History of AFPCES
After the unceremonious closure of the AFP Exchange System, the services it used to provide the men-in-uniform spelled a great difference at the height of economic difficulties especially felt during the great flood of 1972.
While the Exchange System was basically deactivated, some subordinate post/base exchanges remained operational under a cooperative financial structure where its working capital were generated out of the individual contribution of soldiers within a given military facility. Despite its presence, it did not offer any significant price cushion to the deteriorating purchase power of the peso. Thus, the need to re-establish a similar system has become a major command concern for the benefit of the members of the Armed Forces.
Thus, the General Headquarters, AFP worked out for the establishment of an integrated commissary and exchange system to help alleviate the economic plight of the members of the AFP. The AFP Ladies Club acted vigorously for the approval of this proposal being primarily affected by the system’s absence. A lobby group was formed to undertake liaisoning with Malacañan, headed by Mrs Helen Espino. A series of proposals were made to the President of the Philippines and on 23 October 1972, Letter of Instruction 31 was issued directing the Philippine Veterans Bank to set aside Five Million Pesos (P 5M) from the retained earnings of the Veterans Claims Settlement Fund to be entrusted to the AFP Ladies Cooperative Store for the maintenance and operations of the commissaries and PX facilities nationwide. On 20 November 1972, LOI 31-A was issued amending the provisions contained earlier in LOI 31, placing therein at the disposal of the AFP Commissary and Exchange Service the amount earlier earmarked and entrusted to the AFP Ladies Cooperative Stores.
On 5 December 1972, the GHQ, AFP Staff Memorandum Number 05 was issued formally organizing AFPCES Council patterned after that of the defunct AFP Exchange System effective as of 01 November 1972. This is the forerunner of the present-day Board of Trustees.
On 20 December 1972, Presidential Decree Number 83 was issued providing that all purchases of AFPCES from local sources, manufacturers, suppliers and/or producers, intended for resale to its authorized customers shall be exempted from existing revenue laws and tax statutes.
AFPCES formally started its store operations on 15 January 1973 with an initial number of nine (9) commissary and exchange stores/outlets situated within military camps and bases in Greater Manila Area (GMA).
At this time, the operations and management of AFPCES were purely undertaken by military officers, supported by civilian employees and enlisted personnel. Under this set-up, the AFP Ladies Club acted in supervisory role over the system which was in effect performing the inherent functions similar to that of the present-day Board of Trustees.
On 1 July 1976, AFPCES was made as an AFP-Wide Support and Separate Unit pursuant to GHQ, AFP General Order Number 920. A Commander was designated as head of the unit but Mrs Helen Espino remained as the approving authority of all purchases and made as principal signatory to all AFPCES-issued checks.
On 12 July 1976, a Board of Trustees was established for AFPCES with a representative of the AFP Ladies Club as one of the members.
On 12 January 1979, the Chief of Staff, AFP turned over the management and operations of the stores to the AFP Ladies Club under Mrs Helen Espino. A Memorandum of Agreement was entered into by and between the AFP and the AFP Ladies Commissary and Exchange System, Inc. on 11 June 1980.
On 10 December 1981, the Minister of National Defense, Juan Ponce Enrile issued a memorandum to the Chief of Staff, AFP, stating among other things that the Memorandum of Agreement entered into by and between AFP and the AFP Ladies Commissary and Exchange System, Inc. did not bear the approval of the Minister of National Defense, a requirement of Section 568, Revised Administrative Code for validity of contract executed within the Defense Ministry, and should not have been therefore given legal force and effect.
Under this Memorandum, the Minister of Defense has directed that any and all authority given to the AFP Ladies Commissary and Exchange System, Inc. over the AFPCES as well as all the military support extended to it by virtue of the aforestated Memorandum of Agreement be terminated and active management and operations of existing commissary and exchange facilities be undertaken by the AFPCES which should be reorganized and strengthened to make it more responsive as a service unit of the AFP consonantly with the provisions of LOI No 31-A and PD No 83.
To implement this Ministry Memo, the Chief of Staff, GENERAL FABIAN C VER AFP has given the Commanding General of Civil Relations Service, AFP, BRIG GEN ALEXANDER FELIX AFP the following instructions:
1. The CG, CRS, AFP has been directed to take over the management and operations of AFPCES including all its assets and outlets/stores effective 12 December 1981.
