COA hits unauthorized deductions from Navy men’s salaries

/ 02:07 PM June 27, 2017
Commission on Audit


The Commission on Audit (COA) has called out the Philippine Navy Financial Center (PNFC) for virtually acting as a collecting agent of private lending firms and making unauthorized deductions from the salaries of military personnel.

In its audit report for 2016, the COA recommended that the PNFC stop salary deductions made in favor of unaccredited private associations and adjust the salary deductions so as not to eat up too much of the personnel’s take-home pay.


The COA took note of the PNFC’s effort to deduct the personnel’s obligations to unaccredited financial institutions. “In effect, the PNFC is undertaking the collection function, resulting to loss of government time and resources,” the report read.

Some employees’ net take-home pay have fallen below the P3,500 minimum set by the General Appropriations Act of 2016. A review of the civilian payroll for the first three months of 2016 showed that hundreds of employees received net take-home pay ranging from P2,316 to P3,488.77.


Out of the 68 entities listed in the Navy’s Authorized Payroll Deduction System (APDS), the COA said only seven were accredited by the Armed Forces of the Philippines-Financial Institution Accreditation Board (AFP-FIAB). The others were included “by accommodation.”

The report noted that Section 52 of the 2016 budget law only allowed salary deductions for taxes and social insurance, savings and loans associations managed by government employees, government financial institutions, licensed insurance companies, and accredited thrift banks and rural banks.

“The inclusion of unaccredited entities as beneficiaries of the APDS resulted in unnecessary loss of government time and resources that could have been avoided had the CPMU asserted its right of refusal of accommodating associations that were not accredited into the APDS,” the COA said.

The COA added that the PNFC has not collected service fees for transactions in behalf of unaccredited agencies because of the absence of any memoranda or agreement with the lending firms.

“PN was not compensated for the time and resources lost in processing FIs transactions and the government was deprived of the income that could have been used for other beneficial purposes,” it noted. CBB/rga

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