AN ACT TO PUNISH ACTS OF EVASION OF THE LAWS ON THE

NATIONALIZATION OF CERTAIN RIGHTS, FRANCHISES OR PRIVILEGES

Be it enacted by the National Assembly of the Philippines

Section 1. Penalty — In all cases in which any constitutional or legal

provisions requires Philippine or any other specific citizenship as a
requisite for the exercise or enjoyment of a right, franchise or privilege, any
citizen of the Philippines or of any other specific country who allows his
name or citizenship to be used for the purpose of evading such provision,
and any alien or foreigner profiting thereby, shall be punished by
imprisonment for not less than five nor more than fifteen years, and by a
fine of not less than the value of the right franchise or privilege, which is
enjoyed or acquired in violation of the provisions hereof but in no case less
than five thousand pesos.

The fact that the citizen of the Philippines or of any specific country
charged with a violation of this Act had, at the time of the acquisition of his
holdings in the corporations or associations referred to in section two of
this Act, no real or personal property, credit or other assets the value of
which shall at least be equivalent to said holdings, shall be evidence of a
violation of this Act.1

Section 2. Simulation of minimum capital stock — In all cases in which a

constitutional or legal provision requires that, in order that a corporation or
association may exercise or enjoy a right, franchise or privilege, not less
than a certain per centum of its capital must be owned by citizens of the
Philippines or of any other specific country, it shall be unlawful to falsely
simulate the existence of such minimum stock or capital as owned by such
citizens, for the purpose of evading said provision. The president or
managers and directors or trustees of corporations or associations
convicted of a violation of this section shall be punished by imprisonment
of not less than five nor more than fifteen years, and by a fine not less than
the value of the right, franchise or privilege, enjoyed or acquired in violation
of the provisions hereof but in no case less than five thousand pesos. 2
Section 2-A. Unlawful use, Exploitation or enjoyment — Any person,
corporation, or association which, having in its name or under its control, a
right, franchise, privilege, property or business, the exercise or enjoyment of
which is expressly reserved by the Constitution or the laws to citizens of
the Philippines or of any other specific country, or to corporations or
associations at least sixty per centum of the capital of which is owned by
such citizens, permits or allows the use, exploitation or enjoyment thereof
by a person, corporation or association not possessing the requisites
prescribed by a the Constitution or the laws of the Philippines; or leases, or
in any other way, transfers or conveys said right, franchise, privilege,
property or business to a person, corporation or association not otherwise
qualified under the Constitution, or the provisions of the existing laws; or in
any manner permits or allows any person, not possessing the qualifications
required by the Constitution, or existing laws to acquire, use, exploit or
enjoy a right, franchise, privilege, property or business, the exercise and
enjoyment of which are expressly reserved by the Constitution or existing
laws to citizens of the Philippines or of any other specific country, to
intervene in the management, operation, administration or control thereof,
whether as an officer, employee or laborer therein with or without
remuneration except technical personnel whose employment may be
specifically authorized by the Secretary of Justice, and any person who
knowingly aids, assists or abets in the planning consummation or
perpetration of any of the acts herein above enumerated shall be punished
by imprisonment for not less than five nor more than fifteen years and by a
fine of not less than the value of the right, franchise or privilege enjoyed or
acquired in violation of the provisions hereof but in no case less than five
thousand pesos: Provided, however, That the president, managers or
persons in charge of corporations, associations or partnerships violating
the provisions of this section shall be criminally liable in lieu thereof:
Provided, further, That any person, corporation or association shall, in
addition to the penalty imposed herein, forfeit such right, franchise,
privilege, and the property or business enjoyed or acquired in violation of
the provisions of this Act: And provided, finally, That the election of aliens
as members of the board of directors or governing body of corporations or
associations engaging in partially nationalized activities shall be allowed in
proportion to their allowable participation or share in the capital of such
entities.3

Section 2-B. Any violation of the provisions of this Act by the spouse of any
public official, if both live together, shall be cause for the dismissal of such
public official. 4itc@lawphil

Section 2-C. The exercise, possession or control by a Filipino citizen having

a common-law relationship with an alien of a right, privilege, property or
business, the exercise or enjoyment of which is expressly reserved by the
Constitution or the laws to citizens of the Philippines, shall constitute a
prima facie evidence of violation of the provisions of Section 2-A hereof. 5

Section 3. Any corporation or association violating any of the provisions of

this Act shall, upon proper court proceedings, be dissolved.

