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COUNTRY PROFILE: PHILIPPINES 

March 2006

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COUNTRY 

Formal Name: Republic of the Philippines (Republika ng Pilipinas). 

Short Form: Philippines (Pilipinas). 

Term for Citizen(s): Filipino(s). 

Capital: Manila. 

Major Cities: Located on Luzon Island, Metropolitan Manila, including the adjacent Quezon 

City and surrounding suburbs, is the largest city in the Philippines, with about 12 million people, 

or nearly 14 percent of the total population. Other large cities include Cebu City on Cebu Island 

and Davao City on Mindanao Island. 

Independence: The Philippines attained independence from Spain on June 12, 1898, and from 

the United States on July 4, 1946. 

Public Holidays: New Year’s Day (January 1), Holy Thursday (also called Maundy Thursday, 

movable date in March or April), Good Friday (movable date in March or April), Araw ng 

Kagitingan (Day of Valor, commonly called Bataan Day outside of the Philippines, April 9), 

Labor Day (May 1), Independence Day (June 12), National Heroes Day (last Sunday of August), 

Bonifacio Day (celebration of the birthday of Andres Bonifacio, November 30), Eid al Fitr (the 

last day of Ramadan, movable date), Christmas Day (December 25), Rizal Day (the date of the 

execution by the Spanish of José Rizal in 1896, December 30). 

Flag: The flag of the Philippines has two equal horizontal bands of blue 

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(top) and red with a white equilateral triangle based on the hoist side; 

in the center of the triangle is a yellow sun with eight primary rays (each 

containing three individual rays), and in each corner of the triangle is 

a small yellow five-pointed star. 

HISTORICAL BACKGROUND 

Early History: The Philippine archipelago was settled at least 30,000 years ago, when 

migrations from the Indonesian archipelago and elsewhere are believed to have occurred. 

Additional migrations took place over the next millennia. Over time, social and political 

organization developed and evolved in the widely scattered islands. The basic unit of settlement 

was the barangay (a Malay word for boat that came to be used to denote a communal 

settlement). Kinship groups were led by a datu (chief), and within the barangay there were broad 
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social divisions consisting of nobles, freemen, and dependent and landless agricultural workers 

and slaves. Over the centuries, Indo-Malay migrants were joined by Chinese traders. A major 

development in the early period was the introduction of Islam to the Philippines by traders and 

proselytizers from the Indonesian islands. By A.D. 1500, Islam had been established in the Sulu 

Archipelago and spread from there to Mindanao; it reached the Manila area by 1565. In the midst 

of the introduction of Islam came the introduction of Christianity, with the arrival of the Spanish. 

Spanish Control: Ferdinand Magellan was the first European recorded to have landed in the 

Philippines. He arrived in March 1521 during his circumnavigation of the globe. He claimed land 

for the king of Spain but was killed by a local chief. Following several more Spanish 

expeditions, the first permanent settlement was established in Cebu in 1565. After defeating a 

local Muslim ruler, the Spanish set up their capital at Manila in 1571, and they named their new 

colony after King Philip II of Spain. In doing so, the Spanish sought to acquire a share in the 

lucrative spice trade, develop better contacts with China and Japan, and gain converts to 

Christianity. Only the third objective was eventually realized. As with other Spanish colonies, 

church and state became inseparably linked in carrying out Spanish objectives. Several Roman 

Catholic religious orders were assigned the responsibility of Christianizing the local population. 

The civil administration built upon the traditional village organization and used traditional local 

leaders to rule indirectly for Spain. Through these efforts, a new cultural community was 

developed, but Muslims (known as Moros by the Spanish) and upland tribal peoples remained 

detached and alienated. 

Trade in the Philippines centered around the “Manila galleons,” which sailed from Acapulco on 

the west coast of Mexico (New Spain) with shipments of silver bullion and minted coin that were 

exchanged for return cargoes of Chinese goods, mainly silk textiles and porcelain. There was no 

direct trade with Spain and little exploitation of indigenous natural resources. Most investment 

was in the galleon trade. But, as this trade thrived, another unwelcome element was introduced—

sojourning Chinese entrepreneurs and service providers. 

During the Seven Years’ War (1756–63), British East India Company forces captured Manila. 

Although the Philippines was returned to Spain at the end of the war, the British occupation 

marked the beginning of the end of the old order. Rebellions broke out in the north, and while the 

Spanish were busy fighting the British, Moros raided from the south. The Chinese community, 

resentful of Spanish discrimination, supported the British with laborers and armed men. The 

restoration of Spanish rule brought reforms aimed at promoting the economic development of the 

islands and making them independent of subsidies from New Spain. The galleon trade ceased in 

1815, and from that date onward the Royal Company of the Philippines, which had been 

chartered in 1785, promoted direct and tariff-free trade between the islands and Spain. Cash 

crops were cultivated for trade with Europe and Latin America, but profits diminished after 

Spain’s Latin American colonies became independent in the 1810s and 1820s. In 1834 the Royal 

Company of the Philippines was abolished, and free trade was formally recognized. With its 

excellent harbor, Manila became an open port for Asian, European, and North American traders. 

In 1873 additional ports were opened to foreign commerce, and by the late nineteenth century 

three crops—tobacco, abaca, and sugar—dominated Philippine exports. 
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Rise of Nationalism: Also in the late nineteenth century, Chinese immigration, now with official 

approval, increased, and Chinese mestizos became a feature in Filipino social and economic life. 

So, too, did the growing Filipino native elite class of ilustrados (literally, enlightened ones), who 

became increasingly receptive to liberal and democratic ideas. Conservative Catholic friars 

continued to dominate the Spanish establishment, however. They resisted the inclusion of native 

clergy and were economically secure, with their large land holdings and control of churches, 

schools, and other establishments. Despite the bias against native priests, brothers, and nuns, 

some members of Filipino religious orders became prominent to the point of leading local 

religious movements and even insurrections against the establishment. Additionally, ilustrados 

returning from education and exile abroad brought new ideas that merged with folk religion to 

spur a national resistance. 

One of the early nationalist leaders was José Rizal, a physician, scientist, scholar, and writer. His 

writings as a member of the Propaganda Movement (intellectually active, upper-class Filipino 

reformers) had a considerable impact on the awakening of the Filipino national consciousness. 

His books were banned, and he lived in self-imposed exile. Rizal returned from overseas in 1892 

to found the Liga Filipina (Philippine League), a national, nonviolent political organization, but 

he was arrested and exiled and the league dissolved. One result was the split of the nationalist 

movement between the reform-minded ilustrados and a more revolutionary and independenceminded plebeian constituency. Many of the latter joined the Katipunan, a secret society founded 

by Andres Bonifacio in 1892 and committed to winning national independence. By 1896, the 

year the Katipunan rose in revolt against Spain, it had 30,000 members. Although Rizal, who had 

again returned to the Philippines, was not a member of the Katipunan, he was arrested and 

executed on December 30, 1896, for his alleged role in the rebellion. With Rizal’s martyrdom, 

the rebels, led by Emilio Aguinaldo as president, were filled with new determination. Spanish 

troops defeated the insurgents, however, and Aguinaldo and his government went into exile in 

Hong Kong in December 1897. 

When the Spanish-American War broke out in April 1898, Spain’s fleet was easily defeated at 

Manila. Aguinaldo returned, and his 12,000 troops kept the Spanish forces bottled up in Manila 

until U.S. troops landed. The Spanish cause was doomed, but the Americans did nothing to 

accommodate the inclusion of Aguinaldo in the succession. Fighting between American and 

Filipino troops broke out almost as soon as the Spanish had been defeated. Aguinaldo issued a 

declaration of independence on June 12, 1898. However, the Treaty of Paris, signed on 

December 10, 1898, by the United States and Spain, ceded the Philippines, Guam, and Puerto 

Rico to the United States, recognized Cuban independence, and gave US$20 million to Spain. A 

revolutionary congress convened at Malolos, north of Manila, promulgated a constitution on 

January 21, 1899, and inaugurated Aguinaldo as president of the new republic two days later. 

Hostilities broke out in February 1899, and by March 1901 Aguinaldo had been captured and his 

forces defeated. Despite Aguinaldo’s call to his compatriots to lay down their arms, insurgent 

resistance continued until 1903. The Moros, suspicious of both the Christian Filipino insurgents 

and the Americans, remained largely neutral, but eventually their own armed resistance had to be 

subjugated, and Moro territory was placed under U.S. military rule until 1914. 

United States Rule: U.S. rule over the Philippines had two phases. The first phase was from 

1898 to 1935, during which time Washington defined its colonial mission as one of tutelage and 
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preparing the Philippines for eventual independence. Political organizations developed quickly, 

and the popularly elected Philippine Assembly (lower house) and the U.S.-appointed Philippine 

Commission (upper house) served as a bicameral legislature. The ilustrados formed the 

Federalista Party, but their statehood platform had limited appeal. In 1905 the party was renamed 

the National Progressive Party and took up a platform of independence. The Nacionalista Party 

was formed in 1907 and dominated Filipino politics until after World War II. Its leaders were not 

ilustrados. Despite their “immediate independence” platform, the party leaders participated in a 

collaborative leadership with the United States. A major development emerging in the postWorld War I period was resistance to elite control of the land by tenant farmers, who were 

supported by the Socialist Party and the Communist Party of the Philippines. Tenant strikes and 

occasional violence occurred as the Great Depression wore on and cash-crop prices collapsed. 

