There is both bad news and good news.
It is difficult to find any written reference in Philippine Law which specifically identifies the counting method.
According to this chart
http://en.wikipedia.org/wiki/Image:C...nity_chart.png she is 5 degree however it's best to consult ICAB because there are different ways of counting.
The contact infomation for ICAB is at the bottom of this link
http://www.gov.ph/faqs/adoption.asp
Consanguinity within the 4th degree allows for the waiver of Philippine residency. It won't make a difference when it comes to US Immigration. She has to qualify for Intercountry Adoption process through ICAB.
If she is not considered an orphan under the I-600 process you will have to meet a two year physical and legal custody before she will be considered your child and be allow to immigrate under the INA. Again you need to consult ICAB for any alternatives if she is not qualified as an orphan. Our son was not qualified and we were directed to the Domestic process as our only option. we discovered afterward that he actually could have been qualified. So explore your option completely.
Once the Intercountry Adoption Act of 2000 is implemented she can qualify for the I-600 process as a non-orphan if she is irrevocably released by the bio-parents. Last I read this is expected in late 2006 or early 2007, but this most likely won't be an easy process to do even with some tangible help.
Johnny