Shouldn't the Philippines repeal the "60/40 Law" (and change its Constitution) to encourage investments?

Dear Filipino,

The Philippines cornered the least amount of foreign direct investments among seven selected economies in Southeast Asia in 2009, according to the International Monetary Fund (IMF) in its first global survey on FDIs. On a global scale, the Philippines ranked 60th out of 72 countries included in the Coordinated Direct Investment Survey.

Question: Considering that investments are needed to bolster economic growth -- e.g., $10B for infrastructure alone -- how should the Philippines become more investor friendly? How about repealing the 60/40 Law? This is one scuttlebutt that is impeding investors from coming in!

Mike T.

Dear Mike,

What prompted a guy like you with a “harvard.edu” email handle to ask a lowly blogger like me? Aren’t you guys supposed to hail from the “Know-it-all Capital of the Universe”?

Just a little good-natured ribbing there, of course. ;-)

Anyway, thanks for your question, but the “60/40 Law” you’re asking about is actually part of a HUGE issue that I really want to talk about with more breadth here. [For readers looking for more depth on a particular legal sub-issue, I recommend approaching knowledgeable legal professionals practicing in the Philippines.]

First, some Philippine constitutional background.

Under the heading “National Economy and Patrimony,” Section 1 of Article XII of the Philippine Constitution provides:

The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising the quality of life for all, especially the underprivileged.

The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices.

In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. Private enterprises, including corporations, cooperatives, and similar collective organizations, shall be encouraged to broaden the base of their ownership.

I added the italicization in the indented paragraphs above because I found those blurbs very admirable and impressive-sounding. And if the drafters of the Constitution really meant what they wrote, let’s give them some credit. Unfortunately however, when it comes to formulating laws in accordance with lofty stated policies, negative unintended consequences always pose a risk; in the Philippines, this problem becomes even more compounded by problems stemming from implementation.

So let’s talk about the main implementing law behind the constitutionally sanctioned policy of protecting local industry from “unfair foreign competition”: The Foreign Investments Act (FIA) of 1991 (as amended).

The FIA requires “the formulation of a regular Foreign Investment Negative List [FINL] covering investment areas/activities which may be opened to foreign investors and/or reserved to Filipino nationals.”

If you’re a “former Filipino” and now a citizen of another country and you haven’t yet gotten your dual citizenship or reclaimed your Filipino citizenship, you may want to pay particular attention to this “FINL.” This “negative list” is really a list of occupations, trades and investments where foreign participation is either limited or off-limits altogether. So if you are harboring any dream of someday going back to the Philippines to practice your trade, set up a sari-sari store or other small business, or invest, this list is very important to you.

Subject to all sorts of exceptions and asterisks which I won’t discuss here, the latest “negative list” under Executive Order No. 858 signed in 2010 includes the following:

I.  No Foreign Equity Allowed: Mass media (except recording); practice of all professions (engineering, medicine and allied professions, accountancy, architecture, criminology, chemistry, customs brokerage, environmental planning, forestry, geology, interior design, landscape architecture, law, librarianship marine deck/engine officers, master plumbing, sugar technology, social work, teaching, agriculture, fisheries, and guidance counseling); retail trade enterprises with paid-up capital of less than US$2.5M; cooperatives; private security agencies; small-scale mining; utilization of marine resources; ownership, operation and management of cockpits; manufacture, repair, stockpiling and/or distribution of nuclear weapons; manufacture, repair, stockpiling and/or distribution of biological, chemical and radiological weapons and anti-personnel mines; and manufacture of firecrackers and other pyrotechnic devices.

II.  Up to 20% Foreign Equity Allowed: Private radio communications.

III.  Up to 25% Foreign Equity Allowed: Private recruitment, whether for local or overseas employment; contracts for the construction and repair of locally-funded public works; contracts for the construction of defense-related structures.

IV.  Up to 30% Foreign Equity Allowed: Advertising.

Now, here’s where the term “60/40 Law” got coined:

V.  Up to 40% Foreign Equity Allowed: Exploration, development and utilization of natural resources; ownership of private lands; operation and management of public utilities; ownership, establishment and administration of educational institutions; culture, production, milling, processing, trading excepting retailing, of rice and corn and the by-products thereof; contracts for the supply of materials, goods and commodities to government-owned or controlled corporation, agency or municipal corporation; project proponent and facility operator of a BOT project requiring a public utilities franchise; operation of deep sea commercial fishing vessels; adjustment companies; ownership of condominium units; manufacture, repair, storage, and/or distribution of products and/or ingredients requiring Philippine National Police (PNP) or Department of National Defense (DND) clearance; manufacture and distribution of dangerous drugs; sauna and steam bathhouses, massage clinics and other like activities; all forms of gambling; domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000; domestic market enterprises which involve advanced technology or employ at least fifty (50) direct employees with paid-in-equity capital of less than the equivalent of US$100,000.

VI. Up to Sixty Percent (60%) Foreign Equity Allowed: Financing companies and investment houses regulated by the SEC.

Quite understandably, the restrictions are based on the premise that it is in the country’s best interests for these areas of concern to remain under the control of Filipino citizens and/or Filipino corporations.

And I for one think the premise makes some sense. A lot of countries, even the most advanced ones, also have some very restrictive laws about who can own what in order to protect their national interests. That’s why you have members of the US Congress intervening and threatening legislative action whenever a Chinese company is rumored to acquire a key American company. That’s why Scandinavian countries have very strong key local industries largely protected from foreign competitors.

When I was living in London in the middle of the last decade, a common refrain from locals, whether homeowner or renter, was the cost of housing. Why? Because wealthy foreigners from Arab states, among others, were gobbling up properties left and right, thereby driving up prices to levels completely out of reach for the locals.

We don't want that to happen in the Philippines, of course. But the problem with the Philippine situation, as you can see, is that the “negative list” is pretty broad-based and leaves little room for foreign professionals and investors to actively participate in the Philippine economy -- the kind of participation which may be necessary to globalize the country’s industries and spur economic growth.