The second period of United States rule—from 1936 to 1946—was characterized by the 

establishment of the Commonwealth of the Philippines and occupation by Japan during World 

War II. Legislation passed by the U.S. Congress in 1934 provided for a 10-year period of 

transition to independence. The country’s first constitution was framed in 1934 and 

overwhelmingly approved by plebiscite in 1935, and Manuel Quezon was elected president of 

the commonwealth. Quezon later died in exile in 1944 and was succeeded by Vice President 

Sergio Osmea. Japan attacked the Philippines on December 8, 1941, and occupied Manila on 

January 2, 1942. Tokyo set up an ostensibly independent republic, which was opposed by 

underground and guerrilla activity that eventually reached large-scale proportions. A major 

element of the resistance in the Central Luzon area was furnished by the Huks (short for 

Hukbalahap, or People’s Anti-Japanese Army). Allied forces invaded the Philippines in October 

1944, and the Japanese surrendered on September 2, 1945. 

Early Independence Period: World War II had been demoralizing for the Philippines, and the 

islands suffered from rampant inflation and shortages of food and other goods. Various trade and 

security issues with the United States also remained to be settled before Independence Day. The 

Allied leaders wanted to purge officials who collaborated with the Japanese during the war and 

to deny them the right to vote in the first postwar elections. Commonwealth President Osmea, 

however, countered that each case should be tried on its own merits. The successful Liberal Party 

presidential candidate, Manual Roxas, was among those collaborationists. Independence from 

the United States came on July 4, 1946, and Roxas was sworn in as the first president. The 

economy remained highly dependent on U.S. markets, and the United States also continued to 

maintain control of 23 military installations. A bilateral treaty was signed in March 1947 by 

which the United States continued to provide military aid, training, and matériel. Such aid was 

timely, as the Huk guerrillas rose again, this time against the new government. They changed 

their name to the People’s Liberation Army (Hukbong Mapagpalaya ng Bayan) and demanded 

political participation, disbandment of the military police, and a general amnesty. Negotiations 

failed, and a rebellion began in 1950 with communist support. The aim was to overthrow the 

government. The Huk movement dissipated into criminal activities by 1951, as the better-trained 

and -equipped Philippine armed forces and conciliatory government moves toward the peasants 

offset the effectiveness of the Huks. 

Populist Ramón Magsaysay of the Nacionalista Party was elected president in 1953 and 

embarked on widespread reforms that benefited tenant farmers in the Christian north while 
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exacerbating hostilities with the Muslim south. The remaining Huk leaders were captured or 

killed, and by 1954 the movement had waned. After Magsaysay’s death in an airplane crash in 

1957, he was succeeded by Vice President Carlos P. Garcia. Garcia was elected in his own right 

the same year, and he advanced the nationalist theme of “Filipinos First,” reaching agreement 

with the United States to relinquish large areas of land no longer needed for military operations. 

In 1961 the Liberal Party candidate, Diosdado Macapagal, was elected president. Subsequent 

negotiations with the United States over base rights led to considerable anti-American feelings 

and demonstrations. Macapagal sought closer relations with his Southeast Asian neighbors and 

convened a summit with the leaders of Indonesia and Malaysia in the hope of developing a spirit 

of consensus, which did not emerge. 

The Marcos Era: Nacionalista Party leader Ferdinand Marcos came to dominate the political 

scene for the next two decades, beginning with his election to the presidency in 1965. During his 

first term, Marcos initiated ambitious public works projects that improved the general quality of 

life while providing generous pork-barrel benefits for his friends. Marcos perceived that his 

promised land reform program would alienate the politically all-powerful landowner elite, and 

thus it was never forcefully implemented. He lobbied strenuously for economic and military aid 

from the United States while resisting significant involvement in the Second Indochina War 

(1954–75). In 1967 the Philippines became a founding member of the Association of Southeast 

Asian Nations (ASEAN). Marcos became the first president to be reelected (in 1969), but early 

in his second term economic growth slowed, optimism faded, and the crime rate increased. In 

addition, a new communist insurgency, this time—starting in 1968—led by the new Communist 

Party of the Philippines-Marxist-Leninist and its military arm, the New People’s Army, was on 

the rise. In 1969 the Moro National Liberation Front was founded and conducted an insurgency 

in Muslim areas. Political violence blamed on leftists, but probably initiated by government 

agents provocateurs, led Marcos to suspend habeas corpus as a prelude to martial law. 

Marcos declared martial law on September 21, 1972, and did not lift it until January 17, 1981. 

During this time, he called for self-sacrifice and an end to the old society. However, in the “New 

Society” Marcos’s cronies and his wife, former movie actress Imelda Romualdez-Marcos, 

wilfully engaged in rampant corruption. With her husband’s support, Imelda Marcos built her 

own power base. She became governor of Metropolitan Manila and minister of human 

settlements. The previously nonpolitical armed forces became highly politicized, with highranking positions being given to Marcos loyalists. In 1979 the United States reaffirmed 

Philippine sovereignty over U.S. military bases and continued to provide military and economic 

aid to the Marcos regime. When martial law was lifted in 1981 and a “New Republic” 

proclaimed, little had actually changed, and Marcos easily won reelection. 

The beginning of the end of the Marcos era occurred when his chief political rival, Liberal Party 

leader Benigno “Ninoy” Aquino, who had been jailed by Marcos for eight years, was 

assassinated as he disembarked from an airplane at the Manila International Airport on August 

21, 1983, following medical treatment in the United States. Marcos cronies were charged with 

this crime but were acquitted. Aquino, however, became a martyr and his murder the focus of 

popular indignation against a corrupt regime. The Catholic Church, a coalition of old political 

opposition groups, the business elite, the left wing, and even factions of the armed forces all 

began to exert pressure on the regime. There also was foreign pressure and, feeling confident 
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with the support given by the Reagan White House, Marcos called a “snap” presidential election 

for February 7, 1986. When the Marcos-dominated National Assembly proclaimed Marcos the 

winner, Cardinal Jaime Sin and key military leaders (including Minister of Defense Juan Ponce 

Enrile and acting Chief of Staff of the Armed Forces Lieutenant General Fidel V. Ramos) rallied 

around the apparent majority vote winner, Aquino’s widow, Corazon Cojuango Aquino. The 

People Power Movement—a popular uprising of priests, nuns, ordinary citizens, and children, 

supported by defecting military units—ousted Marcos on the day of his inauguration (February 

25, 1986) and brought Aquino to power in an almost bloodless revolution. 

The Aquino Years and Beyond: Corazon Aquino had wide popular support but no political 

organization. Her vice president, Salvador H. “Doy” Laurel, had an organization but little 

popular support. Enrile and Ramos also had large stakes in what they saw as a coalition 

government. The coalition unraveled quickly, and there were several attempts, including 

unsuccessful military coups, to oust Aquino. She survived her fractious term, however, and was 

succeeded in the 1992 election by Ramos, who had served loyally as chief of staff of the armed 

forces and secretary of national defense under Aquino. 

President Ramos worked at coalition building and overcoming the divisiveness of the Aquino 

years. Mutinous right-wing soldiers, communist insurgents, and Muslim separatists were 

convinced to cease their armed activities against the government and were granted amnesty. In 

an act of reconciliation, Ramos allowed the remains of Ferdinand Marcos—he had died in exile 

in the United States in 1989—to be returned to the Philippines for burial in 1993. Efforts by 

supporters of Ramos to gain passage of an amendment that would allow him to run for a second 

term were met with large-scale protests supported by Cardinal Sin and Corazon Aquino, leading 

Ramos to declare he would not run again. 

Joseph Estrada, who had served as Ramos’s vice president and enjoyed widespread popularity, 

was elected president in 1998. Within a year, however, Estrada’s popularity declined sharply 

amid allegations of cronyism and corruption and failure to remedy the problems of poverty. 

Once again, street rallies supported by Cardinal Sin and Corazon Aquino took place. Then, in 

2000 Senate investigators accused Estrada of having accepted bribes from illegal gambling 

businesses. Following an abortive Senate impeachment trial, growing street protests, and the 

withdrawal of support by the armed forces, Estrada was forced out of office on January 20, 2001. 

Vice President Gloria Macapagal-Arroyo (the daughter of the late President Diosdado 

Macapagal) was sworn in as Estrada’s successor on the day of his departure. Her accession to 

power was further legitimated by the mid-term congressional and local elections, when her 

coalition later won an overwhelming victory, but the elections were fraught with allegations of 

coercion, fraud, and vote buying. Macapagal-Arroyo’s initial term in office was marked by 

fractious coalition politics as well as a military mutiny in Manila in July 2003 that led her to 

declare a month-long nationwide state of rebellion, as a result of which charges were filed 

against more than 1,000 individuals. Macapagal-Arroyo had declared in December 2002 that she 

would not contest the May 2004 presidential election, but she reversed herself in October 2003 

and decided to run. She was reelected and sworn in for her own six-year term as president on 

June 30, 2004. With this new mandate, she was able to move with greater assurance on the 

political and economic reform agenda that had stalled during her first term in office. 
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GEOGRAPHY 

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Location: The Philippines comprises an archipelago of some 

7,107 islands located off Southeast Asia, between the South 

China Sea on the west and the Philippine Sea on the east. 

The major islands are Luzon in the north, the Visayan Islands 

in the middle, and Mindanao in the south. 

