The Anti-Dummy Law and Beneficial Ownership Transparency: What Every Foreign Investor in the Philippines Must Know in 2026

For decades, Commonwealth Act No. 108 — better known as the Anti-Dummy Law — has been understood in theory by foreign investors but often left unexamined in practice. The Securities and Exchange Commission's issuance of Memorandum Circular No. 15, Series of 2025 (the Beneficial Ownership Disclosure Rules of 2026) changes that: it requires corporations to identify and report the natural persons who ultimately own or control them, which puts nominee arrangements on the record.

For foreign investors — whether you are a multinational establishing your first Philippine subsidiary, a foreign entrepreneur incorporating a local company to hold commercial real estate, or an expat founder structure considering equity compensation for Filipino employees — understanding the Anti-Dummy Law is not a peripheral concern. It is one of the foundational legal compliance matters you must address before, not after, you execute your corporate registration strategy. Violations carry criminal penalties including imprisonment of five to fifteen years, substantial fines, and forfeiture of the right, franchise, or privilege and the property or business acquired in violation of the law; alien offenders may also face separate deportation proceedings under immigration law. There is no corporate structuring work-around that eliminates this risk — only lawful compliance that makes it irrelevant.

This article is written for foreign investors and their advisors who need a clear-eyed understanding of the Anti-Dummy Law's scope, the new beneficial ownership reporting landscape, the sectors that remain affected despite the Philippines' liberalized investment framework, and the practical steps for ensuring your Philippine entity is structured in full compliance with applicable nationality laws.

I. The Statutory Framework: What the Anti-Dummy Law Actually Prohibits

Commonwealth Act No. 108 (1936): The Foundation

Commonwealth Act No. 108 was enacted in 1936 — during the Commonwealth era under American administration — to address the evasion of laws nationalizing certain rights, franchises, and privileges. In its original form, CA 108 punished Filipinos who allowed their name or citizenship to be used to evade nationality requirements, the foreigners who profited, and the false simulation of the required Filipino share of a company's capital (Sections 1 and 2). Section 2-A, added by Commonwealth Act No. 421 and later amended by RA 134 and PD 715, goes further: it penalizes those who permit unqualified persons to use or exploit a nationalized right, franchise, or privilege, and those who allow a foreigner to intervene in the management, operation, administration, or control of a nationalized or partially nationalized enterprise, whether as an officer, employee, or laborer, with or without pay. Because the test is actual intervention and control, it can be reached through a nominal shareholder, a management contract, a technical assistance agreement, or any other arrangement that lets a foreigner exercise actual control over an enterprise that Philippine law requires to be predominantly Filipino-owned.

The operative language of CA 108 captures both the person who evades the law (the foreigner who uses the dummy) and the person who allows the evasion (the Filipino who acts as the dummy). Both are criminally liable. For foreign investors, this means that even if you believe your Filipino partner is a genuine co-founder or independent shareholder, any arrangement that gives you control disproportionate to your equity stake — or that effectively places you in the role of decision-maker for an enterprise operating in a restricted sector — risks triggering liability under CA 108.

Republic Act No. 134 (1947): Escalated Penalties

Republic Act No. 134 amended Sections 1, 2, and 2-A of CA 108 to escalate the penalties: imprisonment of five to fifteen years and a fine of not less than the value of the right, franchise, or privilege enjoyed or acquired in violation of the law, and in no case less than five thousand pesos — tying the financial penalty to the economic benefit obtained. Under Section 2-A, offenders also forfeit the right, franchise, or privilege and the property or business enjoyed or acquired in violation of the law. RA 134 also added Section 3-A, which rewards informers.

Presidential Decree No. 715 (1975): The Board Seats carve-Out

Presidential Decree No. 715 introduced the most practically significant carve-out in the Anti-Dummy Law framework: the provision allowing foreign nationals to sit on the board of directors or governing body of a partially nationalized corporation, but only in proportion to their foreign equity stake. This is a critical point for foreign investors and is commonly misunderstood.

Under Section 2-A of CA 108, as amended by PD 715, foreigners may be elected to the board of a corporation engaged in a partially nationalized activity in proportion to their allowable participation or share in its capital. If foreign investors hold 40% of the shares of such a corporation, they may elect directors representing up to 40% of the board. Board seats are the limit of the carve-out: the same section still bars foreigners from intervening in management as officers, employees, or laborers, so executive and managing positions in these enterprises should be held by Filipinos, apart from technical personnel authorized by the Secretary of Justice. In SEC Opinion No. 16-02 (2016), for example, the SEC advised that a foreign shareholder of a corporation whose purposes included owning land could hold up to 40% of its shares, if no other foreigner held any, but could not serve as its president or chairman of the board.

