Certain activities and property in the Philippines are reserved wholly or partly for Filipino citizens or Filipino-owned corporations (for example, land ownership and certain nationalized or partly nationalized industries). The Anti-Dummy Law penalizes the evasion of these nationality requirements through the use of dummies. It is a crime for a Filipino citizen or a qualified person or entity to allow themselves to be used as a 'dummy' — that is, to permit their name or citizenship to be used to evade the requirement that an activity or property be Filipino-owned — and it is likewise a crime for the disqualified foreigner to use such a dummy. The law also generally prohibits foreigners from intervening in the management, operation, administration, or control of a nationalized or partly nationalized business beyond their allowable participation, even as employees or officers (with limited exceptions for technical positions under the conditions the law and rules allow). Both the dummy and the foreigner who uses them are criminally liable, and the arrangement can also lead to forfeiture. So schemes where a Filipino merely fronts for a foreigner to evade ownership limits are unlawful.
The Purpose
Certain activities and property are reserved for Filipinos (e.g., land, nationalized industries). The Anti-Dummy Law penalizes evading these limits through dummies.
What Is Prohibited
- A Filipino allowing themselves to be used as a “dummy” (lending their name/citizenship to evade the requirement); and
- A disqualified foreigner using such a dummy.
Management Intervention
It generally prohibits foreigners from intervening in the management or control of a nationalized business beyond their allowed participation (with limited exceptions for technical positions).
Practical Takeaways
- Using a Filipino front to evade ownership limits is a crime;
- Both the dummy and the foreigner are liable, and forfeiture can follow;
- Foreigners generally cannot manage a nationalized business beyond their allowed stake.
Frequently Asked Questions
What is the Anti-Dummy Law? A law penalizing the evasion of nationality requirements reserving certain activities and property for Filipinos, through the use of dummies who lend their name or citizenship to a disqualified foreigner.
Who is criminally liable? Both the Filipino who allows themselves to be used as a dummy and the disqualified foreigner who uses them. The arrangement can also lead to forfeiture.
Can foreigners manage a nationalized business? Generally no beyond their allowable participation. The law prohibits foreigners from intervening in the management, operation, or control of a nationalized or partly nationalized business, with limited exceptions for technical positions.
Why does the law exist? To enforce the constitutional and statutory reservation of certain activities and property to Filipinos, preventing schemes where a Filipino merely fronts for a foreigner to evade ownership limits.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
If you have questions about your rights or options under Philippine law, our firm is available to assist. You may reach us via Viber or WhatsApp, call us at 0995 433 5550, or send an email to vivasnobles@gmail.com. We look forward to hearing from you.