Size: The total area is about 300,000 square kilometers, including 

about 298,000 square kilometers of land and about 2,000 square 

kilometers of water. The Philippines stretches about 1,850 

kilometers from Y’Ami Island in the north to Sibutu Island 

in the south and is about 1,000 kilometers at its widest point east to west. The bulk of the population lives on 11 of the 

7,107 islands. 

Land Boundaries: The Philippines has no land boundaries. Nearby neighbors are Taiwan to the 

north, Malaysia and Indonesia to the south, Vietnam to the west, and China to the northwest. 

Disputed Territory: The Philippines, China, Taiwan, Malaysia, and Vietnam hold conflicting 

claims to portions of the South China Sea and the Spratly Islands, which are called the Kalayaan 

(Freedom) Islands in the Philippines. The Philippines also disputes Malaysia’s claim to the state 

of Sabah. 

Length of Coastline: Estimates of the total length of the coastline range from 17,500 kilometers 

(official Philippine figure) to 36,289 kilometers (U.S. figure). 

Maritime Claims: The Philippines claims a territorial sea of up to 100 nautical miles from the 

nearest coastline, an area that includes the entire Sulu Sea and the northern part of the Celebes 

Sea. A presidential decree in 1978 announced additional baselines, which in effect extended the 

territorial sea to claim an area up to 285 nautical miles in breadth in the South China Sea west of 

Palawan Island. This area encompasses the Spratly Islands. The Philippines also claims its 

continental shelf to the depth of exploitation and an exclusive economic zone of 200 nautical 

miles from its baselines. 

Topography: The Philippines consists of volcanic islands, including active volcanoes, with 

mostly mountainous interiors surrounded by flat lowlands and alluvial plains of varying widths 

along the coasts. The elevation ranges from sea level to the highest point of Mount Apo on 

Mindanao Island, at 2,954 meters above sea level. 

Principal Rivers: The longest river is the Cagayan (Río Grande de Cagayan) on Luzon, about 

350 kilometers in length. Other principal rivers on Luzon include the Abra, Bicol, Chico, and 

Pampanga. The Pasig River is only about 25 kilometers in length but serves as the main 

waterway, flowing between Laguna de Bay, the largest freshwater lake in the Philippines, 

through metropolitan Manila to Manila Bay. Principal rivers on Mindanao include the Mindanao 
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River (known as the Pulangi River in its upper reaches), and the Agusan. The St. Paul River on 

Palawan is an eight-kilometer-long underground river. 

Climate: The Philippines has a tropical marine climate, with the northeast monsoon, which 

produces a cool, dry season from December to February, and the southwest monsoon, which 

brings rain and high temperatures from May to October. Between March and May, hot, dry 

weather prevails. Temperatures in Manila range from 21 2 C to 3 C, with an average annual 

temperature of 27 C. Temperatures elsewhere in the Philippines have been recorded at more 

than 37 C. The average monthly humidity ranges from 71 percent in March to 85 percent in 

September. Annual rainfall is heavy but varies widely throughout the Philippines, ranging from 

965 millimeters in some sheltered valleys and the southern tip of the island of Mindanao to 5,000 

millimeters along the mountainous east coasts of the islands of Luzon, Samar, and the northern 

tip of Mindanao. The Philippines lies astride the typhoon belt and experiences 15 to 20 typhoons 

a year from July through October, of which five or six may cause serious destruction and death. 

Natural Resources: The major natural mineral resources include coal, cobalt, copper, chromite, 

gold, gypsum, iron, natural gas, nickel, petroleum, salt, silver, and sulfur. There are lesser 

deposits of bauxite, lead, mercury, molybdenum, and zinc. Other important resources are 

geothermal and hydroelectric power, fish, and timber. 

Land Use: Out of a total land area of about 300,000 square kilometers, about 92,000 square 

kilometers are farmland, and about 72,000 square kilometers are forest land, including 65,000 

square kilometers of public land and 7,000 square kilometers of privately owned land. Forest 

area fell steadily from 270,000 square kilometers in 1900 to 80,000 square kilometers in 1970 

and to 54,000 square kilometers in 1985. Although forest area subsequently grew from its low in 

1985 to its current level in 2004, deforestation is still a major problem. According to the 

agricultural census of 2002, the number of farms decreased from 4.6 million in 1991 to 4.5 

million in 2002, and farm area declined during the same period, from about 100,000 square 

kilometers in 1991 to its current level. 

Environmental Factors: The Philippines is prone to natural disasters, particularly typhoons, 

floods, landslides, volcanic eruptions, earthquakes, and tsunamis, lying as it does astride the 

typhoon belt, in the active volcanic region known as the “Pacific Ring of Fire,” and in the 

geologically unstable region between the Pacific and Eurasian tectonic plates. The Philippines 

also suffers major human-caused environmental degradation aggravated by a high annual 

population growth rate, including loss of agricultural lands, deforestation, soil erosion, air and 

water pollution, improper disposal of solid and toxic wastes, loss of coral reefs, mismanagement 

and abuse of coastal resources, and overfishing. 

Time Zone: The Philippines is in one time zone (Asia/Manila), 8 hours ahead of Greenwich 

Mean Time. 
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SOCIETY 

Population: The total population of the Philippines was 76.5 million, evenly divided between 

males and females, at the last census in May 2000. The Philippine National Statistics Office 

estimated that the total population reached 85.2 million in 2005. The average annual population 

growth rate from 1998 to 2004 was 2.1 percent. There has been a continuing trend of internal 

migration from rural to urban areas since at least 1991. According to the 2000 census, 52 percent 

of the population lived in rural areas and 48 percent in urban areas, including about 12 percent 

who lived in the National Capital Region, or Metropolitan Manila. The Philippines has a 

negligible loss of population as a result of emigration, which was estimated at –1.5 migrants per 

1,000 population in 2004. 

Demography: As of 2005, 35 percent of the population was 0–14 years of age; 61 percent, 15–

64; and 4 percent, 65 and older. According to 2004 data, the gender ratio for the rising generation 

was 104 males for every 100 females. The birthrate was 25.8 births per 1,000 population. The 

death rate was 5.5 deaths per 1,000 population. Infant mortality was 24.2 deaths per 1,000 live 

births. Life expectancy at birth was 66.7 years for males, 72.6 years for females, and 69.6 years 

overall. The fertility rate was 3.2 children born per woman. 

Ethnic Groups: Christian Malays constitute 91.5 percent of the total population, Muslim Malays 

4 percent, Chinese 1.5 percent, and others 3 percent. 

Languages: The Philippines has two official languages, Filipino (or Pilipino) and English. 

Filipino has eight major dialects, in order of use: Tagalog, Cebuano, Ilocano, Hiligaynon or 

Ilonggo, Bicol, Waray, Pampango, and Pangasinense. Filipino, based on Tagalog, is related to 

Malay and Indonesian and is part of the Malayo-Polynesian subgroup of the Austronesian 

language family. Filipino is the common language used between speakers of different native 

languages, which are closely related but not mutually intelligible. English is used in government 

and as the medium of instruction in higher education. 

Religion: About 83 percent of the population is Roman Catholic; 9 percent Protestant, including 

Presbyterian, Methodist, Philippine Independent Church, and Philippine Church of Christ; 5 

percent Muslim; and 3 percent Buddhist and other. The constitution guarantees freedom of 

religion and separation of church and state. But Christianity predominates, and Muslims 

historically have been marginalized. 

Education and Literacy: Six years of primary education are free and compulsory; the four-year 

secondary education program is free but not compulsory. According to the Department of 

Education, for the school year 2002–3 a total of 12.9 million students were enrolled in 

elementary education (about 97 percent of the school-age population), including 12 million in 

public schools run by local government and 910,000 in private schools. A total of 6 million 

students were enrolled in secondary education (about 66 percent of the school-age population), 

including about 4.8 million in public schools and 1.2 million in private schools. In addition, 

about 2.4 million students were enrolled in higher education. At the end of 2005, the simple 

literacy rate was estimated at 93.4 percent, while the functional literacy rate was 84.1 percent. 
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Health: In 2000 the Philippines had about 95,000 physicians, or about 1 per 800 people. In 2001 

there were about 1,700 hospitals, of which about 40 percent were government run and 60 percent 

private, with a total of about 85,000 beds, or about one bed per 900 people. The leading causes of 

morbidity as of 2002 were diarrhea, bronchitis, pneumonia, influenza, hypertension, tuberculosis, 

heart disease, malaria, chicken pox, and measles. Cardiovascular diseases account for more than 

25 percent of all deaths. According to official estimates, 1,965 cases of human 

immunodeficiency virus (HIV) were reported in 2003, of which 636 had developed acquired 

immune deficiency syndrome (AIDS). Other estimates state that there may have been as many as 

9,400 people living with HIV/AIDS in 2001. 

Expenditures on health in 2002 totaled about US$2.2 billion, or about 2.9 percent of gross 

domestic product (GDP). Government expenditures on health accounted for only about 15 

percent of total health expenditures, 30 percent of per capita health expenditures, and about 0.9 

percent of all government spending. Per capita health expenditures in 2002 totaled US$28, of 

which government spending accounted for US$8. Both total and per capita expenditures on 

health have continued to decline since at least 1990, leading to a decrease in the share of GDP 

attributable to health expenditures. The main cause of this decline has been the high population 

growth rate. The government share of total spending on health also has declined steadily, and 

with more people, there has been less to spend per person from both the government and private 

sectors. 