This inevitably brings up the question of whether the law is indeed serving the country and its citizens as intended.

In one study about competitiveness of countries in attracting foreign investments, the Philippines did not only rank at the bottom – 6th out of the ASEAN-6 – in having a favorable regulatory regime, its score is not even close to its nearest competitor, Indonesia:

(Source: InvestPhilippines)

So while I am not in favor of completely doing away with the whole list, what I’m in favor of is a systematic, intensive but expeditious review of the list to see which areas have restrictions that need to be maintained and which areas can and should be fully liberalized, and thereafter a quick governmental action to effect the necessary changes. Although politically messy, this “action” will need to come in the form of Charter Change – there appears to be no getting around to it – if we must revamp the current law.

And revamp it we really must.

Why? Now, I know this is serious stuff but in honor of a favorite comedian, David Letterman, whose show, Late Night with David Letterman, officially debuted on February 1, 1982, let me present to you my...

Top 10 Reasons to Revamp the Philippines’ Foreign Investments Act:

[10] Lack of control over their investment understandably discourages foreign investors.

The restrictions mentioned above are the biggest barriers to foreign investments in the Philippine economy. It’s a fairly simple calculus really: When foreign investors are faced with a choice to put their money in two countries where risks are almost identical but where one country requires majority control to be in the hands of the locals, investors would naturally choose the other country which allows them to determine what happens exactly with their funds.

[9] The amount of available local capital is insufficient to meet the national demand for it.

It is no secret that many of the infrastructure-related projects needed by the country require billions of dollars in funding and that the available free capital among the local investors is simply not sufficient to meet the demand. In fact, it is impossible to meet the demand if the country will just rely on local capital, period.

How can it be possible? As of end-2010, the total stock market capitalization of the entire Philippine Stock Exchange (which means all the companies listed in the country’s stock market) is only PHP 8.87 trillion. This figure translates to just about US $200B, a sum not even 65% of the present market capitalization of one US company, Apple, Inc.  Put another way, the owners of Apple can swap the company with all the companies listed in the Philippine stock market and still have about $100B left.

[8] There is a shortage of actual companies/individuals who can partner with foreigners willing to invest.

Not only is the actual amount of local capital insufficient, but the list of actual Philippine companies and/or individuals who may have the wherewithal to partner with willing foreign investors is also short. Who among the locals can pony up the required 60% in big capital-intensive projects to allow them to serve as joint venture partners of foreign investors willing to enter the Philippine market? Thus, because of the current law, the legal ability of a foreign investor to fund a project is limited by the amount raised by his local partner.

To illustrate, let’s say a restricted project costs $100. Even if a foreign investor can put up the maximum allowed by law – i.e., $40 -- the law still requires his Filipino partner to come up with the other $60. If the Filipino can only raise $30, the maximum the investor can bring in is $20, not $70, leading to the collapse of the joint venture, or the project altogether. Where the project survives, the shortcuts taken to comply with the funding requirements naturally affect the quality of the finished project.

[7] The current law allows the local oligarchs to have their choicest pickings because of limited competition.

In her book 2003 book "World on Fire" (excerpted in a Prospect Magazine essay entitled "Vengeful Majorities"), Prof. Amy Chua wrote: “When foreign investors do business in the Philippines, they deal almost exclusively with Chinese” because “[a]part from a handful of corrupt politicians and a few aristocratic Spanish mestizo families, all of the Philippines’ billionaires are of Chinese descent.”

It’s true: If you’re a Chinese Filipino oligarch in the Philippines, the deals are literally walking to your doorsteps and lining up for your review. But the main reason for that is this 60/40 Law, whose provenance, interestingly enough, can be traced back to American Commonwealth times. Because the Chinese Filipino oligarchs who dominate the Philippine economy are the ones with the funds who can put up the required “Filipino” capital investment, naturally, foreign investors who want to come in are forced to approach them first for partnership possibilities, or the foreigners can’t come in at all.

This dynamic allows these oligarchs to have first crack at studying investment options as to where they can put their money. And with the limited competition, they are almost assured of hefty returns, thereby further concentrating wealth among the handful of them. In fact, in some situations where there is virtually no competition, it is easy to imagine how foreign investors and their local oligarch partners can even practically hold the Philippine government hostage and make it agree to concessions and guarantees that virtually eliminate risk for the investors.

[6] Inflexibility of equity-sharing encourages corruption and other law-breaking (e.g., use of “dummies,” etc.).

In an environment already rife with political corruption, the restrictions placed on foreign investors and their Filipino partners which limit allowable equity structures further stoke law-breaking, bribery and corruption.

A common tactic to get around the restrictions on equity participation is the use of “dummy” Filipino partners. Here, the local partners (often, the oligarchs mentioned above) “own” 60% of the entire venture on paper but the project is, in actuality, mostly (if not fully) funded, operated and managed by the foreigners despite their being just “minority” partners. This type of situation leaves projects vulnerable to extortion from regulators who learn about these arrangements, abuse by one partner over the other just to maintain the front of a legally compliant partnership, or worse, the collapse of the project altogether and ugly lawsuits thereafter.

There is an “Anti-Dummy Law” to counter the use of dummies, but because of inconsistent and/or lack of adequate supervision and enforcement, it appears to an outside observer to be often largely ignored.

[5] Cumbersome compliance issues lead to legal maneurings which may not be compliant with the spirit of the law and just add friction to what can otherwise be a smooth transaction.

The law has led to all sorts of legal squabbles including the most basic: What does “Filipino” mean? In areas reserved to Filipino citizens or domestic corporations whose capital is at least 60% owned by Filipinos, the “Filipino” classification is critical, as shown by the PIATCo-Fraport AG airport controversy where one of the main issues is whether there were violations of the Anti-Dummy Law.

The Philippine Department of Justice has adopted the “control test” in establishing the nationality of corporate stockholders covered by the law: If at least 60% of the corporate capital is owned by Philippine citizens, all the corporate shares, including those owned by foreigners, are considered Filipino. But if the percentage of Filipino ownership goes below 60%, only the number of shares that corresponds to that percentage is treated as Filipino. In other words, if one can show that at least 60% of the capital is owned by Filipinos, no further inquiries are made on the nationality of the owners of the remaining 40%. This means that when this ownership-restricted corporation invests in another ownership-restricted corporation, the investing corporation is treated as a “Filipino” investor.