2. Further, the CG, CRS, AFP was directed to immediately submit an implementing plan to attain the following objectives:
a. Nullification of the Memorandum of Agreement entered into by and between the AFP and the AFP Ladies Commissary and Exchange System, Inc. dated 11 June 1980.
b. Accounting of the P5M, including the interests and earnings, held in trust by the Philippine Veterans Bank for the operations and maintenance of the AFPCES, and all other AFPCES assets.
c. Determination of the corporate validity of all actions of the former Chairman of the Board/Administrator of the AFP Ladies Commissary and Exchange System, Inc.
d. Immediate return of all facilities and military and civilian personnel of the AFP as well as other support extended to the AFPCES by virtue of the aforementioned Memorandum of Agreement.
Appropriate and necessary measures were immediately taken by management to improve the systems and procedures in the general administration and operations of the Service. Particularly, the following were the significant accomplishments of the military management group under BGEN FELIX:
a. Adopted a policy of retrenchment and limited the number of positions of AFPCES civilian personnel to those which are absolutely necessary to the operations and management.
b. Improved the turnover rate of goods through adoption of better systems and procedures.
c. Introduced an inventory control system similar to the US Army and Air Force Exchange Service to minimize losses due to mismanagement.
d. Negotiated for more discount privileges from suppliers.
e. Initiated steps toward collecting accounts receivable and tax refunds.
f. Initiated a service-oriented training program for both military personnel and civilian employees.
It was during the administration of the military management group that significant reforms were vigorously initiated leading towards the meteoric rise in its sales performance and development of its systems into the present-day chain of supermarkets from the mere “Sari-sari” type of operations.
On 15 Oct 1984, AFPCES tax exempt privilege was withdrawn by virtue of PD 1955.
On Dec 1986, Executive Order Nr 76 restored AFPCES tax exempt privilege.
On 26 Feb 1987, General Order Nr 138 was issued activating AFPCES as a regular unit of General Headquarters, AFP effective 31 January 1987 pursuant to approved AFP Table of Distribution and Allowances (TDA) Nr G40-3 dtd 31 January 1987.
On July 1989, the Fiscal Incentives and Review Board (FIRB) of the Department of Finance withdrew AFPCES’ tax exemption privilege but instead granted an initial 50 million peso subsidy effective 01 Jan 1990.
On 26 December 1997, then President Ramos issued Administrative Order Nr 372 which suspended all tax subsidy to all government owned and controlled corporations and local government units. This order also included AFPCES.
After the unceremonious closure of the AFP Exchange System, the services it used to provide the men-in-uniform spelled a great difference at the height of economic difficulties especially felt during the great flood of 1972.
While the Exchange System was basically deactivated, some subordinate post/base exchanges remained operational under a cooperative financial structure where its working capital were generated out of the individual contribution of soldiers within a given military facility. Despite its presence, it did not offer any significant price cushion to the deteriorating purchase power of the peso. Thus, the need to re-establish a similar system has become a major command concern for the benefit of the members of the Armed Forces.
Thus, the General Headquarters, AFP worked out for the establishment of an integrated commissary and exchange system to help alleviate the economic plight of the members of the AFP. The AFP Ladies Club acted vigorously for the approval of this proposal being primarily affected by the system’s absence. A lobby group was formed to undertake liaisoning with Malacañan, headed by Mrs Helen Espino. A series of proposals were made to the President of the Philippines and on 23 October 1972, Letter of Instruction 31 was issued directing the Philippine Veterans Bank to set aside Five Million Pesos (P 5M) from the retained earnings of the Veterans Claims Settlement Fund to be entrusted to the AFP Ladies Cooperative Store for the maintenance and operations of the commissaries and PX facilities nationwide. On 20 November 1972, LOI 31-A was issued amending the provisions contained earlier in LOI 31, placing therein at the disposal of the AFP Commissary and Exchange Service the amount earlier earmarked and entrusted to the AFP Ladies Cooperative Stores.
On 5 December 1972, the GHQ, AFP Staff Memorandum Number 05 was issued formally organizing AFPCES Council patterned after that of the defunct AFP Exchange System effective as of 01 November 1972. This is the forerunner of the present-day Board of Trustees.
On 20 December 1972, Presidential Decree Number 83 was issued providing that all purchases of AFPCES from local sources, manufacturers, suppliers and/or producers, intended for resale to its authorized customers shall be exempted from existing revenue laws and tax statutes.
AFPCES formally started its store operations on 15 January 1973 with an initial number of nine (9) commissary and exchange stores/outlets situated within military camps and bases in Greater Manila Area (GMA).
At this time, the operations and management of AFPCES were purely undertaken by military officers, supported by civilian employees and enlisted personnel. Under this set-up, the AFP Ladies Club acted in supervisory role over the system which was in effect performing the inherent functions similar to that of the present-day Board of Trustees.