Welfare: The Philippines’ social security system was established in 1957 and is compulsory for 

all employees, public and private. Retirement is compulsory at age 65 but optional at 60. An 

employees’ compensation program, added in 1975, pays double compensation for work-related 

death, injury, or illness to employees who are not self-employed. The Philippine Health 

Insurance Corporation was established in 1995 to administer the National Health Insurance 

Program, with the stated goal of providing universal coverage. Annual premiums are about 

US$22. Retirees who have reached the age of 65, or who are older than 60 but not yet 65 and 

have already paid 120 monthly premiums, pay nothing. Depending on their level of income, 

heads of poorer households may pay the annual premium and have it include three other family 

members, as well as themselves. Indigents may have their entire premiums paid in part by the 

national government and in part by their local government. Benefits do not necessarily cover the 

full costs of medical expenses, and many poor people still cannot afford to pay the difference. 

ECONOMY 

Overview: The economy of the Philippines is an anomaly in the Asia-Pacific region in that it has 

lagged behind other economies, such as those of Singapore, South Korea, and Taiwan. From a 

position as one of the wealthiest countries in Asia after World War II, the Philippines is now one 

of the poorest. Since the 1970s, which were a relatively prosperous decade, the Philippines has 

failed to achieve a sustained period of rapid economic growth and has suffered from recurring 

economic crises. This persistent underperformance has occurred in spite of the Philippines’ rich 

natural and human resources. 
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The reasons are rooted partly in history, partly in policy. As a legacy of the U.S. colonial period, 

oligopolies have dominated the economy, particularly in agriculture, where farmland continues 

to be concentrated in large estates. In the post-World War II period, the Philippines pursued a 

strategy of import substitution industrialization, whereby domestic goods are substituted for 

imports. This strategy required protectionist measures, which led to inefficiencies and the 

misallocation of resources. Although some trade protectionist measures were relaxed in the early 

twenty-first century, the Supreme Court continues to support restrictions on foreign ownership of 

land and other assets in effect since the constitution of 1935. These restrictions, plus widespread 

graft and corruption, have suppressed inbound foreign direct investment. A historically low rate 

of taxation—only about 15 percent of gross domestic product (GDP), partly as a result of 

widespread tax evasion—has led to underinvestment in infrastructure and uneven economic 

development. 

The National Capital Region around Manila, which produces about 36 percent of GDP with only 

12 percent of the population, is much more prosperous than rural areas, where much of the 

population depends on subsistence living. The traditional lack of job opportunities has led many 

Filipinos to seek employment outside the country, notably in the Persian Gulf states. Remittances 

to family members back home—equivalent to 10 percent of GDP—have partially offset a 

relatively low national rate of savings of about 15 to 18 percent, about average for the 

Organization for Economic Cooperation and Development, but below average for the region. 

Current account and budget deficits exacerbate the impact of the low savings rate on growth. 

Although trade barriers were scaled back, industrial cartels split up, and limited reform measures 

taken in the late twentieth century, political instability, continuing high levels of corruption, and 

resistance to reforms by entrenched interests have prevented the Philippines from pursuing a 

consistent and effective economic course. The industrial sector continues to decline relative to 

services, an economic bright spot in which the Philippines apparently enjoys a comparative 

advantage, although some argue that services represent an employer of last resort. In 2005 the 

services sector accounted for about 53.5 percent of GDP; industry, 31.7 percent; and agriculture, 

forestry, and fishing, 14.8 percent. 

Poverty is a serious problem in the Philippines. In 2003 per capita gross national income was 

US$1,080, below the US$1,390 average for lower-middle-income countries. Reflecting regional 

disparities, in 2003 about 11 percent of Filipinos lived on less than US$1 per day and 40 percent 

on less than US$2 per day, according to the World Bank. The overall poverty rate declined from 

33 percent (25.4 million people) in 2000 to 30.4 percent (23.5 million people) in 2003. Poverty is 

more concentrated in rural than in urban areas. 

Gross Domestic Product (GDP): In 2004 the gross domestic product (GDP) was US$84.6 

billion, or US$1,150 on a per capita basis. According to purchasing power parity (PPP), 

however, GDP in 2005 was estimated to be US$451.3 billion, or US$5,100 per capita. In 2004 

the Philippines achieved real economic growth of 6 percent, up from 4.5 percent in 2003. 

However, with the population expanding by more than 2 percent annually—one of the highest 

rates in Asia—the actual improvement in living standards is modest. 
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Government Budget: The budget has shown a deficit every year since 1998, but trends in the 

early twenty-first century are encouraging. In 2004 the deficit was US$3.4 billion, or about 3.9 

percent of gross domestic product (GDP), conforming to the government’s increasingly stringent 

targets for the second consecutive year. During 2005, the government expected to begin to close 

the revenue gap by introducing an expanded value-added tax. However, the tax’s introduction 

was delayed pending resolution of a dispute over its constitutionality, which came on October 18 

in a ruling by the Supreme Court. Historically, the persistent budget deficit, the result of 

overspending and poor collection by the Bureau of Internal Revenue, has placed restraints on 

economic growth. 

Inflation: In 2005 consumer price inflation was 7.6 percent, up from 5.5 percent in 2004 and 3.0 

percent in 2003. The rise in inflation reflected the combined impact of a depreciating peso, rising 

petroleum prices, and tariffs on electric power to offset losses at the state-owned power utility. 

The introduction of an expanded value-added tax is expected to provide an additional spur to 

inflation in 2006. Still, inflation remains well below the peak levels approaching 12 percent 

registered during the Asian financial crisis of 1997–98. 

Agriculture, Forestry, and Fishing: The agricultural sector in the Philippines is known for low 

productivity, as it employs about 36 percent of the labor force but accounts for only 14.8 percent 

of gross domestic product (GDP). From 1991 to 2002, both the total number of farms and the 

total area of farmland decreased, respectively, from 4.6 million to 4.5 million farms and from 9.9 

million hectares to 9.2 million hectares of farmland. The average size of each farm decreased 

from 2.2 hectares to 2.0 hectares. 

In the first three quarters of 2005, crops accounted for 46.4 percent of the value of all agricultural 

production, livestock and poultry for 28.8 percent, and fishing for 24.9 percent. Overall 

agricultural production rose 1.7 percent over the same period in 2004. In order of value, major 

agricultural products were rice, poultry, livestock, corn, bananas, and coconuts. The national diet 

consists mainly of rice, fish, and vegetables, with occasional chicken and pork. 

Forestry accounts for less than 1 percent of the total labor force and a minuscule share of all 

agricultural production, but at 72,000 square kilometers, it accounts for about 45 percent of all 

agricultural lands and about 25 percent of the total national land area. Once a major industry and 

the leading earner of foreign exchange in the 1960s, forestry has declined sharply in importance 

as a result of rapid deforestation. From a position as the world’s leading exporter of tropical 

hardwoods in the 1970s, the Philippines became a net importer of forest products by the 1990s. 

In 1990 the Department of Environment and Natural Resources announced a 25-year plan for the 

sustainable development of the nation’s forests. The Congress of the Philippines is considering a 

nationwide ban on logging; such bans already have been introduced in several provinces. 

Fishing consists of municipal fishing, which uses no boats at all, rafts, or boats less than three 

tons; commercial fishing, which uses boats of three tons or more; and aquaculture farms. In 2004 

municipal fishing accounted for about 34 percent of the value of all fishing production, 31 

percent of the volume, and 85 percent of the fishing labor force. Commercial fishing accounted 

for 36 percent of the value, 32 percent of the volume, but only 1 percent of the fishing labor 
Library of Congress – Federal Research Division Country Profile: Philippines, March 2006 

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force. Aquaculture accounted for 30 percent of the value, 37 percent of the volume, and 14 

percent of the fishing labor force. 

Mining and Minerals: The Philippines has substantial copper, chromite, and gold deposits, and 

the country also is rich in many other minerals, including coal, cobalt, gypsum, iron, nickel, 

silver, and sulfur. There are also lesser deposits, not currently being mined, of bauxite, lead, 

mercury, molybdenum, and zinc. The latest exploration by the Minerals and Geosciences Bureau 

in 1996 estimated that the Philippines had 7.1 billion tons of metallic mineral reserves and 51 

billion tons of nonmetallic mineral reserves. Of the metallic reserves, copper accounted for 4.8 

billion tons, and gold accounted for 110,000 tons. Of the nonmetallic mineral reserves, limestone 

accounted for 29 billion tons and marble for 8.5 billion tons. The U.S. Department of State 

estimates that the Philippines possesses untapped mineral wealth of US$840 billion. 

One of the world’s top producers of chromite, copper, gold, and nickel in the 1970s and 1980s, 

the Philippines failed to rank in the top 10 worldwide for the production of any of these minerals 

or precious metals in 2002. With the closing of several major mines, mining has declined as a 

share of the gross domestic product (GDP) from a high of 30 percent in the industry’s heyday to 

1 percent in 2003. Aging infrastructure, high production costs, low commodity prices, and 

environmental concerns contributed to the decline. In 2003 mining employed only 4 percent of 

the labor force and claimed a negligible part, about 9,000 hectares, of the total land area. 

However, the fortunes of the mining industry may be looking up. In 2003 President Gloria 

Macapagal-Arroyo announced that the government was shifting its policy from “tolerance to 

promotion of mining.” Consistent with the president’s policy, in December 2004 the Supreme 

Court issued a decision upholding the constitutionality of the 1995 Mining Act, which permits 

foreign companies to obtain mining and energy service contracts with the Philippine 

government. Following this decision, the local subsidiary of an Australian mining company 

announced a gold and copper mining service contract. The government hopes that additional 

foreign investment in the mining industry will be forthcoming. 