Now, compare this test from the “grandfather rule,” which is still followed in some instances. Under this rule, the nationality of the individual stockholders or the owner of the stocks of the corporate shareholder affects the status of the restricted corporation in which the investment was made.

How to make sense of the two rules? According to SEC Commissioner Raul J. Palabrica, the current rule seems to be this: The "control test" is the main standard to determine the nationality of corporations but the "grandfather rule" will be applied if there are questions about compliance with Filipino ownership requirements.

One creative strategy to circumvent the ownership restrictions is the use of “global depository receipts” or GDRs in which investee companies would sell to foreign investors interest-bearing “depository receipts” using the stocks of the restricted investee companies as collateral.

Technically, the nationality rule is not violated because the stocks remain in the company’s name but the investors are assured of hefty returns on their investment without breaching the nationality rule. But it should be obvious that GDRs are, for all intents and purposes, “foreign investments” which should be covered under the nationality rule if the government is indeed serious about cracking down on these types of legal maneuvers which may be compliant with the letter of the law but not its spirit. Additionally, GDRs only increase the friction in business transactions for the companies trying to raise funds, adding unnecessary cost in terms of time and money to what would otherwise be simple transactions.

[4] Revamp of the law can increase the competitiveness of local industries and create jobs.

Foreigners are not only reluctant to invest their money if they do not have control, they are also concerned about intellectual theft if they are to divulge their corporate secrets to Filipino partners in a partnership where they are in the minority. This often entails their dialing back of their investment of intellectual capital in the form of industrial/product design, technology and market knowhow.

Allowing these profit-seeking foreigners to own their local subsidiaries outright 100% can translate to increased competitiveness for the local industries affected because the oligarchs who presently rule their industries will be forced to up their game. With increased competition, the affected industries will modernize, grow and, in the process, create jobs for locals.

[3] Revamp of the law can increase the country’s exports.

The current law is really anti-trade, and here’s why.

One way for the country to grow its export-oriented manufacturing industries is to enter into bilateral trade agreements (BTAs) with the right countries, especially with those whom the Philippines already enjoys robust trading. But the current law poses a hindrance to signing of BTAs because the Philippines’ counterparties will definitely demand preferential terms and more openness on the part of the country to allow investors from their countries to come in unencumbered by restrictive investment laws.

[2] The current law discourages even “former” Filipinos from investing or returning to the Philippines to set up their businesses or practice their professions.

While there is now a dual citizenship law which allows Filipinos who became naturalized citizens of other countries to reclaim their lost Filipino citizenship, many of them choose not to do so for various reasons. But because they are considered foreigners under the law, they are therefore prevented from setting up small businesses (e.g., retail trade enterprises less then $2.5M in capital; see the list above) under their own name and/or practice their professions in the Philippines. This is unfortunate considering these “former” Filipino professionals have much to share with the land of their birth, having learned immensely from their exposure in globalized and highly competitive industries all over the world.

[1] To retain the current law is to maintain the status quo.

‘Nuff said.

Got a question for The Filipino?  Email him now at askthepinoy@gmail.com.

Feature Post: What are the pros and cons of dual citizenship?

Dear Filipino,

Do you know the history of the enactment of the Philippine Law that allows former Filipino Citizens to reacquire their lost Philippine citizenship? Is there any group or individuals who lobbied for the passage of the law, be it in the Philippines or abroad? Please explain the benefits or disadvantages of the Philippine Dual Citizenship law. Thank you.

Always a Filipino

Dear Always,

This is a very good question and I want to give that extra effort to answer this.  The reason for this is because I really haven’t seen a comprehensive discussion of the Philippine Dual Citizenship law anywhere, especially the pros and cons part, to enable folks to make an educated decision.

In any case, since your question touches on some legal issues, first things first.

DISCLAIMER: The material presented herein [not just in this blogpost but the entire blog!] is intended for information purposes only.  It is not intended as professional advice and should not be construed as such.  The services of a competent professional should be sought if legal or other specific expert assistance is required.  Any unauthorized use of material contained herein is at the user’s own risk.  Transmission of the information and material herein is not intended to create, and receipt does not constitute, an agreement to create an attorney-client relationship with that good-looking sample of the human specie otherwise known as The Filipino who is licensed to practice law in California but not in the Philippines or anywhere else.

Additionally, please note that while most of the discussion here applies to all Filipinos -- or should I say ex-Filipinos? -- regardless where they got their foreign citizenship, some parts of the discussion here are US-specific.

With the above out of the way, we can now begin.

I.  Overview

Citizenship is commonly defined as “the state of being vested with the rights, privileges, and duties of a citizen,” who is “a native or naturalized member of a state or other political community.”  It is widely believed that the concept was first introduced to the West by the ancient Greeks who implemented it in small communities and who distinguished their citizens from the non-citizens – i.e., the slaves, the “barbarians” and the women.  It was then expanded by the ancient Romans to cover their entire empire and in so doing legitimize their rule over their conquered territories, and further refined by the French, who, by staging the French Revolution, did away with a “caste system” for their citizens so that the commoners would have the same rights as the nobles.

The modern concept of citizenship has of course developed further, and countries and supranational entities (e.g., the European Union with their concept of an EU citizen) are up to now still debating related matters.  Complicating things a bit is the issue of citizenship versus nationality: The former is deemed “more exclusive” while the latter is afforded those people from colonial territories who do not enjoy all citizenship rights.  (Because of the size of the former British Empire, the UK has probably the most interesting and most confusing citizenship and nationality laws.  When I was living in London, I was surprised to find out a very long list of qualified Commonwealth citizens hailing from about 50+ countries who are entitled to register to vote if they meet certain requirements.)

