Caronan, Nelee Grace T.

Siobal, Jilyan Yapching, Elin Mae

Ninobla, Pearl Kim Abaga, Roustum Dave Micu, Melvin

Anti-Dummy Law
Commonwealth Act No. 108
Presidential Decree No. 715

Constitutional Basis

1987 Constitution, Article XII, Section 11

Section 11. No franchise, certificate, or any other form of authorization for the
operation of a public utility shall be granted except to citizens of the Philippines or
to corporations or associations organized under the laws of the Philippines, at least
sixty per centum of whose capital is owned by such citizens; nor shall such franchise,
certificate, or authorization be exclusive in character or for a longer period than fifty
years. Neither shall any such franchise or right be granted except under the
condition that it shall be subject to amendment, alteration, or repeal by the
Congress when the common good so requires. The State shall encourage equity
participation in public utilities by the general public. The participation of foreign
investors in the governing body of any public utility enterprise shall be limited to
their proportionate share in its capital, and all the executive and managing officers
of such corporation or association must be citizens of the Philippines.

Commonwealth Act 108

What is the Anti-Dummy Law?

It is an Act to punish evasion of the laws on the nationalization of certain
rights, franchises or privileges. It is Commonwealth Act No. 108, as amended.

Prohibited Acts and Penalties

What are the prohibited Acts and the corresponding penalties?

SEC. 1. PENALTY
 PROHIBITED ACT:
 Any Philippine citizen, or a citizen of any specific country
 Who allows his name or citizenship to be used
 For evading the nationalization provisions under the Constitution, or
under the laws
 And any alien or foreigner profiting thereby

 PENALTY:
 Imprisonment: minimum 5 years, maximum 15 years
 Fine: equivalent to at least the value of the right, franchise, or
privilege enjoyed in violation of the nationalization laws, BUT shall
not be less than P5, 000.

SEC. 2 SIMULATION OF MINIMUM CAPITAL STOCK

 PROHIBITED ACT:
 It shall be unlawful for the president or managers, and directors or
trustees of a corporation or association to falsely simulate the
existence of the minimum stock / capital required by the
nationalization requirements under the Constitution or the laws

 PENALTY:
 Imprisonment: minimum 5 years, maximum 15 years
 Fine: equivalent to at least the value of the right, franchise, or
privilege enjoyed in violation of the nationalization laws, BUT shall
not be less than P5, 000.

1
Caronan, Nelee Grace T. Siobal, Jilyan Yapching, Elin Mae
Ninobla, Pearl Kim Abaga, Roustum Dave Micu, Melvin

SECTION 2-A. UNLAWFUL USE, EXPLOITATION OR ENJOYMENT (PD 715)

 PROHIBITED ACTS:
 Permitting or allowing the use, exploitation or enjoyment of a right,
franchise, privilege, business, or property by a person, corporation or
association not possessing the requisites prescribed by nationalization
laws;
 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 nationalization laws;
 In any manner permitting or allowing any person not qualified:
 to acquire, use, exploit or enjoy a right, franchise, privilege,
property or business, the exercise and enjoyment of which are
expressly reserved by nationalization 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

 EXCEPTION: Except technical personnel whose employment may be

specifically authorized by the Secretary of Justice.

 Any person who knowingly aids, assists or abets in the planning

consummation or perpetration of any of the acts herein above
enumerated.

 PENALTY:
 Imprisonment: minimum 5 years, maximum 15 years
 Fine: equivalent to at least the value of the right, franchise, or
privilege enjoyed in violation of the nationalization laws, BUT shall
not be less than P5, 000.
 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.
 Any person, corporation or association shall forfeit such right,
franchise, privilege, and the property or business enjoyed or acquired
in violation of the provisions of this Act.

 EXCEPTION:
 Aliens may be elected as members of the board of directors or
governing body of corporations or associations engaging in partially
nationalized activities
 But only in proportion to their allowable participation or share in the
capital of such entities.
SEC. 2-B
 PROHIBITED ACT:
 Violation of this Act is committed by the spouse of any public official
 The spouses must be living together

 PENALTY:
 The violation shall be cause for dismissal of the public official.

SEC. 2-C.
 PROHIBITED ACT:
 Exercise, possession, or control by a Filipino citizen of a right,
privilege, property, or business the exercise or enjoyment of which is
covered by nationalization laws
 The Filipino citizen is in a common-law relationship with an alien /
foreigner

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Caronan, Nelee Grace T. Siobal, Jilyan Yapching, Elin Mae
Ninobla, Pearl Kim Abaga, Roustum Dave Micu, Melvin

 EFFECT:

 It shall constitute a prima facie evidence of violation of Section 2-A of

this Act.

SEC. 3.
 PROHIBITED ACT:
 When a corporation or association violates any provision of this Act

 EFFECT:
 The same shall constitute a ground for dissolution of the corporation,
upon proper court proceedings.

SECTION 3-A. REWARD TO INFORMER.

 REQUISITES:
 There must be a conviction under the provisions of this Act
 The informer shall furnish the Government original information
leading to the conviction
 The informer shall be ascertained and named in the judgment of the
court

 EFFECT:

 He shall be entitled to 25% of the fine imposed

 IF THE INFORMER IS A DUMMY:

 The dummy-informer shall voluntarily take the initiative of reporting
to the proper authorities any violation of the provisions of this Act
 He shall assist in the prosecution, resulting in the conviction of any
person or corporation profiting thereby or involved therein

 EFFECT:
 He shall be entitled to 25% of the fine actually paid or received by the
Government
 He shall be exempted from penal liabilities under this Act