Industry and Manufacturing: The production of consumer goods dominates the manufacturing 

sector. The leading industries are processed foods, followed by electrical machinery (mainly 

semiconductors), petroleum products, coal, chemical products, and garments. Industry accounted 

for about 32 percent and the manufacturing subsector for 23–24 percent of gross domestic 

product (GDP) in 2005. The number of persons employed in manufacturing and construction was 

about 16 percent of the total labor force in 2004. 

Energy: In 2004 the Philippines derived 42 percent of its energy from oil; 30 percent from 

biomass, solar, and wind; 12 percent from coal; 7 percent from geothermal; 5 percent from 

hydropower; and 4 percent from natural gas. The Energy Development Plan for 2005–14 calls 

for the country to work toward energy independence by boosting domestic production of oil, gas, 

and coal and doubling the use of renewable sources of energy. 

The Philippines has 152 million barrels of oil reserves and 3.7 trillion cubic feet of natural gas 

reserves. In 2004 the Philippines produced 25,000 barrels of oil per day, but domestic 

consumption was about 338,000 barrels per day, which meant that the Philippines was dependent 
Library of Congress – Federal Research Division Country Profile: Philippines, March 2006 

 14

on imports for about 92.5 percent of its needs. Consumption of oil has remained relatively stable 

so far this decade as the Philippines has met growing energy demand with electricity generated 

from natural gas produced by the Malampaya field in the South China Sea beginning in 2001. 

The Malampaya field, which has about 2.6 trillion cubic feet of natural gas reserves, produces 

about 25,000 barrels per day of natural gas. A deep-water pipeline carries natural gas to an 

onshore power station. Eventually, three such stations will have a combined capacity of 2,700 

megawatts. In 2003 the Philippines consumed 9.6 million short tons of coal, of which 7.4 million 

tons (77 percent) were imported. The Philippines is the second largest producer of geothermal 

power in the world after the United States, and geothermal power accounts for about 50 percent 

of domestic power generation, followed by hydropower, which accounts for about 33 percent. 

The development of hydropower through the construction of large dams, however, has been 

controversial. Its proponents argue that the dams provide flood control, irrigation, and more selfsufficiency in energy. Its opponents argue that the dams destroy valuable natural habitat and 

displace thousands of local people without adequate compensation. Other power sources are 

natural gas, coal, and oil. There are no operational nuclear power plants in the Philippines. The 

Bataan Nuclear Power Plant, completed in 1985, had its operations suspended in 1986 because of 

corruption charges, and in 1997 the government decided to convert the idle plant to a natural gas 

power plant. The Philippines continues to pursue the privatization of the state-owed National 

Power Company known as Napocor, but so far the initiative has been plagued by delays. 

Possible reasons include poor infrastructure and inflated valuations. 

Services: The services sector, in which the Philippines apparently enjoys a comparative 

advantage, has grown steadily since 1985, when it accounted for about 40 percent of both gross 

domestic product (GDP) and the total number of persons employed. By 1999, services accounted 

for about 52 percent of GDP and about 45 percent of the total number of persons employed, and 

by 2004 those figures had risen to 53 percent and 48 percent, respectively. In the first half of 

2005, the services sector grew more quickly (by 6.6. percent) than industry or agriculture. The 

fastest growing segments of the services sector were telecommunications, business outsourcing, 

and financial services. 

Banking and Finance: The Central Bank of the Philippines supervises the nation’s banking 

system. Nonbank financial intermediaries such as private insurance companies are overseen by 

the Insurance Commission and the Securities and Exchange Commission. The largest domestic 

banks, in order of size, are Metropolitan Bank and Trust (Metrobank), Bank of the Philippine 

Islands, Equitable-PCI Banking Corporation, Land Bank of the Philippines, Philippine National 

Bank, Development Bank of the Philippines, Rizal Commercial Banking Corporation, Banco de 

Oro, Allied Banking Corporation, and China Banking Corporation. There also are 32 other 

universal and commercial banks. Four of the banks are owned or controlled by the government: 

the Land Bank of the Philippines, the Philippine National Bank, the Development Bank of the 

Philippines, and the Al-Amanah Islamic Bank. In addition, the banking sector includes 93 thrift 

banks (savings and mortgage banks, stock savings and loan associations, private development 

banks, and micro-finance institutions) and 771 rural banks. The universal and commercial banks 

and the largest thrift banks have licences to operate foreign-currency deposit units. Foreign banks 

provide competition to local banks and are active in investment banking, asset management, and 

foreign-exchange and derivatives trading. Although they have a small market share and branch 

networks are not extensive, the expertise and reputation of the foreign banks attract customers. 
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 15

The banking sector was relatively undamaged by the Asian financial crisis of 1997–98, and since 

2001 asset quality has improved. In July 2005, nonperforming loans declined into the single 

digits (9.3 percent), half the peak level (18.8 percent) recorded in October 2001. This progress 

reflects the positive impact of the Special Purpose Vehicle Act of 2002, which provided 

incentives to financial institutions to reduce non-performing assets. Another trend in commercial 

banking is toward consolidation and restructuring. 

The capitalization of the stock market is still modest, but it is growing rapidly off a low base. At 

the end of 2005, total stock market capitalization reached US$113 billion, up 25 percent from the 

previous year. During 2005, initial public offerings reached their highest level since the Asian 

financial crisis in 1997–98: US$1.06 billion. However, fewer than 1 percent of Filipinos invest in 

the stock market. Filipino investors generally prefer the bond market, which they regard as safer, 

and foreign investors also lack confidence in the stock market. The most important index, the 

Philippine Composite Index (PHISIX), consists of 34 listed issues, representing the country’s 

most important companies. The main financial centers are in Manila, the location of the 

Philippine Stock Exchange, and in Cebu. 

The Philippines had 34 life insurance firms in 2005; this number includes foreign insurers that 

dominate the industry. Three foreign-owned life insurers and four joint-venture (foreign and 

domestic) life insurers enjoyed a combined market share of about 60 percent. The Philippine 

American Life Insurance Company is the largest life insurance issuer with a market share of 23.6 

percent. 

Tourism: In 2005 about 2.6 million foreign tourists visited the Philippines—a record high. 

Tourists came from the following regions, listed in order of volume: East Asia, North America, 

Association of South East Asian Nations, and Australiasia/Pacific. Authorities were hopeful that 

visitors could reach 3 million in 2006. Tourism has grown significantly since the first three years 

of the decade, when about 1.9 million foreigners visited the country each year. The Department 

of Tourism has actively promoted tourism to take advantage of the fact that the indirect impact of 

tourism on the economy is 2.5 times the actual money spent by visitors, according to a study by 

economists at the University of Asia and the Pacific. Prior to 2005, tourism had failed to flourish 

as a result of political and economic instability, the terrorist threat in the southern provinces, and 

the perception that other countries in the region offer better attractions. The Philippines is 

seeking more investment in hotels, restaurants, and other tourism-related infrastructure. 

Labor: In December 2005, the unemployment rate was 7.4 percent, much lower than the roughly 

11 percent average typical since the mid-1980s. The improvement was attributable to electronics 

exports, the end of drought conditions for agriculture, and growth in business outsourcing, real 

estate, and tourism. Some 32.9 million people were employed out of a total workforce of 35.5 

million. However, the underemployment rate was 21.2 percent. In 2004 about 48 percent were 

employed in services, 36 percent in agriculture, and 16 percent in industry. Reflecting the lack of 

satisfactory employment opportunities at home, an estimated 652,000 Filipinos obtained 

employment outside the country as contract workers. About 4 million workers belong to trade 

unions, which are particularly prevalent in manufacturing. Labor relations generally are good 

because of the strict enforcement of labor laws and the acceptance of collective bargaining. 
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However, in 2003 some 38 new strikes, mostly attributable to unfair labor practices, led to the 

loss of 156,000 workdays, less than half the level in the previous year. 

Foreign Economic Relations: The Philippines’ foreign economic relations revolve around its 

Asian neighbors, with which it conducts a majority of its trade, and the United States, which is a 

major trading partner. The Philippines helped to found the Association of Southeast Asian 

Nations (ASEAN) in 1967. The Philippines also belongs to the Asia-Pacific Economic 

Cooperation (APEC) forum. ASEAN’s goal of establishing a regional free-trade area has been 

only partially realized. 

The Philippines has been a member of the World Trade Organization (WTO) since January 1, 

1995. In 2001 the Philippine Bureau of International Trade Relations issued a positive 

assessment of the WTO’s impact on the country’s economic development. WTO membership 

has enabled the Philippines to adopt transparent trade rules regarding customs valuation, 

defenses against unfair trade, and protection of intellectual property rights. For example, in 1998 

the government passed a law that improves the protection of intellectual property rights in the 

areas of copyrights, patents, and trademarks. However, the United States maintains that the 

intellectual property protections are inadequate and has taken initial steps toward imposing trade 

sanctions. 

Imports: In 2004 the Philippines’ imports were valued at US$45.1 billion, up 10.6 percent from 

the previous year. Principal imports were telecommunications and electronics equipment (34 

percent), chemicals (7 percent), and crude petroleum (6 percent). The main origins of imports 

were Japan (19.8 percent), the United States (13.7 percent), China (7.7 percent), Singapore (7.4 

percent), Taiwan (7.0 percent), and South Korea (5.6 percent). 

