AFP store quizzed on costly deals
COA wants the AFP Commissary and Exchange Service to explain P149.63-M purchases that it could have gotten at a cheaper amount

MANILA, Philippines – Why did a military store, which is supposed to sell goods at affordable prices to Armed Forces of the Philippines (AFP) personnel, enter into P149.63-M in transactions when it could have gotten cheaper deals?

The Commission on Audit (COA) wants to know, and is questioning the AFP Commissary and Exchange Service (AFPCES) for purchase orders with Puregold Junior Supermarket Inc in the first half of 2011. The transactions amounted to P149,626,306.50, based on COA’s review of the agency’s transactions.

COA said AFPCES could have bought goods, at cheaper amounts, directly from exclusive distributors or manufacturers.

This resulted in a double hit for the government because the latter had to pay value-added tax (VAT) for the grocery items on top of the middleman’s add-on cost, according to COA.

“Since e-VAT is shifted or passed on to the buyer, the AFPCES gets the burden of paying the additional tax passed on to Puregold from the manufacturers, but recovers the full amount of e-VAT from the AFPCES through the issuance of a TSAC, which the latter can use as tax credit to the disadvantage of the government,” COA said.

The tax subsidy was supposed to allow AFPCES to provide “quality merchandise goods and services at reasonably low prices to authorized customers,” such as military and civilian personnel of the AFP, retirees, widows and widowers of deceased soldiers, war veterans, and their families.

Another problem is that AFPCES allowed even unauthorized customers, or those who did not present official AFPCES purchase cards, to make purchases. The merchandise on display in various AFPCES outlets, COA added, did not bear a signage that says, “Tax subsidized by the Philippine government. Not for resale.”

“In the absence of said markings, there is a probability that the merchandise/goods purchased at AFPCES may be resold to other parties thus, the objective for which the tax subsidy was granted may not be achieved,” COA said.

The supplies AFPCES bought from Puregold included cheese, laundry detergent powder, biscuits, cookies, noodles, junk food, vinegar, soy sauce, ketchup, and fruit juice powder.

The P149.64-M purchases is only an initial sum based on records from January to June 2011, COA said. The total could be higher, it noted. –