In 1958, President Carlos P. Garcia implemented a highly controversial law that made him many enemies: The “Filipino First” policy. His presidency was essentially anchored on this campaign promise, but as a consequence, he earned the ire of three groups in the Philippines at the time: the Americans, the Chinese, and the Chinese-Filipinos.

No other group was more outraged than the Chinese and the Chinese-Filipinos, who saw the policy as a ruse to drive them out of the country, according to historians Patricio Abinales and Donna Amoroso. On the other hand, the policy gained popular support of Filipino businessmen.

What is the Filipino First Policy?

According to Abinales and Amoroso, the Filipino First policy was the government’s active promotion and preference for Filipino-owned businesses over foreign-owned ones. It also controlled imports and currency to favor Filipino entrepreneurs.

During the first years of implementing the policy, Filipinos’ economic output surged in manufacturing, agriculture, and mining.

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Remnants of this policy are seen in Article XII of the 1987 Constitution, which limits foreign ownership of entrepreneurs.

Today, many lawmakers are calling for the amendment of the Constitution for this very reason, alleging that the policy is inhibiting economic growth by barring foreigners from investing in the Philippines. The Constitution prohibits foreigners from fully owning businesses in the Philippines, stating that Filipinos should own at least 60 percent of capital in any enterprise.

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But why was the Filipino First policy put up in the first place? It actually had a lot to do with World War II and what happened to the Philippines after.

The Bell Trade Act’s Rape of the Philippine Economy

At the conclusion of World War II, the Philippines was one of the most devastated countries in the world, with Manila the second most devastated city in the world after Warsaw—a devastation of the Americans’ own doing.

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According to American historian James Scott, the U.S. unleashed so much firepower in Manila for a full month, destroying nearly every inch of the historic city.

“We fired 42,000 rounds of artillery in a matter of four weeks,” said Scott.

In 1946, on the guise of helping the Philippines recover from the War, the Americans passed the Bell Trade Act, a highly controversial law that demanded the bankrupt Philippine government make the following concessions:

The United States shall control the value of the Philippine peso

Very low or nonexistent tariffs on all U.S. products entering the Philippines

Unlimited currency transfers from the Philippines to the U.S.

Parity Rights shall be granted all Americans, granting them equal rights as Filipinos to the Philippines’ natural resources

The Philippines should amend the 1935 Constitution to accommodate the provisions within the Bell Trade Act

The U.S. further forced the hand of the Philippine government by emphasizing that it will not release $800 million worth of war rehabilitation funds if the Philippine Congress fails to ratify the Bell Trade Act.

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Two days before the Philippines gained independence from the United States, the Philippine Congress approved the law in a landslide vote.

The Bell Trade Act continued for over a decade through 1955 when the Laurel-Langley Agreement abolished certain provisions, such as the U.S. control of the peso.

The effects of the Bell Trade Act were so traumatic that when the framers of the 1987 Constitution drafted the present charter, in their mind were the horrors the Bell Trade Act wreaked on the country’s natural resources, which is why the Constitution now states that all natural resources in the country belong to the State.

Nevertheless, the Americans still controlled the most important parts of the Philippine economy such as the manufacturing sector, mining, and forestry, extracting billions of dollars’ worth of resources from the Philippines and shipping them to America.

It was against this backdrop of American imperialism that President Carlos P. Garcia drew up the Filipino First policy. Its framers had also not forgotten the horrors the Bell Trade Act wreaked on the country’s natural resources, which is why it also states that all natural resources in the country belong to the State.

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The Filipino First Policy did not mean to discriminate

The Filipino First policy’s intention was to make Filipinos the beneficiaries of their own land’s resources, and to emphasize to its former colonizer that Philippine laws should serve the interest of Filipino citizens. The Bell Trade Act severely exploited Filipinos and their country’s resources.

But it was inevitable that the policy would magnify the already existing Filipino hostility or prejudice towards the Chinese at the time. It’s a familiar trend that resonates to this day with the threat of COVID-19 bringing out the worst in Filipinos’ xenophobia against the Chinese.

Nevertheless, Garcia’s Filipino First policy raised the issue of what makes a person Filipino: Does one have to be born in the Philippines? Is there such thing as Chinese-Filipinos? And are children born to Filipino parents in America considered Filipinos?

Chinese-Filipinos in Binondo who were born and raised in the Philippines saw the policy as discriminatory and another form of spoils system that served the interest of the Garcia’s cronies.

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The Filipino First Policy Today

Today, echoes of the Filipino First policy are still heard on the floors of Congress when they debate about opening up the economy to foreign investors.

On February 18, when the House of Representatives approved a measure granting foreigners full ownership of enterprises in the power, communications, and transport sectors.

Although Garcia’s original policy is no longer in effect, its principles are still alive today and enshrined in the 1987 Philippine Constitution through Article XII, which is about the national economy.