Amendment to the Anti-Dummy Law

The decree is enacted to amend Section 2-A of Commonwealth Act No. 108 (the Anti-Dummy Law).
The decree expressly addresses conflicting interpretations on whether Section 2-A allows aliens to become members of the board of directors or governing body of corporations or associations engaging in partially nationalized activities.
The amendment aligns implementation of Section 2-A with the constitutional policy on foreign participation.

The decree declares it is fair and equitable to allow foreign investors limited representation in the governing board or body of corporations or associations.
The decree directs that such representation must be in proportion to the foreign investors’ allowable participation in equity of the entity.
The decree ties this approach to the constitutional policy expressed in Article XIV, Section 5 of the Constitution.

Section 2-A governs persons, corporations, or associations that handle rights reserved to Philippine citizens (or to citizens of any other specific country) or to corporations/associations with at least sixty per centum (60%) Filipino ownership.
The prohibited conduct includes permitting or allowing use, exploitation, or enjoyment of a reserved right, franchise, privilege, property, or business by an unqualified person/corporation/association.
The prohibited conduct includes arranging transactions that lease, or otherwise transfer or convey reserved rights, privileges, or businesses to an unqualified person/corporation/association.
The prohibited conduct includes allowing any unqualified person to intervene in management, operation, administration, or control of the reserved business as an officer, employee, or laborer, with or without remuneration, subject to a defined exception for technical personnel.

Section 2-A allows employment of technical personnel when such employment may be specifically authorized by the Secretary of Justice.
Intervention in management, operation, administration, or control is prohibited for unqualified persons in any capacity (officer, employee, or laborer), except for technical personnel whose employment is specifically authorized by the Secretary of Justice.

Section 2-A imposes criminal punishment on any person who knowingly aids, assists, or abets the planning, consummation, or perpetration of the enumerated prohibited acts.
The imprisonment penalty is not less than five years nor more than fifteen years.
The fine is not less than the value of the right, franchise, or privilege enjoyed or acquired in violation.
The fine has a minimum floor of no case less than five thousand pesos.

Section 2-A provides that the president, managers, or persons in charge of corporations, associations, or partnerships violating Section 2-A are criminally liable in lieu thereof.
This rule specifies that corporate officers in charge bear criminal liability instead of the general liability scheme for the corporate entity actors covered by the provision.

Section 2-A requires forfeiture as an additional consequence.
Any person, corporation, or association must forfeit the right, franchise, privilege, and the property or business enjoyed or acquired in violation of this Act.
Forfeiture is expressly stated as in addition to the penalty imposed under Section 2-A.

Section 2-A allows the election of aliens as members of the board of directors or governing body of corporations or associations engaging in partially nationalized activities.
The allowed alien representation must be in proportion to their allowable participation or share in the capital of those entities.

The decree provides that it takes effect immediately upon issuance.
The decree does not set any delayed operation for the amended rule on alien board participation and the expanded criminal and forfeiture consequences under Section 2-A.