Section 2-A also keeps a narrow exception for foreign technical personnel (not managers) in nationalized and partially nationalized enterprises. Under the current text, their employment must be specifically authorized by the Secretary of Justice, which is done through an Authority to Employ Aliens (AEA) from the Department of Justice (DOJ). This is separate from the Alien Employment Permit (AEP) that the Department of Labor and Employment (DOLE) issues under Article 40 of the Labor Code — a separate but related compliance requirement that foreign employers and their foreign employees must satisfy.

Republic Act No. 11232 (2019): The Revised Corporation Code

The Revised Corporation Code (RA 11232), which took effect in 2019, introduced provisions directly relevant to Anti-Dummy Law compliance. Under Section 73, corporations must keep records of their current ownership structure and voting rights, including beneficial ownership; the thresholds and disclosure mechanics are set by SEC rules (now MC 15-2025, discussed below).

RA 11232 also ties several governance tools to nationality rules. Founders' shares cannot carry an exclusive right to elect directors if that would violate the Anti-Dummy Law or the Foreign Investments Act (Section 7); voting trusts may not be used to circumvent nationality and capital requirements (Section 58); and the SEC may disapprove articles of incorporation, or amendments, if the required percentage of Filipino ownership is not met (Section 16). For violations of the Code or its rules, the SEC may impose fines and suspend or revoke a corporation's certificate of incorporation (Section 158).

II. Sectors Still Affected: Where the Anti-Dummy Law Bites

Despite significant liberalization of the Philippines' foreign investment framework — including the amendments to the Public Service Act under RA 11659 and the successive Foreign Investment Negative Lists, now the 13th list under EO 113, Series of 2026 — the Anti-Dummy Law continues to apply to a meaningful range of business activities. Foreign investors must understand that liberalization in one area does not eliminate Anti-Dummy Law exposure in another.

Public Utilities

Under the 1987 Constitution, Article XII, Section 11, the operation of a public utility is reserved to corporations that are at least 60% Filipino-owned. The Public Service Act (RA 11659), which amended the old Public Utilities Act in 2022, narrowed the definition of "public utility" to electricity distribution and transmission, petroleum and petroleum products pipeline transmission systems, water and wastewater pipeline systems (including sewerage), seaports, and public utility vehicles — significantly expanding the space for foreign investment in telecommunications, airlines, railways, and other sectors that were previously classified as public utilities. However, for the activities that remain classified as public utilities, the 60-40 Filipino-foreign ownership requirement is absolute, and the Anti-Dummy Law applies with full force.

This is particularly relevant for foreign investors in the energy and water sectors who are considering investments in electricity distribution or transmission utilities or water pipeline distribution companies. In each case, the 60% Filipino ownership requirement must be satisfied at the corporate level — not just at the project level — and Anti-Dummy Law scrutiny will apply to the governance and management of the entity.

Exploitation of Natural Resources

Article XII, Section 2 of the 1987 Constitution places the exploration, development, and utilization of natural resources under the full control and supervision of the State, which may undertake them itself or through co-production, joint venture, or production-sharing agreements with Filipino citizens or corporations at least 60% Filipino-owned. The only opening for foreign-owned corporations is a technical or financial assistance agreement with the President for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils. Outside that route, foreign ownership of an entity exploring, developing, or utilizing natural resources is capped at 40%, and the use and enjoyment of the nation's marine wealth is reserved exclusively to Filipino citizens. Any dummy arrangement to evade this prohibition is subject to the full range of Anti-Dummy Law penalties.

Mass Media and Advertising

Article XVI, Section 11 of the Constitution limits the ownership and management of mass media to Filipino citizens or to entities wholly owned and managed by them — no foreign equity at all. The advertising industry is treated differently: foreign investors may hold up to 30%, since only Filipino citizens or entities at least 70% Filipino-owned may engage in it, with foreign participation in the governing body limited to the proportionate share and all executive and managing officers required to be Filipino citizens. Any attempt to structure around this prohibition exposes both the foreign investor and their Filipino collaborators to criminal liability under CA 108.

Land Ownership

While land ownership itself is governed primarily by the Constitution's Chapter on National Economy and Patrimonial Properties rather than CA 108 directly, the Anti-Dummy Law is implicated in arrangements where foreigners attempt to control land-holding entities beyond what the constitutional limitations permit. Foreign investors may lease private land for up to 99 years in aggregate under the Investors' Lease Act (RA 7652, as amended by RA 12252) and may acquire up to 40% of the economic interest in a condominium corporation. Structures that effectively give a foreigner greater economic rights in Philippine real estate than these frameworks permit — including through voting trusts, share options, or management arrangements — risk Anti-Dummy Law characterization.