Section 3-A. Reward to informer. — In case of conviction under the

provisions of this Act, twenty-five per centum of any fine imposed shall
accrue to the benefit of the informer who furnishes to the Government
original information leading to said conviction and who shall be
ascertained and named in the judgment of the court. If the informer is a
dummy, who shall voluntarily take the initiative of reporting to the proper
authorities any violation of the provisions of this Act and assist in the
prosecution, resulting in the conviction of any person or corporation
profiting thereby or involved therein, he shall be entitled to the reward
hereof in the sum equivalent to twenty-five per centum of the fine actually
paid to or received by the Government, and shall be exempted from the
penal liabilities provided for in this Act. 6

Section 4. This Act shall take effect upon its approval.

itc-alf

Approved, October 30, 1936.

Footnotes
*As amended by RA 421, RA 134, RA 6084, and PD 715.

Words in bold in the text above are amendments introduced by RA 134,

1

section 1, approved June 14, 1947.

Statutory History of section 1:

Original text —

SEC. 1. In all cases in which any constitutional or legal provision requires

Philippine or [United States] citizenship as requisite for the exercise or
enjoyment of a right, franchise or privilege, any citizen of the Philippines or
[the United States] who allows his name or citizenship to be used for the
purpose of evading such provision, and any alien or foreigner profiting
thereby, shall be punished by imprisonment for not less than [two] nor more
than [ten] years, and by, fine of not less than [two thousand nor more than
ten thousand pesos.]

The fact that the citizen of the Philippines or of [the United States] charged
with, violation of this Act had, at the time of acquisition of his holdings in
the corporations or association referred to in section two of this Act, no
real or personal property, credit or other assets the value of which shall at
least be equivalent to said holdings, shall be admissible as circumstantial
evidence of, violation of this act. (Ed. Note: Words in brackets were deleted
in RA 134, supra)

Words in bold in the text above are amendments introduced by RA 134,

2

section 1, approved June 14, 1947.

Statutory History of section 2:

Original text

SEC. 2. In all cases in which a constitutional or legal provisions requires

that, in order that a corporation or association may exercise or enjoy a right,
franchise or privilege, not less than a certain per centum of its capital must
be owned by citizens of the Philippines or [the United States, or both.] It
shall be unlawful to falsely simulate the existence of such minimum of
stock or capital as owned by such citizens of the Philippines [or the United
States or both,] for the purpose of evading said provision. The president or
managers and directors or trustees of corporations or associations
convicted of a violation of this section shall be punished by imprisonment
[for] not less than [two] nor more than [ten] years, and by a fine of not less
than [two thousand nor more than ten thousand pesos.] (Ed. Note: Words in
brackets were deleted in RA 134, supra.)

Words in bold in the text above are amendments introduced by PD 715,

3

section 1, promulgated May 28, 1975.

Statutory History of section 2-A:

a) Original text — (inserted by CA 421)

SEC. 2-A. Any person, corporation or association which, having in its name
or under its control, a right, franchise, privilege, property or business, the
exercise or enjoyment of which is expressly reserved by the constitution or
the laws [of the Philippines] to citizens of the Philippines or of [the United
States,] or to corporations or associations at least sixty per centum of the
capital of which is owned by such citizens, permits or allows the use,
exploitation or enjoyment thereof by a person, corporation or association
not possessing the requisites prescribed by the Constitution or the laws of
the Philippines; or leases, or in any other way transfers or conveys said
right, franchise, privilege, property or business to a person, corporation or
association not otherwise qualified under the Constitution, or the
provisions of the existing [Acts,] any person who knowingly aids, assists, or
abets in the planning, consummation or perpetuation of any of the acts
herein above enumerated, shall be punished by imprisonment for not less
than [two] nor more than [ten] years, and by a fine of not less than [two
thousand nor more than ten thousand pesos:] Provided, however, That
presidents, managers, or persons in charge of corporations, associations or
partnerships violating the provisions of this section shall be criminally
liable in lieu thereof. (Ed, Note: Words in brackets were deleted in RA
134, infra.)
b) Words in bold in the next immediately following are amendments
introduced by RA 134, section 2, approved June 14, 1947.