There is no uniform rule of international law relating to the acquisition of citizenship and an individual may actually acquire multiple citizenships by automatic operation of law of the relevant countries.  For instance, a person may acquire multiple citizenships through (a) the jus soli principle (“right of soil” or citizenship by virtue of just being born in the nation’s territory like what the US famously has); (b) the jus sanguini principle (“right of blood” or citizenship based on ancestry); (c) marriage; (d) the process of naturalization; (e) his country's membership in supranational communities or signing of treaties (i.e., some countries have dual citizenship agreements with other countries).

II.  The Philippine Experience With Dual Citizenship

Because the Philippines was a US territory during the period starting in 1898 when the US bought the country from Spain until 1946 when the US granted it independence, all Filipinos were considered US nationals but were never US citizens.  This meant Filipinos could go in and out of the US, reside and work without restrictions, but not vote or hold elective office.  Citizens of Puerto Rico -- which is also a former Spanish colony which was acquired by the US in the same deal with Spain in 1898 -- were in the same position until 1917 when they were collectively made US citizens as a result of the Jones-Shafroth Act passed by the US Congress.

The Commonwealth period was the closest Filipinos got to enjoying dual citizenship as an entire group of people, and nothing comes even close to that period.  The new legal regime currently in place in the Philippines is at best a distant second in terms of substance.

This newly established legal regime is due in no small measure to the Marcos dictatorship.  According to Prof. E. San Juan, Jr. of Washington State University: “There was no real Filipino diaspora before the Marcos dictatorship in the 1970s and 1980s.  It was only after the utter devastation of the Philippines in World War II, and the worsening of economic and political conditions in the neo-colonial set-up from the late 1960s to the present, that Filipinos began to leave in droves.”  This development led Marcos to sign the Balikbayan Act in 1973 (Presidential Decree 185), which allowed “a natural born citizen of the Philippines who has lost his Philippine citizenship to be a transferee of private land, for use by him as his residence.”  The law also gave legal status to balikbayans as “returnees” or “people coming back home” to the country, and became the foundation moving forward for giving other benefits and privileges to the balikbayans not otherwise available to ordinary travelers.

But the strongest push for dual citizenship actually came from anti-Marcos activists based in the US, which was home to the exiled family of Ninoy Aquino, the father of the sitting president.  The need for the law became especially manifest when Marcos fell and US-based supporters of the new administration wanted some say in the running of the country without having to give up newly acquired citizenship rights in the US.  According to a SF-based community leader, Rodel E. Rodis:

After fighting Marcos and martial law from within the United States until People Power ended the dictatorship in 1986, we wanted the right to vote in Philippine elections and the right to be dual citizens which people in more than 100 other countries enjoy.  We were affected by the corrupt leaders elected in the Philippines which our taxes also paid to support, all without having a say in the election of that government.

Overseas-based Filipinos and organizations worldwide rallied to the cause and lobbied Philippine politicians through letters, phone calls and personal visits to pass laws on dual citizenship and overseas voting.  One of the most notable of these individuals is Rene Pascual, who, when he became president of the California Chapter of the Integrated Bar of the Philippines in 1998, tirelessly made it almost a personal mission for his organization to lead the push for the passage of said laws. [EDIT 1/12/2011.]

III.  The Passage of the Laws: The OAVA and CRRA

But as Rodis would note, from that fateful day in 1986, it would take “five Congresses, four Presidents, 64 filed absentee voting bills and 16 long years before the Philippine Congress finally passed the Overseas Absentee Voting Act, officially known as Republic Act [RA] 9189, on February 13, 2003.”

Even after passage of the new law, however, a provision under Section 5(4), which came to be seen as a “poison pill,” required overseas Filipino voters to sign an “Affidavit of Intent to Return” to the Philippines to live there permanently after three years, with threat of sanctions if they don’t.  Predictably therefore, few took advantage of the new law.  (Representative Teddy Locsin, who was responsible for inserting the dreaded provision, supposedly promised to author a bill removing the same from the Act.)

Shortly after passage of RA 9189, in August of 2003, then-Senate President Franklin Drilon successfully pushed for the passage of RA 9225 or the Citizenship Retention and Re-acquisition Act of 2003, hoping the bill would bring in investments and other benefits from hyphenated Filipinos based abroad.  Known popularly as the Dual Citizenship Law, it grants natural-born Filipinos (i.e., citizens of the Philippines from birth who do not have to perform any act to acquire or perfect their Philippine citizenship) who have lost their Filipino citizenship through naturalization in a foreign country the opportunity to retain or reacquire their Filipino citizenship.  The bill seeks to revise the decades-old law which mandated that natural-born Filipinos who become naturalized citizens of another country automatically lose their Philippine citizenship.

In other words, from August 2003 onwards, a natural born Filipino who becomes a naturalized citizen of another country is deemed not to have lost his/her citizenship under the provisions of the new law.  On the other hand, one who lost his Filipino citizenship prior to August 2003 has the opportunity to reacquire it without having to renounce his present foreign citizenship, in a way leaving the decision to foreign courts to determine what the impact is on the foreign citizenship of the individual who decided to reacquire his Filipino citizenship.

IV.  The Good: The Benefits of Reacquiring Philippine Citizenship

Individuals who reacquire Filipino citizenship under RA 9225 may once again enjoy the bundle of civil and political rights afforded all other Filipino citizens under Philippine laws, as follows:

(a)  Right to own real property in the Philippines

This is probably the most tangible, immediate, and for some, most important, impact of the new law because the Philippine Constitution prohibits foreigners from owning any form of real property in the Philippines.  While there are privileges granted to foreigners or former Filipinos as far as property ownership is concerned, these privileges are more restricted and the laws can be quite complicated. This is why before passage of the law, folks who were not Philippine citizens were generally holding titles in the name of a family member, friend or business partner – i.e., a “dummy.”

(b)  Right to engage in business and/or practice one’s profession

Many industries and lines of work in the Philippines are reserved only for Filipinos -- e.g., engaging in retail and media businesses, in professions that require a license to practice, etc.  So for former Filipinos who want to retire in the Philippines and open up a small business/office, dual citizenship has a huge benefit.

