Filipinos Warned Not to Pawn Passports
Raising finance through non-official channels in exchange for passport as collateral is dangerous and could result in tough consequences
DUBAI: The Philippine government has warned its citizens not to use their passports as collateral to borrow money saying the move could lead to revocation of their travel documents that could ultimately jeopardize their employment overseas.
The Department of Foreign Affairs issued the warning in the wake of reports that a sizeable number of Filipinos in Saudi Arabia and the UAE have pawned their passports to get loans from individuals or firms that require personal identification documents as collateral.
“Under DFA Foreign Service Circular No. 214-99 issued on August 19, 1999, passports used as collateral or guarantee for financial obligations other than their original purpose may be revoked immediately by the Philippine government. Thus, the passport becomes invalid and useless as a guarantee or collateral,” DFA said in a statement released this month.
In Saudi Arabia, the practice of using passports as collateral is so common among Filipinos that the Philippine Embassy in Riyadh was forced to issue a statement that the passport is considered the property of the government and the passport-holder has no right to pawn it.
Vicious cycle
In the UAE, the practice of borrowing money using the passport as collateral came to the forefront during the global financial crisis.
Those who lost their jobs turned to “unofficial” loan agencies to survive, because they could not borrow from banks, having no savings, no property and no substantial salary to show their creditworthiness.
Private lenders filled the cash vacuum for people who were in dire need of cash to pay their bills but couldn’t go to banks.
A mother of two in her mid-30s, LM, borrowed Dh5,000 from Marie in 2009 during a family emergency.
By November 2012, her repayments totalled Dh10,000, double the original loan. In December 2012, LM offered Dh7,000 as a final installment.
But Marie wanted Dh20,000 more – taking the total to six times the original loan – in exchange for the release of LM’s passport and guarantee check.
Throughout these three years, ML had to deposit with Marie either her own passport, or her husband’s, or her children’s, depending on which ones she required for any embassy paperwork.
Marie is a 45-year-old retail worker, who also lends money at high interest rates to those who seek it from her.
She sees nothing wrong with holding back the borrower’s passport, blank checks, post-dated checks and labor cards.
“I don’t lend to people who give me nothing but an empty promise,” she said.
In some cases, individuals also pawn their Emirates ID or employment visas just to convince creditors to lend them money.
Barney Almazar, a Filipino lawyer who works as director at Gulf Law, said a Philippine passport is considered government property; individuals have no right to use them for their personal gain other than facilitating their travel.
A reader from Al Ain who wrote to The Filipino Times’ Legal Forum said she borrowed Dh13,000 from a friend in Dubai and was asked to use her passport as collateral. She was also required to pay an interest rate of 20 percent with penalties if she failed to meet her dues.
The woman said she was surprised to learn that her penalties alone climbed to Dh18,200 within a year, money that she doesn’t have.
In rare cases, an unpaid loan can turn bloody as was the case of Filipina businesswoman Lorna Varona, who was found dead inside the trunk of her car in October 2012.
She was killed by RA, who owed her money and had given her his passport as collateral. RA was sentenced to life imprisonment in April 2014.
Declared lost
Filipinos who think of declaring their passports as “lost” to avoid paying their debts will face a tough investigation process.The first step is to immediately report a lost passport to the police.
“When you lose your passport, you should immediately report it to the police. You will complete a form in order for the police to issue a Lost Passport Report. The purpose of this report is to prevent any unauthorized use of your passport,” said Almazar.
Likewise, those in this situation must advise the Naturalization and Residency Department or the Philippine Consulate or Embassy if they have received the lost passport.
“If these offices do not have your passport, you will need to proceed to the Criminal Investigation Department (CID) to submit the police report and the NOC from your visa sponsor,” said Almazar.
Documents obtained from the CID must then be brought to the Philippine Consulate or Embassy.
Philippine officials reiterated that personal debts are responsibility of the individuals who take the loans.Almazar said this means personal debt cannot be passed on to the government.
“Personal matters such as payment of debts for a defaulting national cannot be requested from the embassy or consulate as the Philippine government is prohibited from using taxpayers’ money for the benefit of private individuals,” he said.