Exports: In 2004 the Philippines’ exports were valued at US$38.7 billion, up 9.6 percent from 

the previous year. Principal exports were electronic products (68.8 percent), clothing (5.6 

percent), coconut oil (1.5 percent), and petroleum products (1.0 percent). Exported electronic 

products were primarily semiconductors. The main destinations of exports were Japan (20.1 

percent), the United States (17.9 percent), the Netherlands (9.1 percent), Hong Kong (7.9 

percent), China (6.7 percent), and Singapore (6.6 percent). 

Trade Balance: In 2004 the Philippines incurred a merchandise trade deficit of US$6.4 billion, 

or 14 percent of imports. However, remittances of US$8.8 billion from Filipinos working 

overseas during 2004 more than offset the trade deficit. Such remittances surpassed US$10.8 

billion in 2005. As recently as 2002, the Philippines had a slight trade surplus. 

Balance of Payments: In 2004 the current account balance was US$2.1 billion. Since 1998, the 

Philippines has achieved a positive current account balance. Reflecting the sustained period of 

balance of payments surpluses, gross international reserves rose to a record US$18.6 billion in 

September 2005. 

External Debt: In 2004 external debt amounted to US$61 billion, or 72.2 percent of gross 

domestic product (GDP). 
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Foreign Investment: In 2004 direct investment inflows were a modest US$57 million. Over the 

long term, direct and portfolio investment have been anemic, reflecting the relative 

unattractiveness of the economy, restrictions on foreign ownership, and the perception of 

political risk. The three top sources of foreign direct investment—ranked by amount—are the 

United States, Japan, and the Netherlands. 

Currency and Exchange Rate: The currency is the Philippine peso (PHP). In mid-March 2006, 

the exchange rate was approximately PHP51 = US$1. The peso is made up of 100 centavos. 

Coins are issued in denominations of 1, 5, 10, and 25 centavos and 1, 5, and 10 pesos. Banknotes 

are issued in denominations ranging from 5 pesos to 1,000 pesos. 

Fiscal Year: Calendar year. 

TRANSPORTATION AND TELECOMMUNICATIONS 

Overview: The transportation system faces the fundamental geographic challenge that the 

Philippines is a far-flung archipelago. This fact offers a partial explanation for the country’s 

relatively undeveloped transportation infrastructure. Another reason is the sustained 

underinvestment in infrastructure since the 1997–98 Asian economic crisis. In 2003, for 

example, infrastructure investment accounted for only 3.6 percent of gross domestic product, 

well below the rate of investment in Thailand (15.4 percent) and Vietnam (9.9 percent). 

Consequently, the Philippines ranked 89 out of 102 countries in infrastructure quality in 2004, 

according to the World Economic Forum. Among developing economies in East Asia, the 

Philippines ranked last for the quality of its railroads, ports, and electrical systems. The road 

network is mostly unpaved, only slightly more than half of the limited railroad system is in 

operation, and only a few ports have major passenger and cargo terminals. President Gloria 

Macapagal-Arroyo hopes to establish a highway and ferry network that will ease travel across 

the archipelago. 

Roads: Although an extensive road network covers almost the entire nation, the quality varies 

widely, and traffic congestion is common, particularly in Manila. Local governments are 

responsible for managing some 86 percent of the 202,000-kilometer network. An estimated 60 

percent of roads are unpaved village roads. As for the national network, 70.4 percent of roads are 

paved with concrete or asphalt, with the remainder consisting of gravel or earth. In urban areas, 

transportation is available by car, bus, light rail, metro rail, and jeepney. The highly decorated 

but popular jeepney, a derivative of the World War II-era U.S. Army jeep, has been adapted to 

public transportation. In the provinces, buses, jeepneys, and three-wheeled taxis are the main 

modes of ground transportation. A priority in the nation’s lagging road investment program is the 

improvement of roads carrying goods to and from ports. 

Railroads: The Philippines has 897 kilometers of railroads, but much of the network in the north 

is closed because of its poor condition. The main railroad line, of which 440 kilometers are 

operational, is located on the island of Luzon, the largest island in the archipelago and home of 

Manila. On Luzon, the Philippine National Railways provides long-distance service, while in 

Metropolitan Manila, the Metro Rail Transit Authority and Light Rail Transit Authority provide 

elevated, light-rail service. 
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Ports: As an archipelago, the Philippines has more than 1,000 ports, of which 117 are regarded 

as international ports. The Philippines Port Authority, which administers the ports, has the 

mission of promoting maritime trade within the context of the Philippines’ hoped-for 

transformation into a newly industrialized country. About 12 of the 117 international ports have 

major cargo and passenger terminals. The premier cargo terminal is in the Port of Manila. The 

domestic ports service inter-island boats, ferries, and roll-on, roll-off vessels. Some remote 

islands are accessible only by boat. In 2003 privately controlled ports accounted for 54 percent of 

total cargo serviced. Private ports generally handle more international trade, whereas 

government-run ports service mainly domestic trade. 

Inland Waterways: The Philippines has 3,219 kilometers of inland waterways. The nation’s 

inland waterway system is the thirty-second largest in the world. 

Civil Aviation/Airports: The Philippines has 87 airports, including four major international 

airports: Mactan-Cebu International on Mactan Island in Cebu province, Ninoy Aquino 

International in Manila, Diosdado Macapagal International at the former U.S. Air Force base at 

Clark Field, north of Manila, and Davao International Airport near Davao City on Mindanao. 

Most of the other regional airports are substandard. The government is working on improving the 

civil aviation infrastructure. A legal dispute is holding up the opening of a newly constructed 

terminal at Ninoy Aquino International Airport. A consortium of international companies is 

seeking to recover investments in the project, following the revocation of the group’s buildoperate-transfer contract and seizure of the terminal by President Macapagal-Arroyo’s 

administration. The government plans to complete the terminal in early 2006, but the opening is 

likely to be delayed. The flagship airline is Philippine Airlines, which serves 32 foreign and 21 

domestic cities with a fleet of 30 Boeing and Airbus aircraft. 

Pipelines: In October 2001, multinational energy companies began to tap natural gas from the 

Malampaya offshore field in the South China Sea by completing a 502-kilometer pipeline, one of 

the longest deep-water pipelines in the world. The Malampaya field is believed to contain 2.6 

trillion cubic feet of natural gas. The natural gas will be used to fuel three power plants with a 

combined annual capacity of 2,700 megawatts. 

Telecommunications: Mobile telecommunications are more popular than fixed-line 

telecommunications in the Philippines. An estimated 30–40 million Filipinos have cell phones. 

The Philippines uses the Global System for Mobile Communications, a second-generation digital 

technology employed by 71 percent of the world market. In November 2004, the National 

Telecommunications Commission held initial hearings to lay the groundwork for the 

introduction of third-generation digital technology, already widely used in the United States, 

Europe, and much of the Asia-Pacific region. In December 2005, the government authorized four 

domestic carriers to provide third-generation cellular service beginning in 2008. Thirdgeneration technology enables high-speed, high-bandwidth video applications by cell phone. 

Currently, Short Message Service, a system for text messages under 160 characters in length, is 

widely used, with more than 200 million messages transmitted per day, but Multimedia Message 

Service has been gaining acceptance since its introduction in 2003. 
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In 2003 the Philippines had 11.5 million radios, 3.7 million televisions, and 1.5 million personal 

computers. Internet access is modest, particularly in comparison to other countries in the region. 

Whereas South Korea boasts the world’s highest Internet broadband penetration rate, only about 

5 million Filipinos have Internet access, and 85 percent of them rely on dial-up connections. The 

Philippine Long Distance Company, the largest telecommunications provider, is responsible for 

maintaining a national digital fiber-optic network, digital microwave radio, and satellite 

communications. 

GOVERNMENT AND POLITICS 

Overview: In February 1987, the Philippines adopted a new constitution that instituted the 

presidential-style republican form of democracy, which resembles the U.S. model much more 

than the European parliamentary system. One key difference between the Philippine and U.S. 

systems is that the Philippines is a unitary republic, whereas the United States is a federal 

republic, with significant powers reserved for the states. In the Philippines, by contrast, the 

national government is not challenged by local authority. The ratification of the 1987 

constitution—the fourth in the nation’s history—by national referendum signaled the country’s 

return to democracy following the autocratic rule of Fernando Marcos (1965–86). Politics in the 

Philippines is somewhat tumultuous. In February 2006, the president declared a state of 

emergency after quashing the attempted coup staged by the political opposition. 

Executive Branch: Embracing the concept of separation of powers, the constitution provides for 

a president, who is simultaneously head of government and chief of state, a separately elected 

vice president, a bicameral legislature, and an independent judiciary. The constitution includes 

legislative and judicial limits on the power of the president. The president cannot abolish 

Congress, and Congress can override a presidential veto with a two-thirds majority vote. 

Moreover, the president needs Congressional support in order to implement policies and 

programs. The Supreme Court rules on the constitutionality of presidential decrees. 

The president is elected to a single six-year term by direct universal suffrage; the vice president 

may be elected to a maximum of two consecutive six-year terms. The vice president may be 

appointed to the cabinet without legislative confirmation. The current president is Gloria 

Macapagal-Arroyo, who originally took office in January 2001, when she succeeded Joseph 

Estrada following his impeachment in November 2000. In May 2004, Macapagal-Arroyo was 

elected to a full term. The vice president, since June 2004, is Noli de Castro. The executive 

functions of the government are carried out through the Cabinet of Ministers. The cabinet, which 

in 2005 consisted of heads of 22 departments and offices, is appointed by the president with the 

consent of the Commission of Appointments. 

