The Philippine Anti-Dummy Law, officially known as Commonwealth Act No. 108, is a landmark piece of legislation enacted in 1936 to uphold constitutional restrictions on foreign ownership and control in certain sectors of the Philippine economy. Here’s a detailed breakdown of its purpose, scope, and enforcement:

🇵🇭 Overview of the Anti-Dummy Law

Purpose:

  • To prevent foreign nationals from circumventing ownership restrictions by using Filipino citizens or entities as “dummies”.

  • To protect national sovereignty and ensure that certain rights, franchises, and privileges remain under Filipino control12.

Key Provisions

  • Prohibited Acts:

    • Using Filipino citizens or corporations to hold title or shares on behalf of foreigners.

    • Allowing foreigners to control businesses reserved for Filipinos through contracts, side letters, or informal arrangements.

    • Simulating Filipino ownership of capital stock to meet legal thresholds23.

  • Beneficial Ownership:

    • Even if a Filipino legally owns shares, if a foreigner is the true owner or controller, it violates the law.

  • Industries Covered:

    • Land ownership

    • Mass media

    • Public utilities

    • Retail trade

    • Education

    • Other sectors with foreign equity restrictions under the Constitution and related laws3.

Penalties

  • Imprisonment: 5 to 15 years

  • Fines: At least ₱5,000 or the value of the illegally acquired right or privilege

  • Forfeiture: Assets involved in dummy arrangements may be seized14.

🏛️ Enforcement & Amendments

  • Enforced by: Department of Justice (DOJ) and Securities and Exchange Commission (SEC)

  • Amended by:

    • Presidential Decree No. 1767 (1981)

    • Republic Act No. 7042 (Foreign Investments Act of 1991)

Real-World Implications

  • Nominee arrangements and simulated transactions are common violations.

  • The law is actively enforced, especially in real estate and corporate ownership cases.

  • Ongoing debates exist around relaxing restrictions to attract foreign investment while safeguarding national interests23.

  • References (4)

1Commonwealth Act No. 108 – The Lawphil Project. https://lawphil.net/statutes/comacts/ca1936/ca_108_1936.html

2The Anti-Dummy Law in the Philippines: Understanding Its Implications. https://www.respicio.ph/commentaries/the-anti-dummy-law-in-the-philippines-understanding-its-implications

3Understanding The Anti-Dummy Law In The Philippines: Key Provisions …. https://lawshun.com/article/what-is-anti-dummy-law-in-the-philippines

4C.A. No. 108 – The Lawphil Project. https://lawphil.net/statutes/comacts/ca_108_1936.html