The decision was linked to a dispute about a contract for warships.
The commander of the Philippine Navy was abruptly sacked on Tuesday in a surprise move which a legislator and news reports linked to a dispute about a contract for warships.
Vice Admiral Ronald Joseph Mercado was replaced by Rear Admiral Robert Empedrad in compliance with "the instructions from higher authorities", said military spokesman Colonel Edgard Arevalo.
"The reason for this change of command will be explained in due time," Arevalo said in a statement.
The navy spokesman, Captain Lued Lincuna, likewise referred queries about Mercado's sudden dismissal to "higher authorities".
Mercado was reassigned to a subordinate post.
The head of the Philippine military, as well as the army, navy and air force chiefs, are appointed by the president.
President Rodrigo Duterte, who was scheduled to speak at the military's 82nd anniversary on Wednesday, has not commented publicly on Mercado's dismissal.
House of Representatives member Gary Alejano, spokesman for a political party made up of former military rebels, called on Congress to launch a public inquiry into the navy chief's dismissal, which he described as "highly unusual and unceremonious".
"I suspect that this has something to do with the lingering issue of the Navy's frigate acquisition project," Alejano said in a statement.
The government last year signed a contract with South Korea's Hyundai Heavy Industries to build two frigates for the Philippine Navy.
Alejano said his party is aware Mercado had opposed the Hyundai deal, though the legislator gave no other details.
"This is an important issue considering that this involves around 18 billion pesos [$358 million] of the (military) modernisation fund," he added.
Media reports said Mercado had been critical of the "combat management system" that was to be installed in the warships.
The Philippine Navy has become run down in recent decades and even featured US craft from World War II until Duterte's predecessor Benigno Aquino begun a modest modernisation programme in 2010.
The project, which included acquiring two former US coast guard cutters and three landing craft from Australia, was prompted by a dispute with China over waters and islands in the South China Sea.
But Duterte has since backed away from asserting his country's maritime claims and focused on repairing ties with Beijing.