeing nobody or simply blind to the rampant financial immoralities within the organization be liable to the degeneration of the AFP like what the AFP of today shows? Now if they or WE for that matter are not partly to be blamed for this mess, what has to be done as a clean-hearted warrior and country–loving fighter to immediately stop corruption so that the tribes of the few brazenly corrupt military leaders will not thrive in this beloved organization? Granting that the stated “100-peso per borrower” example is not accurate, then it doesn’t follow that the interpretation is wrong because the fact is still the same wherein MILITARY GENERALS ARE RECEIVING THOUSAND-PESO PAYOLA FROM THE SO CALLED AFP LOAN INSTITUTIONS. Definitely, Military and Police Generals can still be good leaders without automatic commissions from LOAN INSTITUTIONS!

                Suggested solution is to create one finance unit for every branch of service completely run by competent civilians instead of utilizing military personnel because finance function is purely for the prompt delivery of pay & allowances and all other mandated financial benefits each AFP employees deserves. He (the writer) believes that assigning military personnel for finance matters is extremely insulting because finance functions can be performed by “disabled” but intellectually gifted individuals. Said function is further simplified nowadays due to the advancement of technology e.g. ATM mode of salary withdrawal thus invalidates the need of employing physically hardened and battle-scarred soldiers! Worst if Officers get his star ranks from spending all his military careers at the Finance centers.

What made a civilian managed and independently run finance unit advantageous to the AFP organization is the inherent uneasiness for civilian fund managers to undertake profiteering concessions because it will ultimately put his career and personal being in bewilderment. Truth of the matter why immoral profiteering scheme in the AFP thrives is a conscientious authorization of the Generals themselves in implementing such modus operandi! In other words, creating an independently managed finance unit for every branch of service automatically prevents immoral wheeling and dealing schemes.

ONE CLASSIC EXAMPLE OF AFP LEADERS’ STUPIDITY IS THE APPROVED DISPOSITION FORM (DF) OF THE FAMOUS MGEN CARLOS GARCIA AS THE CHAIRMAN OF THE BOARD ON THE ABOLITION OF CO-MAKERS IN ALL LOAN TRANSACTIONS OF AFP PERSONNEL DATED JULY 2003. BUT UNTIL TODAY, LOAN SHARKS ARE STILL IMPLEMENTING SUCH SCHEME IN VIOLATION TO THE APPROVED AFP MESSAGE. IS THIS A STATEMENT THAT THE AFP IS REALLY FUTILE IN IMPLEMENTING ITS OWN REGULATION TO PROTECT THE INTEREST OF THE LOWLY PAID SOLDIERS?

The second decade old but unnecessary practice is the guaranteed accumulation of interest yields from a mandatory monthly contribution of personnel like the Mutual Relief System (MRS) which were deposited thru a TIME DEPOSIT MODE, the automatic deductions like AFP QUARTERS deduction, PAFSFA (for PAF personnel), deliberate “over deductions” scheme where refunds can only be facilitated when the victim files for a complaint and so many more. In order to have better understanding on this simplification, let us again use common mathematical explanation on each of the stated mandatory deductions.

·          Mutual Relief System (MRS) – The MRS was designed to give financial assistance to the surviving spouse of every dead AFP personnel or AFP dependents. Recently, every surviving spouse is entitled for a financial endowment worth fifteen thousand pesos (P15,000) with a minimum automatic deduction of twenty pesos (P20). Now for the purpose of discussion, let us concentrate on this smallest automatic contribution (20 pesos) being deducted to each AFP member against the total AFP strength of 150,000 personnel.

150,000 personnel x 20 pesos per month x 12 months per year

150,000 x 20 x 12 = 36Million pesos total yearly contribution.

                Based on rough estimation as verbally supplemented by one of the Management & Fiscal Office (MFO, formerly Comptrollership Office) personnel, the yearly disbursal of funds for a deceased AFP member & dependents is only about 30% of the 36 Million yearly contributions or a conservative estimate of 10.8 Million pesos. In other words, the AFP organization is experiencing 720 death cases both for soldiers and dependents every fiscal year, which is not the case! So all in all, the AFP is actually maintaining an average of 22.2 Million pesos in its account. Assuming further that only 15 Million pesos are actually time-deposited at a rate of 5% per annum because the remaining 7 Million pesos were set aside for any unforeseen morale and welfare undertakings, it is therefore proper to conclude that the AFP Leadership is actually generating a paltry sum of P750,000 worth of return from the 5% interests of 15 Million pesos alone every year.