(c)  Right to travel with a Philippine passport

You’re probably asking, “If I have a blue passport (US) already, what use is the Philippine passport?” Well, not much unless you want to (1) stay indefinitely, (2) look for work, or (3) get an education in the Philippines.  The last two reasons may not be a bad idea: The Philippines is enjoying a lower unemployment rate than the US and with the high cost of college education in the US, many US-based parents have been opting to send their kids to school in the Philippines instead.

Additionally, a Philippine passport allows the holder to travel to member-nations of the ASEAN without a visa. [EDIT 1/12/11.]

(d)  Right to have citizenship benefits extend to one’s spouse/children

A Filipino citizen’s foreign spouse may be issued an immigrant visa which entitles the spouse to reside permanently in the Philippines.  If the citizen’s children are unmarried and below 18 years of age upon reacquisition of Filipino citizenship, they are also automatically awarded Filipino citizenships.

(e)  Right to vote in Philippine elections

Following the suit filed by well-known Fil-Am businesswoman, community leader and philanthropist Loida Nicolas Lewis in 2006, the Philippine Supreme Court held that dual citizens need not establish residence in the Philippines to be able to register as an absentee voter under RA 9189.

However, from what I gathered, the “Affidavit of Intent to Return” mentioned earlier is still a requirement in order to register, although there are plans to scrap it already as mentioned above.  I've heard folks from the Philippine embassies/consulates are downplaying the impact of this requirement, but if you are a Filipino immigrant in the US who is not a US citizen yet, do NOT execute this affidavit as it can be deemed contrary to US residency requirements, unless of course you do plan to go back already to the Philippines within the required period.

Not eligible for this right to vote are those candidates for or are occupying any public office in the country where they are naturalized citizens, or those who are in active service as commissioned or non-commissioned officers in the armed forces of the country where they are naturalized citizens.

(f)  Right to hold public office

After reacquiring Filipino citizenship, one can seek and, if elected, hold public office in the Philippines as long as he meets the required qualifications AND at the time of filing his certificate of candidacy -- note closely now – he makes a personal and sworn renunciation of any and all of his foreign citizenships before an authorized public officer.

Now, note that the requirement is a bit lower for the individual appointed to a public office. While a person with multiple citizenships who run for public office must renounce his foreign citizenships, the person appointed to a public office only needs to make a sworn renunciation of the oath of allegiance to the country he took his oath.

V.  The Bad: The Disadvantages of Reacquiring Philippine Citizenship

Individuals planning to reacquire Filipino citizenship under RA 9225 run the following risks:

(a)  Possible denial of application for (or loss of existing) security clearance status

While dual citizenship based solely on one’s parents' citizenship or birth in a foreign country is not necessarily fatal, the active exercising of a non-US citizenship can cause problems.  Specifically, the US Department of Defense requires that “any clearance be denied or revoked unless the applicant surrenders the foreign passport or obtains official permission for its use from the appropriate agency of the United States Government."  I won't be surprised if there are similar provisions in other institutions, whether in the US or other countries.

(b)  Possible charges of dual citizen’s “divided loyalties”

This is not a big issue unless you’re planning to, say, run for office in the country of your foreign citizenship and your opponents find out about it, in which case you should expect to be called a citizen-with-a-ready parachute, a double-timer, a bigamist, a carpet-bagger, or, given the times, even a mole, a sleeper agent or a Manchurian candidate!  It’s not necessarily a candidacy-killer but it can make things, well, a lot tougher.

(c)  Benefits of citizenship may not be available to dual citizen in some situations

By reacquiring Philippine citizenship, the new dual citizen will owe allegiance to – and is obliged to comply with the laws and regulations of – the foreign country of his citizenship as well as the Philippines.  Although the dual citizen’s failure to fulfill his obligations to one country may pose no problems for him while he’s in the other country because the country adversely affected may have few ways (or find it cumbersome) to force him to comply under the circumstances, the same cannot be said if the person travels to the country affected and gets apprehended.  In that situation, because two countries both have a jurisdictional claim over the dual citizen, he may find that any relevant benefits of citizenship (e.g., diplomatic or consular protections) from the country not really affected by his non-compliant actions are now inaccessible to him.

VI.  And The Ugly? Nope -- Just Other Aspects to Consider

(a)  Income and property tax consequences

Note that Philippine taxation is based on where income is earned or where property is located, regardless of citizenship.  Thus, a person does not need to pay Philippine income tax for income earned abroad but does for income earned in the Philippines.  The same is true with property taxes: regardless of his citizenship, a person has to pay real property taxes if he owns real property in the Philippines.

Note also that while only incomes derived from the Philippines are subject to taxation by the Philippine government, in 1976, the Philippines and the US signed a treaty intended to avoid double taxation which provides that taxes paid in the Philippines may be credited in the US and vice versa.  Similar tax agreements are in place between the Philippines and many other countries.

(b)  Travel tax exemption

A Filipino who reacquires Philippine citizenship and is residing permanently overseas can also enjoy travel tax exemption extended to Filipinos permanently residing in other countries.

(c)  For US citizens: Does Uncle Sam get jealous?

The US Government does not formally endorse dual nationality as a matter of policy, but it also does not take any affirmative stand against it. According to the State Department:

The Department has a uniform administrative standard of evidence based on the premise that U.S. citizens intend to retain United States citizenship when they obtain naturalization in a foreign state, subscribe to a declaration of allegiance to a foreign state, serve in the armed forces of a foreign state not engaged in hostilities with the United States, or accept non-policy level employment with a foreign government.

So when performing any of the acts described above, a citizen will retain his US citizenship unless it was indeed his intention to relinquish it.  However, the Department of State again states:

The premise that a person intends to retain U.S. citizenship is not applicable when the individual:

1.  formally renounces U.S. citizenship before a consular officer;
2.  serves in the armed forces of a foreign state engaged in hostilities with the United States;
3.  takes a policy level position in a foreign state;
4.  is convicted of treason; or
5.  performs an act made potentially expatriating by statute accompanied by conduct which is so inconsistent with retention of U.S. citizenship that it compels a conclusion that the individual intended to relinquish U.S. citizenship. (Such cases are very rare.)