Legislative Branch: The bicameral Congress of the Philippines consists of the Senate (upper 

chamber) and House of Representatives (lower chamber). Members of the 24-seat Senate are 

elected at large to six-year terms and are limited to no more than two consecutive terms. The 

current president of the Senate (since 2000) is Franklin M. Drilon. The House is limited by the 

constitution to no more than 250 members. In 2005 there were 238 members, of whom 214 (80 

percent) were elected for three-year terms from legislative districts apportioned among the 
Library of Congress – Federal Research Division Country Profile: Philippines, March 2006 

 20

provinces, cities, and the Metropolitan Manila area in accordance with the population, on the 

basis of a uniform and progressive ratio. The other 24 members (limited by the constitution to 20 

percent of the total) are presidential appointees elected through a party-list system of registered 

national, regional, and sectoral parties or organizations. House members are limited to no more 

than three consecutive terms. The current speaker of the House (now in his third term as speaker, 

most recently since 2004) is José de Venecia. By means of a two-thirds majority vote, Congress 

can override presidential vetoes and declare a state of war. 

Judicial Branch: The Philippines has an independent judiciary, with the Supreme Court as the 

highest court of appeal. The Supreme Court also is empowered to review the constitutionality of 

presidential decrees. The Supreme Court consists of a chief justice and 14 associate justices. It is 

not necessary for the entire court to convene in all cases. Justices are appointed by the president 

on the recommendation of the Judicial and Bar Council and serve until 70 years of age. The 

current chief justice, since 1998, is Hilario G. Davide, Jr. Lower-level courts include a national 

Court of Appeals divided into 17 divisions, local and regional trial courts, and an informal local 

system to settle certain disputes outside the formal court system. In 1985 a separate court system 

founded on Islamic law (sharia) was established in the southern Philippines with jurisdiction 

over family and contractual relations among Muslims. Three district magistrates and six circuit 

judges oversee the Islamic law system. A special court—the Sandiganbayan or anti-graft court—

focuses exclusively on investigating charges of judicial corruption. 

Administrative Divisions: Administrative divisions consist of regions, provinces, chartered 

cities, municipalities, and barangays (villages). Chartered cities are not part of any province and 

do not elect provincial officials. The Philippines has 17 regions, 79 provinces, 117 chartered 

cities, 1,500 municipalities, and 41,975 barangays. Metropolitan Manila, which is regarded as a 

region, consists of 14 cities, 3 municipalities, and 1,694 barangays. The Autonomous Region in 

Muslim Mindanao was established in 1990 following a plebicite in late 1989. 

Provincial and Local Government: Governors and vice governors are elected to head 

provinces, the largest local administrative unit. Appointed functionaries responsible for 

managing offices concerned with finance, tax collection, audit, public works, agricultural 

services, health, and schools are subordinate not just to the governor, but also to national 

ministries. Because the Philippines is a unitary republic, local government has less power than it 

would have in a federal system. In fact, according to the constitution, the president oversees local 

government. The single biggest problem for local government has been inadequate funding. 

Although local government is permitted to levy taxes, such taxes are subject to restrictions by 

Congress, and they have been difficult to collect in practice. A fragmented four-province 

Autonomous Region in Muslim Mindanao was formally established in November 1990 with its 

own governor and unicameral legislature. 

Judicial and Legal System: The basis of the legal code is primarily Spanish and AngloAmerican law. Islamic law applies among Muslims in portions of the southern Philippines. 

According to the constitution, those accused of crimes have the right to be informed of the 

charges against them, to be represented by counsel, and to have a speedy and fair public trial. 

Defendants also enjoy the presumption of innocence and have the right to confront witnesses, 

present evidence, and appeal convictions. However, the judiciary is said to suffer from 
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corruption and inefficiency, which at times undermine the provision of due process and equal 

justice. As a result, the Supreme Court has undertaken a five-year program to speed up the 

judicial process and crack down on corruption. 

Electoral System: The Philippines has universal direct suffrage at age 18 and older to elect the 

president, vice president (who runs independently), and most of the seats in the bicameral 

legislature, consisting of the House of Representatives and the Senate; a minority of House 

members known as sectoral representatives are appointed by the president. Elections are held not 

just for national leadership but also for representation at the provincial and local levels. In the 

last elections in May 2004, some 74 percent of eligible voters participated, but the process was 

marred by violence and numerous irregularities, which the political opposition continues to 

protest, even calling for the president’s impeachment. 

Politics and Political Parties: President Macapagal-Arroyo represents the conservative LakasChristian Muslim Democratic Party (Lakas-CMD), since the May 2004 election the largest 

faction in the House of Representatives (100 seats). Lakas-CMD has formed a governing 

coalition with the Liberal Party (32 seats). Others parties in the House are the Nationalist Peoples 

Coalition (47 seats); Struggle for Democratic Filipinos (nine seats); Nationalista Party (six seats); 

Akbayan (three seats); Association of Philippine Electric Co-operatives (three seats); Bayan 

Muna (three seats); Power of the Filipino Masses (three seats); Aksyon Demokratiko, Promdi, 

and Reporma, which have formed an alliance (two seats); Philippine Democratic Party (two 

seats); and Philippines Democratic Socialist Party (two seats). Personalities are more important 

than parties in Philippine politics. Movie stars and other celebrities have enjoyed considerable 

success. In addition, several prominent families play a disproportionate role in politics. 

Mass Media: The Office of the President is responsible for managing the government’s policy 

toward the press, but freedom of speech and freedom of the press are enshrined in the 1987 

constitution. Although independent observers credit the government with respecting freedom of 

the press in general, the government has been criticized for failing to investigate thoroughly 

summary killings of journalists and for subjecting journalists to harassment and surveillance. The 

most widely read newspapers are the Manila Bulletin, Philippine Star, Philippine Daily Inquirer, 

Manila Times, and Business World. In 2004 the country had 225 television stations, 369 AM 

radio broadcast stations, 583 FM radio broadcast stations, and 5 shortwave stations. Although 

some media outlets, such as IBC (television) and the Philippine Broadcasting Service (radio), are 

government-run, most outlets are privately owned. Much media ownership is concentrated in the 

hands of prominent families and businesses. Consequently, some reports tend to be one-sided 

presentations favoring special interests. The privately owned press also tends toward 

sensationalism at times. 

Foreign Relations: The foreign policy of the Philippines aims to promote democracy and human 

rights and the welfare of some 7 million overseas workers. The Philippines maintains close ties 

to Persian Gulf and other Middle Eastern nations where many of these workers are employed. In 

an effort to expand its relationship with the Islamic world, the Philippines is seeking observer 

status in the Organization of the Islamic Conference. The Philippines is an active member of the 

Association of Southeast Asian Nations. The Philippines also has participated in a variety of 

United Nations-sponsored peacekeeping missions. However, in July 2004, after a Filipino truck 
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driver was taken hostage in Iraq, the Philippines elected to withdraw troops from that embattled 

nation in order to win his release. 

The Philippines maintains strong ties to the United States, which designated the nation a major 

non-North Atlantic Treaty Organization ally in 2003. Although the United States mildly rebuked 

the Philippines for yielding to insurgent demands in Iraq to withdraw its small contingent, the 

United States continues to view the Philippines as an important ally in the war on terrorism, 

particularly in view of various Islamic insurgencies on the islands of Mindanao and Jolo. The 

relationship with the United States was redefined in the early 1990s, when the United States 

complied with Philippine demands to vacate various military bases, including the naval base at 

Subic Bay. However, the two nations remain close, and in May 2004 the Philippines signed an 

agreement with the United States exempting U.S. military personnel in the Philippines from 

prosecution before the International Criminal Court. 

The Philippines has an improving, but still fragile, relationship with China. As reflected in 

President Macapagal-Arroyo’s visit to China in 2001, the Philippines is seeking closer economic 

cooperation with China, even as it fears China’s growing economic and military clout. A 

territorial dispute over control of the Spratly Islands in the South China Sea is an impediment to 

better relations. China also is concerned about the Philippines’ strong ties to the United States, 

which it views as a strategic rival in the region. 

The Philippines cooperates with the neighboring countries of Indonesia and Malaysia in 

combating the regional threat posed by the Islamic terrorist group Jemaah Islamiyah. Relations 

with Indonesia improved following the ouster of President Suharto in May 1998 after 32 years of 

authoritarian rule. Suharto’s overthrow mirrored Ferdinand Marcos’s overthrow in the 

Philippines in 1986. The Philippines’ relations with Malaysia are somewhat impaired by a 

territorial dispute over the state of Sabah, which is now part of Malaysia. 

Japan and the United States are the Philippines’ leading trading partners and sources of direct 

investment. Japan is the top source of development assistance. Australia also is a significant 

economic and security partner. The Philippines and Singapore share a close economic and 

political relationship with the United States, and the two nations have engaged in joint military 

training exercises. 

Membership in International Organizations: The Philippines belongs to the United Nations 

(UN), the World Trade Organization, and several key Asian regional organizations, notably the 

Association of Southeast Asian Nations (ASEAN), ASEAN’s Regional Forum, the Asian 

Development Bank, and the Asia Pacific Economic Cooperation (APEC) forum. In addition, the 

Philippines is a member of the following international organizations: Colombo Plan, Customs 

Cooperation Council, Group of 24, Group of 77, International Chamber of Commerce, 

International Confederation of Free Trade Unions, International Criminal Police Organization, 

International Federation of Red Cross and Red Crescent Societies, International Hydrographic 

Organization, International Olympic Committee, International Organization for Migration, 

International Organization for Standardization, Non-Aligned Movement, Organisation for the 

Prohibition of Chemical Weapons, World Confederation of Labor, World Federation of Trade 
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Unions, and World Tourism Organization. The Philippines has applied for observer status in the 

Organization of the Islamic Conference. 