Rationally speaking, the initial 15 Million peso surplus being deposited will be doubled then tripled and much higher on the 2^nd, the 3^rd, the 4^th year of deposits respectively. In plain logic, the interest will be compounded every fiscal year thus yielding higher rate of return if the finance managers are not spending it outside of what has been prescribed. So the illustration will goes like this:

                @ 5% per annum with initial deposit of 15Million pesos.

                                1^st year   -               still on the process of collection, 0 interests.

                                2^nd year  -               15,000,000              x .05        =              750,000

                                3^rd year  -               15,000,000 + 15,000,000 (2^nd yr collection) + 750,000 (2^nd yr, int)

30,750,000              x .05        =              1,537, 500

                                4^th year  -               30,570,000 + 15,000,000 (3^rd yr collection) + 1,537,500 (3^rd yr, int)

47,287,500              x .05        =              2,364,375

                                5^th year  -               47,287,500 + 15,000,000 (4^th yr collection) + 2,364,375 (4^th yr, int)

64,651,875              x .05        =              3,232,593

                                6^th year  -               64,651,875 + 15,000,000 (5^th yr collection) + 3,232,593.75 (5^th yr, int)

                                                                                82,884,468              x .05       =              4,144,223

                                7^th year  -               82,884,468 + 15,000,000 (6^th yr collection) + 4,144,223 (6^th yr, int)

                                                                                102,028,691            x .05        =              5,101,434

                                8^th year  -               102,028,691 + 15,000,000 (7^th yr collection) + 5,101,434 (7^th yr, int)

                                                                                122,130,125            x .05        =              6,106,506

                                9^th year  -               122,130,125 + 15,000,000 (8^th yr collection) + 6,106,506 (8^th yr, int)

                                                                                143,236,631            x .05        =              7,161,831

                                10^th year                -               143,236,631 + 15,000,000 (9^th yr collection) + 7,161,831 (9^th yr, int)

                                                                                165,398,462 total surplus on the tenth year of MRS implementation.

If a 20-peso monthly automatic deduction yields 165.4 Million peso surplus in ten years of collection, then how much surplus can the AFP generate in the automatic deduction of AFP QUARTERS amounting to 650 pesos? Please continue reading AFP QUARTERS DEDUCTION!

·          AFP QUARTERS DEDUCTION – before we tackle on the merits of this issue, let it be known to all concern that “billeting” is always part of the infrastructural set up of the military organization and even other government organizations such as the Health organization, etc. You can never call it a “main” military camp if you only have a headquarters building in such a way that you cannot call it a hospital if you don’t have a doctors quarters and the like. Main military camp means major encampment where the center of decision making, limited maintenance facilities, logistical buildings and the workforces are located. Sample of which are Camp Aguinaldo, Villamor Air Base, Camp Evangelista, Mactan Air Base and many more. IT IS A BIG NO NO TO HAVE A MILITARY “MAIN” CAMP AND HAS NO BARRACKS (LIVABLE OF COURSE) TO OFFER FOR EVERY PHYSICALLY EXHAUSTED & FAMILY DETACHED SOLDIER!

So essentially, the purpose of giving QUARTERS ALLOWANCE to all military personnel is for them to have available cash on hand the moment they are outside of the military camps for official functions (covert operation especially) on top of the “operational fund support” or in plain Rest and Recreation circumstances. The closest rationale that can be driven out of this presumption is the nature of soldiers’ job which is always on mobile when the situation calls for it. Bringing of families inside camp is merely a case to case privilege being tendered to a particular military camp like the Air Force bases because Air Force equipment were always stationed in that particular base thus allowing Air Force personnel to be in one place in his (almost) entire military career. Of course, quarters’ deduction varies depending on the rank profile of concerned personnel. In the writer’s case, he has an automatic deduction of 650 pesos per month plus an OVERDEDUCTION of 500 pesos for the last two years. Said over deduction have been referred to the Office concern of the PAF but was not acted upon because of no written complaint filed. Well that’s another point of discussion in the succeeding part of this exposition. So just follow the illustration below:

                Let’s just presume the AFP is uniformly deducting 200 pesos quarters deduction to all AFP personnel regardless of its ranks despite knowing of the actual 650 pesos deduction from the author. Since AFP strength is 150,000 personnel, the total money being generated will just be negligible as shown below:

150,000 personnel x 200 pesos monthly deduction

= 30Million pesos per month or 360Million per year.