On 1 July 1976, AFPCES was made as an AFP-Wide Support and Separate Unit pursuant to GHQ, AFP General Order Number 920. A Commander was designated as head of the unit but Mrs Helen Espino remained as the approving authority of all purchases and made as principal signatory to all AFPCES-issued checks.
On 12 July 1976, a Board of Trustees was established for AFPCES with a representative of the AFP Ladies Club as one of the members.
On 12 January 1979, the Chief of Staff, AFP turned over the management and operations of the stores to the AFP Ladies Club under Mrs Helen Espino. A Memorandum of Agreement was entered into by and between the AFP and the AFP Ladies Commissary and Exchange System, Inc. on 11 June 1980.
On 10 December 1981, the Minister of National Defense, Juan Ponce Enrile issued a memorandum to the Chief of Staff, AFP, stating among other things that the Memorandum of Agreement entered into by and between AFP and the AFP Ladies Commissary and Exchange System, Inc. did not bear the approval of the Minister of National Defense, a requirement of Section 568, Revised Administrative Code for validity of contract executed within the Defense Ministry, and should not have been therefore given legal force and effect.
Under this Memorandum, the Minister of Defense has directed that any and all authority given to the AFP Ladies Commissary and Exchange System, Inc. over the AFPCES as well as all the military support extended to it by virtue of the aforestated Memorandum of Agreement be terminated and active management and operations of existing commissary and exchange facilities be undertaken by the AFPCES which should be reorganized and strengthened to make it more responsive as a service unit of the AFP consonantly with the provisions of LOI No 31-A and PD No 83.
To implement this Ministry Memo, the Chief of Staff, GENERAL FABIAN C VER AFP has given the Commanding General of Civil Relations Service, AFP, BRIG GEN ALEXANDER FELIX AFP the following instructions:
1. The CG, CRS, AFP has been directed to take over the management and operations of AFPCES including all its assets and outlets/stores effective 12 December 1981.
2. Further, the CG, CRS, AFP was directed to immediately submit an implementing plan to attain the following objectives:
a. Nullification of the Memorandum of Agreement entered into by and between the AFP and the AFP Ladies Commissary and Exchange System, Inc. dated 11 June 1980.
b. Accounting of the P5M, including the interests and earnings, held in trust by the Philippine Veterans Bank for the operations and maintenance of the AFPCES, and all other AFPCES assets.
c. Determination of the corporate validity of all actions of the former Chairman of the Board/Administrator of the AFP Ladies Commissary and Exchange System, Inc.
d. Immediate return of all facilities and military and civilian personnel of the AFP as well as other support extended to the AFPCES by virtue of the aforementioned Memorandum of Agreement.
Appropriate and necessary measures were immediately taken by management to improve the systems and procedures in the general administration and operations of the Service. Particularly, the following were the significant accomplishments of the military management group under BGEN FELIX:
a. Adopted a policy of retrenchment and limited the number of positions of AFPCES civilian personnel to those which are absolutely necessary to the operations and management.
b. Improved the turnover rate of goods through adoption of better systems and procedures.
c. Introduced an inventory control system similar to the US Army and Air Force Exchange Service to minimize losses due to mismanagement.
d. Negotiated for more discount privileges from suppliers.
e. Initiated steps toward collecting accounts receivable and tax refunds.
f. Initiated a service-oriented training program for both military personnel and civilian employees.
It was during the administration of the military management group that significant reforms were vigorously initiated leading towards the meteoric rise in its sales performance and development of its systems into the present-day chain of supermarkets from the mere “Sari-sari” type of operations.
On 15 Oct 1984, AFPCES tax exempt privilege was withdrawn by virtue of PD 1955.
On Dec 1986, Executive Order Nr 76 restored AFPCES tax exempt privilege.
On 26 Feb 1987, General Order Nr 138 was issued activating AFPCES as a regular unit of General Headquarters, AFP effective 31 January 1987 pursuant to approved AFP Table of Distribution and Allowances (TDA) Nr G40-3 dtd 31 January 1987.
On July 1989, the Fiscal Incentives and Review Board (FIRB) of the Department of Finance withdrew AFPCES’ tax exemption privilege but instead granted an initial 50 million peso subsidy effective 01 Jan 1990.
On 26 December 1997, then President Ramos issued Administrative Order Nr 372 which suspended all tax subsidy to all government owned and controlled corporations and local government units. This order also included AFPCES.