During 2004–5 the Philippines served as a temporary member of the UN Security Council. The 

Philippines is a permanent member of the following UN-affiliated organizations: Economic and 

Social Commission for Asia and the Pacific, Food and Agriculture Organization, International 

Atomic Energy Agency, International Bank for Reconstruction and Development (World Bank), 

International Civil Aviation Organization, International Development Association, International 

Finance Corporation, International Fund for Agricultural Development, International Labour 

Organization, International Maritime Organization, International Monetary Fund, International 

Telecommunication Union, UN Conference on Aid and Development, UN Educational, 

Scientific and Cultural Organization, UN Industrial Development Organization, UN Office of the 

High Commissioner for Refugees, UN University, Universal Postal Union, World Health 

Organization, World Intellectual Property Organization, and World Meteorological 

Organization. 

Major International Treaties: The Philippines is a party to the following environmental 

agreements: Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, 

Endangered Species, Hazardous Wastes, Law of the Sea, Marine Dumping, Ozone Layer 

Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands, and Whaling. The 

Philippines has signed, but not ratified, the agreement on Air Pollution-Persistent Organic 

Pollutants. In the area of arms control, the Philippines is a party to the Biological Weapons 

Convention, Chemical Weapons Convention, Treaty on the Non-Proliferation of Nuclear 

Weapons, and Limited Test Ban Treaty. The Philippines has ratified numerous international 

human rights agreements, including those against slavery, genocide, prisoner of war abuse, 

human trafficking, racial discrimination, and torture. The Philippines also has adopted 

agreements designed to protect women, children, and refugees. Although the Philippines is a 

member of the World Intellectual Property Organization (WIPO), it has not ratified the WIPO 

Performances and Phonograms Treaty or the Copyright Treaty. 

NATIONAL SECURITY 

Armed Forces Overview: The Armed Forces of the Philippines (AFP) consists of a 66,000-

member army; a 24,000-member navy, including 7,500 marines; and a 16,000-member air force. 

Active forces are supplemented by 131,000 reserves. A joint service command covers five 

military areas. The 6,000-member National Capital Region Command, established in November 

2003, is responsible for protecting the government against coup attempts. The president of the 

republic is commander in chief of the armed forces. The AFP is poorly funded and is armed with 

antiquated equipment. In 2003 the government moved to replace World War II-era rifles. In 

addition, only slightly more than half of the Philippines’ naval ships are operational, and only a 

few air force planes are combat ready. Compounding the problem of inadequate equipment, the 

AFP’s leadership has been accused of corruption and complicity with insurgent groups, although 

its primary mission involves counterinsurgency. In July 2003, junior officers staged an 

unsuccessful coup. The Philippines is the recipient of U.S. military assistance. 
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Foreign Military Relations: The United States and the Philippines have a mutual defense treaty 

that has been in effect since 1952, but it does not extend to territorial disputes involving the 

Spratly Islands. In 2003 the United States designated the Philippines as a major non-North 

Atlantic Treaty Organization ally. Total U.S. military assistance to the Philippines rose from 

US$38 million in 2001 to US$114 million in 2003 and a projected US$164 million in 2005, 

which would make the Philippines the fourth largest recipient of U.S. foreign military assistance. 

Australia reportedly also a major source of military assistance. 

External Threat: The Philippines faces no major external threat. 

Defense Budget: The defense budget for 2005 totaled US$840 million, or 5 percent of the 

proposed government budget of US$16.5 billion. Almost half of the defense budget was 

designated for the army. Viewed another way, 80 percent of the budget was slated for personnel 

and almost the entire remaining amount, for maintenance and operating expenses. Thus, less than 

1 percent was available for desperately needed procurement. 

Major Military Units: The army has eight light infantry divisions, one special operations 

command, five engineering battalions, one artillery regiment at headquarters, one presidential 

security group, and three light-reaction companies. The navy has two commands—Fleet and 

Marine Corps. Navy bases are located at Sangley Point/Cavite, Zamboanga, and Cebu. The air 

force is organized into headquarters and five commands: air defense, tactical operations, air 

education and training, air logistics and supply, and air reserves. 

Major Military Equipment: The army is equipped with 65 light tanks, 85 armored infantry 

fighting vehicles, and 370 armored personnel carriers, as well as towed artillery, mortars, 

recoilless launchers, and several small aircraft. The navy is equipped with one frigate; 58 patrol 

and coastal combatants; 7 amphibious ships, plus about 39 amphibious craft; and 11 support and 

miscellaneous vessels. However, in April 2003 the armed forces chief of staff stated that only 56 

percent of the navy’s vessels were operational. Naval aviation has six transport aircraft and four 

search-and-rescue helicopters. The air force has 36 combat aircraft and 25 armed helicopters. 

Military Service: The Armed Forces of the Philippines (AFP) is an all-volunteer force. The 

minimum age for service is 20 years. 

Paramilitary Forces: Paramilitary forces include the civilian Philippine National Police (under 

the Department of Interior and Local Government), with an estimated 115,000 personnel; the 

Coast Guard (run by the navy but technically part of the Department of Transportation and 

Communications), numbering 3,500; and local citizen armed militias, the Civilian Armed Forces 

Geographical Units (CAFGUs) estimated to number 40,000–82,000. 

Foreign Military Forces: Beginning in 2002, the U.S. military has assisted the Armed Forces of 

the Philippines in fighting the Abu Sayyaf Group (ASG), an al Qaeda affiliate. Although foreign 

militaries are formally banned from conducting operations on Philippine soil, the U.S. military 

has maintained an officially advisory presence in the Philippines continuously since 2002. The 

two nations regularly conduct joint training exercises in the Philippines. 
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Military Forces Abroad: The Philippines has participated in a variety of United Nations (UN)-

sponsored peacekeeping missions, most recently the UN Mission in Burundi, the UN Mission of 

Support in East Timor, the UN Stabilization Mission in Haiti, the UN Mission in Ivory Coast, 

and the UN Mission in Liberia. The Philippines also participated in United States-led operations 

in Iraq, with troops involved in humanitarian assistance starting in August 2003. However, the 

Philippines decided to withdraw its small force in July 2004 when insurgents took a Filipino 

truck driver hostage. 

Police: The Department of Interior and Local Government oversees the Philippine National 

Police (PNP), which has an active force of about 115,000. The PNP, which had been entrusted 

with internal security in 1996, lost this role two years later, when the Armed Forces of the 

Philippines—particularly the army—reasserted its lead role in internal security. In September 

2002, the PNP regained some of its authority when it was allowed to form a counterinsurgency 

task force in northeast Mindanao. Meanwhile, the army established a parallel task force in 

southwest Mindanao. 

Internal Threat: Insurgencies by various Islamic terrorist and separatist groups and the 

communist New People’s Army pose a significant internal threat. In response to this situation 

and the global war on terrorism, the Armed Forces of the Philippines (AFP) has been 

restructured to combat domestic insurgencies, most of which are based on the southern island of 

Mindanao: the Moro Islamic Liberation Front (MILF), the Abu Sayyaf Group (ASG), Jemaah 

Islamiyah, and the Communist Party of the Philippines’ New People’s Army (NPA). In addition, 

the loyalty of the military to the government remains in doubt, following an unsuccessful coup 

by a renegade faction of the AFP in July 2003. 

Terrorism: The Philippines faces an indigenous terrorist threat from several organizations: the 

Moro Islamic Liberation Front (MILF), the Abu Sayyaf Group (ASG), Jemaah Islamiyah (JI), 

and the communist New People’s Army (NPA). The MILF and ASG, which aspire to establish 

an Islamic state on Mindanao, are reputed to have links to al Qaeda. The MILF, which has 

engaged in sporadic peace negotiations with the government and has some moderate elements, is 

the largest of the groups, with about 10,000 to 11,000 soldiers. The more militant ASG, after 

being forced to abandon its stronghold on the island of Basilan by the Armed Forces of the 

Philippines, has regrouped on Jolo. About 400 guerrillas now are affiliated with the group, about 

half the original level before its confrontation with the Philippine military. Jemaah Islamiyah, an 

al Qaeda affiliate active in Indonesia but with branches across Southeast Asia, allegedly failed to 

execute plans to bomb ceremonies marking the inauguration of the new Philippine government 

in June 2004. The NPA, the military wing of the Communist Party of the Philippines, has about 

3,000 guerrillas on Mindanao. 

Human Rights: According to a U.S. Department of State report released in March 2006, 

Philippine security forces have been responsible for serious human rights abuses despite the 

efforts of civilian authorities to control them. The report found that although the government 

generally respected human rights, some security forces elements—particularly the Philippine 

National Police—practiced extrajudicial killings, vigilantism, disappearances, torture, and 

arbitrary arrest and detention in their battle against criminals and terrorists. Prison conditions 

were harsh, and the slow judicial process as well as corrupt police, judges, and prosecutors 
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impaired due process and the rule of law. Besides criminals and terrorists, human rights activists, 

left-wing political activists, and Muslims were sometimes the victims of improper police 

conduct. Violence against women and abuse of children remained serious problems, and some 

children were pressed into slave labor and prostitution.