Cases in categories 2, 3, 4 and 5 will be developed carefully by U.S. consular officers to ascertain the individual's intent toward U.S. citizenship.

Intent may be shown by a person’s statements or conduct.  However, if the U.S. Government is unable to prove that the person had such an intent when he obtained the foreign citizenship, the person will have both nationalities.  In other words, the burden is on the US Government to demonstrate that a person performed a designated act both voluntarily and with the specific intent to renounce his US citizenship.

Additionally, while the State Department takes the position that acceptance of policy-level employment with a foreign government is a presumptive basis for denaturalization, several American dual citizens have held high positions in foreign governments without loss of citizenship, including as ambassadors of their other country’s citizenship.

VII.  Parting Thoughts

In an essay in The Atlantic Monthly entitled “Trans-national America,” the influential essayist Randolph S. Bourne, noting the unique attributes of America, rejected the “melting-pot” model of assimilation of immigrants, advocated dual citizenship, and argued that the country (and indeed the world) is going to be better off developing “international citizens” who maintain spiritual ties to their native country and hold on to their literature and culture. The essay was written in 1916 while the First World War was still raging, and yet, almost a century later, I think the idea still resonates to hyphenated Americans like me.

However, citizenship, especially the kind advanced by Bourne, cannot be taken lightly because responsible citizenship by definition means fulfilling one’s obligations to the community one belongs, not just taking advantage of its attendant rights and privileges.  As Aristotle once said: “To take no part in the running of the community's affairs is to be either a beast or a god!”

For Filipinos by birth who became citizens of another country by choice, the Philippine dual citizenship law provides another opportunity to contemplate what it really means to be a Filipino in today's world.  Above, I have numerated the technical pros and cons, the technical benefits and disadvantages, whether or not to re-acquire Philippine citizenship.  I can imagine the ability to own real property and, most especially, to vote probabaly loom large for many as key benefits couseling for an affirmative choice on the question, but I can also easily understand both pragmatic and noble reasons why going through the process of reacquisition is not advisable for many. 

Personally, I've come to the conclusion that one doesn't really need to undergo the legal formalities to show one's substantive "Filipino citizenship."  I think one just has to fulfill his obligations to the global Filipino community -- or even to humanity, in general -- which common decency, empathy and justice demand. 

Got a question for The Filipino?  Email him now at askthepinoy@gmail.com.

3-in-1: Are jeepney drivers stupid? Are Filipinos obsessed with skin whitening? Are Ilocanos Filipinos?

Question 1:

Dear Filipino,

AAF Rocks!

I am a Filipino and have lived in Metro Manila for the past 20 years. I have always hated public utility drivers. They're reckless, always breaking traffic laws, a lot of times discorteous among other bad descriptions that I try always not to be. And that is only with regards to how they earn their living. Is being poor a reason? Is it lack of education? Why are a lot of them stupid?

Regards,
Pikon Na

Question 2:

Dear Filipino,

Why are Filipinos obsessed with whitening their skin considering we are a tropical country (skin cancer, hello!), etc.?  Brown is beautiful!!!

Desert Pinay

Question 3:

Dear Filipino,

Why do most Ilocanos in the US of A especially those in Hawaii DENY being Filipinos and only speak their dialect and not Filipino (or Tagalog)?...I never believed this story when a friend of mine back home told me about it and we’re totally dumfounded when my brother and I witnessed it firsthand here in DMV California. When this American guy asked this mother and daughter if they’re Filipinos, they told the guy that they’re Ilocanas and it’s totally different.  What!? And why they would say those things?

Bert Perez

Dear Pikon, Desert and Bert,

First of all, happy New Year!

Here's a few tidbits re 2011: Did you know (and I'm pretending you care about the following factoids) that this year marks the 100th year of the arrival of the first De La Salle Brothers to the Philippines; the establishment of the University of the Philippines' College of Law, thanks in part to the YMCA; and (quite possibly) the birthday of Carlos Bulosan, labor activist, poet and author of America Is in the Heart, a must-read book for any serious student of Asian American history?  (And here's my bit about "tidbits": The Online Etymology Dictionary says tidbit "probably [came] from dialectal tid 'fond, solicitous, tender' + bit 'morsel,' but as in my usage here at least, I would submit that maybe tid was in fact borrowed from the Viking word for 'time.') 

Secondly, you're probably wondering why I decided to lump your questions in one blogpost.  There are really two reasons for that decision.  One is because I'm feeling a bit pressured to answer the mounting number of questions being lobbed at me and I needed to find a way to do it faster (sorry!); and two is because there's a theme that runs through your questions which I plan to explain more later (really!).

Thirdly, if you've read most of the previous blogposts here, you're also probably noticing a recurring thing on AAF!: i.e., that whoever this guy is -- i.e., me, a.k.a. "The Filipino" -- he does sound sometimes like he is some kind of "Chief Filipino Apologist" (CFA), if there's such a thing, right?  Well, I am not, and there is of course no such thing, although I now feel maybe there should be.

Fourthly, you probably also know this is just my third month as a blogger.  And I guess I'm not really complaining about the emails I get (keep them coming guys!), but look: I started this blog with the primary goal of answering mainly questions by non-Filipinos about Filipinos and the Philippines, and yet -- guess what? -- MOST of the questions I've received so far are from Filipinos!  Isn't that interesting?

And as to the kinds of questions I'm getting from Filipinos, both the answered and the pending?  Well, let's just say that, to me at least, several of the questions really reveal an underlying penchant for either self-flagellation and/or some form of disdain for the fellow Pinoy, thus confirming my long-held suspicion that we as a people -- whether based in the Philippines or abroad -- really are filled with so much socio-cultural baggage, so much unhealthy crap, and so much depressing BS, even in instances when we should be celebrating our colorful history, fascinating culture, and shared humanity.