Granting that the AFP was not able to construct soldiers housing needs for the last ten years due to unavailability of funds from the national government then by start of fiscal year 2007, the AFP can perhaps construct dignified barracks to all military personnel who until are renting outside of camp because the collection alone without the compounded interests of time deposits is already equivalent to 3.6 Billion pesos (360 Million x 10 years). Is 3.6 billion pesos not enough for the housing needs of AFP personnel? As explained in AFP HOUSING web page, the AFP can actually construct these infrastructures with free or minimal labor costs because of its own and abundant human resource-engineers, architects, masons and pure laborers and most importantly is the huge number of idle heavy equipment in all AFP units!  

If we ridiculously submit ourselves to the Generals’ line of reasoning that there are no money available to construct soldiers housing unit, then what really happens to the negligible 3.6 billion pesos quarters deduction, the MRS contributions and the other automatic deductions? Even if the so called surplus is not invested to any “noble” businesses, the amount is still self sustaining so to speak!

The third institutional abuse employed at the finance centers is the “willful” over-deductions or non remittance of contributions against the armed but powerless military personnel except for the Generals of course! Below are the two actual examples occurred in the military life of LT POGOY.

a.        NON-REMITTANCE OF CONTRIBUTION- it was in his cadet days when then Cadet POGOY voluntarily applied for the “capital contribution” savings at AFPSLAI thru PAYSLIP DEDUCTION in the amount of Two thousand (2000) pesos. Considering that PMA is an institution teaching the cadets not to cheat, steal nor tolerate any wrongdoings, willful non-remittance of contribution is very much uncalled for especially when the said contributions are time-deposited to commercial banks whose interests are siphoned off nonetheless! It is very much disgusting to experience such because Officers assigned at Philippine Military Academy (MA6, comptrollership?) are expected to be incorruptible, honorable or simply say a corps of upright gentlemen worthy of emulation for the cadets’ overall transformation.

b.       OVER DEDUCTIONS – the term itself exemplifies unjustifiable confiscation of salaries which resulted to the soldiers’ further bankruptcy. How can a soldier benefit his hard earned salary when finance people automatically hacks an amount from the soldiers salary upon receipt of automatic deduction order for “prescriptive deductions” and wait for the injured party to file a written complaint before formal stoppage of over deduction is effected? Adding insult to injury, finance people automatically assures the victim that the money will not be lost because it will be refunded. The problem is that over deductions will only be refunded after one year of religious follow up because budget for that purpose will be taken from the succeeding budget allocation of the next fiscal year. So in the case of LT POGOY, he has an over deduction of 500 pesos for almost two years up to this date but still the finance office did not act on it due to the absence of written complaint despite his public appeal/pronouncement in two separate forums headed by MGEN DEYPALUBOS AND LTGEN REYES/MGEN CADUNGOG (my apology, sir) respectively to immediately stop all over deductions of all concerned personnel. In fact LT POGOY declared that he is no longer interested of the refund, he is just after of the immediate stoppage of over deductions not on his case alone but to all personnel affected by such intentional and irrational scheme. The bottom line of this generalization is still interest generation on the time-deposited accounts from over deductions. Just multiply a one shot over deduction of the 150,000 personnel at 500 pesos each the lowest deduction ever made.

150,000 AFP personnel x 500 pesos = 75,000,000 pesos

In other words, there is an instant capital of 75 Million pesos to be time deposited at commercial banks whose interest will automatically be subdivided to the incumbent military leaders and yet simple barracks requirement cannot be funded! What a shame Generals!

And to sum up all possible funds accumulated in the mentioned automatic deductions above alone:

FOR ONE MONTH ALONE!

                NON REMITTANCE           -               P2000 (150,000 AFP pers)    =              300,000,000 or 300 Million

                OVER DEDUCTION            -               P500 (150,000 AFP pers)      =              75,000,000 or 75 Million

                AFP QUARTERS                  -               P200 (150,000 AFP pers)      =              30,000,000 or 30 Million

                MRS                                        -               P20 (150,000 AFP pers)        =              3,000,000 or 3 Million

                LOAN PAYOLA                   -               P100 (150,000 AFP pers)      =              15,000,000 or 15 Million___  

A total of:              423 Million pesos              

Can we not see the difference now why military Generals are rich but an ordinary soldier remain impoverished after retirement? It was never heard that one retiring soldier (compulsory retirement) had been given extravagant retirement party like what all retiring Generals do!