SEC. 2-A. Any person, corporation, or association which, having in its name
or under its control, a right franchise, privilege, property or business, the
exercise or enjoyment of which is expressly reserved by the Constitution or
the laws to citizens of the Philippines or of any other specific country, or to
corporations or associations at least sixty per centum of the capital of
which is owned by such citizens, permits or allows the use, exploitation or
enjoyment thereof by a person, corporation or association not possessing
the requisites prescribed by the Constitution or the laws of the Philippines;
or leases, or in any other way transfers or conveys said right, franchise,
privilege, property or business to a person, corporation or association not
otherwise qualified under the constitution, or the provisions of the existing
laws; or in any manner permits or allows any person, not possessing the
qualifications required by the Constitution or existing laws to acquire, use,
exploit or enjoy a right, franchise, privilege, property or business, the
exercise and enjoyment of which are expressly reserved by the constitution
or existing laws to citizens of the Philippines or of any other specific
country, to intervene in the management, operation, administration or
control thereof, whether as an officer, employee or laborer therein, with or
without remuneration except technical personnel whose employment may
be specifically authorized by the [President of the Philippines upon
recommendation of the Department Head concerned, if any,] and any
person who knowingly aids, assists or abets in the planning, consummation
or perpetration of any of the acts hereinabove enumerated shall be
punished by imprisonment for not less than five nor more than fifteen years
and by a fine of not less than the value of the right, franchise, or privilege
enjoyed or acquired in violation of the provisions hereof but in no case less
than five thousand pesos: Provided, however, That the president, managers,
or persons in charge of corporations, associations, or partnerships
violating the provisions of this section shall be criminally liable in Lieu
thereof: Provided further, That any person, corporation or association shall,
in addition to the penalty imposed herein, forfeit such right, franchise,
privilege, and the property or business enjoyed or acquired in violation of
the provisions of this Act. (Ed. Note: Words in brackets were deleted in PD
715, supra.)

PRESIDENTIAL DECREE No. 715 May 28, 1975

AMENDING COMMONWEALTH ACT NO. 108, AS AMENDED, OTHERWISE

KNOWN AS "THE ANTI-DUMMY LAW"

WHEREAS, there have been conflicting interpretations as to whether

Section 2-A of Commonwealth Act No. 108, as amended, otherwise known
as the Anti-Dummy Law, allows aliens to become members of the board of
directors or governing body of corporations or associations engaging in
partially nationalized activities;

WHEREAS, it is fair and equitable and in line with the constitutional policy
expressed in Article XIV, Section 5 of the Constitution, that foreign
investors be allowed limited representation in the governing board or body
of corporations or associations in proportion to their allowable
participation in the equity of the said entities;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,

by virtue of the powers vested in me by the Constitution, do hereby order
and decree:

Section 1. Section 2-A of Commonwealth Act No. 108, as amended, is

hereby further amended to read as follows:

"Section 2-A. Any person, corporation, or association, which, having in its

name or under its control, a right, franchise, privilege, property or business,
the exercise or enjoyment of which is expressly reserved by the
Constitution or the laws to citizens of the Philippines or of any other
specific country, or to corporations or associations at least sixty per
centum of the capital of which is owned by such citizens, permits or allows
the use, exploitation or enjoyment thereof by a person, corporation or
association not possessing the requisites prescribed by the Constitution or
the laws of the Philippines; or leases, or in any other way, transfers or
conveys said right, franchise, privilege, property or business to a person,
corporation or association not otherwise qualified under the Constitution,
or the provisions of the existing laws; or in any manner permits or allows
any person, not possessing the qualifications required by the Constitution,
or existing laws to acquire, use, exploit or enjoy a right, franchise, privilege,
property or business, the exercise and enjoyment of which are expressly
reserved by the Constitution or existing laws to citizens of the Philippines
or of any other specific country, to intervene in the management, operation,
administration or control thereof, whether as an officer, employee or
laborer therein with or without remuneration except technical personnel
whose employment may be specifically authorized by the Secretary of
Justice, and any person who knowingly aids, assists, or abets in the
planning, consummation or perpetration of any of the acts herein above
enumerated shall be punished by imprisonment for not less than five nor
more than fifteen years and by a fine of not less than the value of the right,
franchise or privilege enjoyed or acquired in violation of the provisions
hereof but in no case less than five thousand pesos: Provided, however,
that the president, managers or persons in violating the provisions of this
section shall be criminally liable in lieu thereof: Provided, further, That any
person, corporation or association shall, in addition to the penalty imposed
herein, forfeit such right, franchise, privilege and the property provisions of
this Act; and Provided, finally, That the election of aliens as members of the
board of directors or governing body of corporations or associations
engaging in partially nationalized activities shall be allowed in proportion to
their allowable participation or share in the capital of such entities.

Section 2. This Decree shall take effect immediately.

DONE in the City of Manila, this 28th day of May, in the year of Our Lord,
nineteen hundred and seventy-five.

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