I think this baggage, this crap, this BS, is the product of many factors, not least of which is not knowing who we are as a people, not knowing our history, not knowing facts, and feeling insecure about the Philippines' and our place in the fast-globalizing world.  And because we don't know ourselves, we live up to the stereotypes others have of us and then perpetuate them even further.

Now, I'm really not given to profanity when writing even with the anonymity afforded me by this Internet blog, but let me say this and let me say this clearly:

SCREW THOSE STEREOTYPES!

There, I said it.  And I hope you will forgive me (I actually wanted to use a stronger-sounding four-letter word that rhymes with buck but thought better of it).  I admit this is NOT a nice way to start the new year, but this is really the first time I'm intentionally cussing in this blog (my earlier post about "Milk!" doesn't count, of course) and I hope this is the last. 

You see, I am not really an angry brown man.  Believe me, I'm usually level-headed (relatively speaking at least) even when answering loaded and infuriating questions -- like where I had to:

     - explain why the Philippines does not really suck;

     - clearly imply that Filipino culture is not an impediment to success, as proven by the fact that as a group, Filipinos in the US are among the most affluent, best educated, and least poor; and

     - deny that Filipinos have a patent on crab mentality, a claim which is regularly being bandied about by Filipinos themselves.

Seriously, I am really getting frustrated by the amount of negativity about the Philippines and Filipinos out there, so much so that even without a related question posed, I felt the need to write a blogpost anyway arguing why we are not Somalia in the making.  I'm now glad I did because I just really found the very idea alarmist and way off the mark.

Let me repeat that: Philippines = Somalia in the making?  Way off the mark!

And that's what I also have to say about the underlying premises of the "Why?" questions posed by you guys -- Pikon, Desert and Bert:

Way off the mark!

Let me now go about your questions one by one.

Pikon's Question

Dear Pikon,

There are three question marks in your email but there is really only one question: "Why are a lot of [public utility drivers (let's call them PUDs for short)] stupid?"

Now, the two sentences preceding this question, while also punctuated by erotemes, are not real questions but are instead your proposed possible reasons for the "stupidity" of the PUDs : "being poor" and "lack of education."

So let's look deeper at the premise of your only real question: that PUDs are "stupid." 

Prior to the interrogative sentence, you wrote that "public utility drivers" are "reckless," "always breaking traffic laws," and "discorteous among other bad descriptions."  This statement also functions as the premise of your question, which is of course just your opinion, likely shaped by your limited experiences, observations and interactions with your subjects of inquiry, the PUDs.

But in "the premise to the premise" of your question, you revealed that you, sir, "have always hated" them.

Well, if that's the case, the premise to the premise of your question answers your question: As far as you are concerned, a lot of PUDs are "stupid" because you "have always hated them"!

Indeed, your question has lived up to the Latin etymology of the word premise -- i.e., praemittere, which means "to dispatch in advance," which is exactly what you did.  So why then did you even bother to email me your question? 

Oh, I know: Because you want someone like me to affirm your belief that "a lot of the PUDs are stupid." 

Well, I am sorry to disappoint you.  You won't get this affirmation from me, not even with more generous compliments about my blog.  In fact, I completely disagree with your belief and, truth be told, dislike you for it. 

And since it's the New Year, I hope you'll make it one of your resolutions to put a stop to your hatred of PUDs.  Seriously. 

For two reasons:

The first reason is because, contrary to your belief, a lot of them are actually very smart, just not lucky enough to get good breaks in life.  For sure, some of them are smarter than some of the folks in Congress right now, whether in the Philippines or the US.

Think about it: The quintessential PUD -- that is to say, the jeepney driver -- has to remember who has or hasn't paid yet; calculate and make change based on the distance travelled by every single passenger; listen to verbal commands to stop (para!); and watch the side streets for additional passengers (to be pursued), kotong cops (to be avoided, if possible) or angry girlfriends (also to be avoided, but impossible) -- all while driving in notoriously chaotic and crowded streets of cities like Manila. 

Frankly, it's a wonder to me that accidents don't happen more often involving jeepneys!

The second reason is because they are really just like you and I.  Most of them are nice and honest folks working as best as they can to raise a family and just survive with some modicum of decency intact.

I should know.  After all, I personally came to know several of these people, having personally washed and cleaned many of their vehicles for a living when I was much, much younger. 

Moreover, I know whereof I speak because I myself was also a "public utility driver" once.  With my two legs serving as the engine and my fear of hunger as the fuel, I was the "driver" of a kariton (pushcart) during my early teens, plying the roads of my small provincial city as a magbobote.  I fit the definition of a PUD because my business then, which involved buying and selling scrap metals and bottles for a couple of local junk yards, also definitely served a "public utility": i.e., to rid the sellers of their junk; promote commerce; and help the country's nascent recycling efforts (this, the poor do as a matter of survival, by the way, and not to be fashionable, unlike some of the holier-than-thou folks I know).

A certified promdi, I also remember getting lost one time some 20 years ago after falling asleep aboard a jeepney plying the Cubao-Marikina route.  I woke up, panicky but still groggy, somewhere in Marikina when I should have gotten off much earlier: at the Katipunan stop, where my dorm was most proximate.  The driver, bless his heart, allowed me back in for free (maybe you find this stupid?), and made sure to drop me at the right stop on the way back.

But why, you'll probably insist, do most of those PUDs drive like maniacs? 

Well, I'm not bulls-itting you, but it is at this juncture that I must call on the kindred spirits of Sitting Bull.  Because there is in fact an American Indian proverb which says: "Never criticize a man until you've walked a mile in his moccasins."

Well, in this case, I ask you: If you really want to understand PUDs, withhold your hatred of them first until you've had a turn at the wheel of a non-airconditioned jeepney, with pollution and smoke blowing in your face and all over on a hot and humid day, and you had to try with all your might to navigate Manila's mind-boggling traffic gridlocks as fast as practicable in order to cover miles and miles just to be able to pay for ever-increasing boundary fees and gasoline prices, and miles and miles more to eke out a pittance of a living just to feed and clothe your kids. 

That's all really.  Try it.  Then maybe you'll be able to answer your own question about PUDs -- or even just come up with a different one.

Desert's Question

Dear Desert,

I agree completely: Brown is indeed beautiful.  Very beautiful.

But obviously, the premise of your "Why?" question is this: that Filipinos are in fact obsessed with skin whitening.  It may or may not be true on an individual level (I'm voting for the latter), but it's really best to re-visit who exactly are obsessed with skin whitening and why.

But first, another confession: During my first year in college, when my face was getting attacked by a bad case of pimples while at the same time I was also feeling a bit insecure about my being very dark (blame genes and years of being under the sun) in a college environment where rich, good-looking mestizo Filipinos abound, I turned to cheap Eskinol products.  The ads said Eskinol would get rid of pimples and also have some whitening effect, so I bought it.  Why not -- it was "perfect" for a certified promdi like me, right?  I'm ashamed about it now but it's true -- I too bought into their hideous marketing claim.  In any case, Eskinol didn't really work, and since it's the only brand I could afford then, I stopped caring altogether, liberating me in the process and giving me that "ruggedly handsome" look. ;-)

Now, it's very easy to say that use of skin whitening products is just another manifestation of colonial mentality, of autophobia or self-hatred, of low self-esteem. (Of course, this can also just be a case of people wanting what they don't have, which should explain why white people spare no expense sometimes to get that "healthy tan" look.)  Any of these theories is intuitively correct and can likely be proven with empirical data.  In fact, it is common knowledge that people from countries and ethnic groups with a history of Western colonization and enslavement suffer from this desire to look like their white rulers.  Viewed in the prism of today's world, some now see this desire, which has come to mean to be literally whiter, as a mental illness (think Michael Jackson).

Can you imagine though if African empires had ruled the world?  What would things be like?  For this question, the so-called "Obama Effect" in fashion shows and runway castings provides a clue.

And this is why the premise of your question is way off:  Because I think Filipinos are not the ones obsessed with skin whitening.  It's big business -- encompassing the cosmetics and pharmaceutical industries, the TV industry, and the media in general -- that is obsessed with it.  In other words, it's capitalism that's obsessed with it.

Think about it.  Without big business pushing and marketing and advertising skin whiteners incessantly, Filipinos (and indeed many other ethnic groups) would not even be thinking about skin whitening; they would live with the characteristics they were born with.  Without big business obsessed with profits, there would be no revolting Glutathione craze gripping the Philippines and all its attendant problems, no MLM scammers promising another "unmatched business opportunity" to capitalize on some "medical breakthrough" and issuing other exaggerated statements which they know fully well have not even been evaluated by authorities like the U.S. Food and Drug Administration.

That's why, you see, this obsession with skin whitening is not about Filipinos really.  It's purely about money.  Gobs of it.

And the Filipinos who get taken here are but the victims of an elaborate hoax -- the unwitting participants in a long-running subjugation of simpler minds. 

No, these victimized Filipinos are not obsessed: They've just been told over and over and over again that in order for them to succeed, to feel better about themselves, to look desirable, to improve themselves, they have to look whiter.  They've been told over and over and over again that not changing their skin color will consign them to poverty and more misery.

And for me, if there's one thing commendable about these poor Filipinos buying into this noxious propaganda hook, line and sinker, it is this: That these Filipinos have shown that they do want to better themselves so they're doing something about their perceived shortcomings.  In a way, one can argue that it's better than doing nothing.

The challenge of course is how to change these Filipinos' misguided thinking, but that's a question best left for another day.

Bert's Question

Dear Bert,

This is an amusing question because it's true: Many Ilocanos really consciously tell people they are Ilocanos, not Filipinos.  It's been their schtick for a while now.  I've heard this even from my esteemed college Philosophy professor, an Ilocano himself, who taught his course entirely in Tagalog. 

I think Ilocanos make that statement because they have a rich cultural and heritage identity.  They pride themselves on being an industrious and thrifty people, in much the same way that Bicolanos pride themselves on being uragon.

But you are off the mark because if you think about it, they are not really denying their Filipino-ness, for the simple reason that they can't.  In fact, by saying they're Ilocanos, they are admitting that they are Filipinos. 

You have to understand also that Ilocanos were really the first to migrate to the US as hired plantation hands in Hawaii a litttle over a century ago, which corresponds to the first decade of American occupation of the Philippines.  At that time, the Americans were still just in the initial stages of introducing a national Congress for the Philippines, universal education and national laws patterned after the US legal system.  The very concept of "Filipino" itself was fairly new, with most linguistic groups really unsure about what was happening outside their own.

Against that backdrop, this is how I choose to see these Ilocanos claiming they are not Filipinos: They are descendants of the first Ilocanos who had to migrate to the US and market themselves to employers in order to get hired.  And what they had to say goes something like this: "You've probably heard somewhere from your parents or grandparents or other relatives who went to the Philippines as a soldier, missionary or colonial official that in the Philippines, the locals don't have to work the fields much because food is abundant and they also love to spend all they have just to have fun, much like the Spanish do, causing all sorts of issues.  Well, I am not your typical Filipino.  I am the industrious and thrifty type because I am Ilocano.  So go ahead, hire me, and make my day." 

And in a way it's a good thing, even if the statement has a condescending ring to it, even if the statement reeks of misguided ethnocentricity.  Because what they are really saying is: "Don't you dare think that all Filipinos are of the same mental, emotional and constitutional makeup, because they are not."  And that statement is true because no group really is.

I'm sure though that most of these Ilocanos, like my professor, did not really mean to say they are not Filipinos.  As for those who do mean what they say, guess what?  Until and unless the Ilocos Region secedes from the Philippines, they can say they're not Filipinos all they want until they're blue in the face, but in the end, they'll still be Filipinos. 

In closing...

Hey, this is quite a long post now.  You've probably tuned me out already long before this line.  But if you're still reading this, I just want to (1) apologize for the profanity again, (2) thank you for reading this blog, and (3) wish you again Naragsac nga Baro nga Tawen (Happy New Year in Ilocano). 

Got a question for The Filipino? Email him now at askthepinoy@gmail.com.