13th Foreign Investment Negative List (FINL)

Executive Order No. 113, Series of 2026 (the 13th FINL, effective May 2, 2026, replacing the 12th FINL under EO 175, Series of 2022) catalogues the areas where foreign equity restrictions apply under the Constitution and specific laws (List A) and for reasons of security, defense, risk to health and morals, and protection of small- and medium-scale enterprises (List B). These include the corporate practice of architecture, micro and small domestic market enterprises below the capital thresholds, and activities such as firearms and explosives, defense materiel, dangerous drugs, and gambling. The practice of other professions remains governed by the Constitution and each profession's own law. Foreign investors must consult the current FINL — updated with each new EO — to confirm whether their intended activity is subject to nationality restrictions.

III. What Constitutes a "Dummy" Arrangement: The Mechanics of Violation

The Anti-Dummy Law targets not just the formal legal structure of a corporation, but the substance of who actually controls and benefits from it. Understanding what constitutes a "dummy" arrangement requires looking at both the legal form and the practical reality of corporate governance.

Nominal Shareholding

The most common dummy arrangement involves a Filipino national holding legal title to shares on behalf of a foreigner, pursuant to a side agreement — verbal or written — under which the Filipino holds those shares in trust for the foreigner, returns dividends to the foreigner, and exercises voting power at the foreigner's direction. The critical legal document here is the Deed of Assignment or voting trust agreement that creates the beneficial interest. Even if the Filipino's name appears on the SEC share registry, the moment a side agreement exists that gives the foreigner the economic benefit and voting control, the arrangement is a dummy arrangement within the meaning of CA 108.

The warning signs of a dummy arrangement lie in the economic reality: a Filipino nominee who receives no dividends, holds no voting power in practice, and exercises no management function, while the foreign national makes all material business decisions and receives all economic benefits. Corporate filings, tax returns, payroll records and immigration records can each reveal that pattern, so a structure that depends on a nominee playing no real role is difficult to defend.

Disproportionate Management Control

A second category of violation involves a foreign shareholder who holds less than majority equity but exercises disproportionate control over the corporation's management. This commonly manifests as a 40% foreign shareholder who appoints and controls the president, the chief financial officer, and the operational management of the enterprise — effectively running the corporation while Filipino shareholders hold the majority purely as a legal formality. Under CA 108 as interpreted by SEC opinions and court decisions, the prohibition is against a foreigner "intervening, directly or indirectly, in the management" of a partially nationalized enterprise — and the law does not require that the foreigner hold majority equity before this prohibition applies.

Management Contracts and Technical Assistance Arrangements

A third category — increasingly common in international franchise and distribution arrangements — involves a foreigner entering into a management contract or technical assistance agreement with a Philippine corporation that gives the foreigner effective control over the enterprise's operations, without taking any equity stake at all. Section 2-A of CA 108 prohibits foreigners from intervening in the management, operation, administration or control of an enterprise in a nationalized activity, so such an arrangement risks violating the law where its practical effect is to give a foreign national that authority.

Back-to-Back Financing Arrangements

Loans or financing arrangements structured to give a foreign lender effective ownership rights — for example, a loan that is repayable only from dividends on the Filipino shareholder's shares, or a convertible loan that effectively transfers the economic benefit of ownership to the foreign lender — risk being treated as disguised ownership arrangements that circumvent the Anti-Dummy Law. Foreign investors who provide debt financing to their Philippine joint venture partners should ensure that the financing is structured as genuine commercial debt with arm's-length terms, not as a mechanism to capture economic ownership of the enterprise.

IV. The New SEC Beneficial Ownership Disclosure Rules of 2026: MC 15-2025

Against this backdrop of Anti-Dummy Law risk, the SEC's issuance of Memorandum Circular No. 15, Series of 2025 in December 2025 revised the SEC's beneficial ownership framework. The new rules — formally titled the Beneficial Ownership Disclosure Rules of 2026, effective January 1, 2026 — amend or repeal the SEC's earlier beneficial ownership circulars (MC 15-2019, MC 30-2020, and MC 10-2022), impose direct compliance obligations on reporting entities under the SEC's jurisdiction, and set administrative penalties for non-compliance, along with rules on access to beneficial ownership information by other government agencies.

Scope and Application

MC 15-2025 applies to all persons under the SEC's jurisdiction — domestic stock and non-stock corporations (including wholly foreign-owned subsidiaries and joint venture companies), partnerships, one-person corporations, and foreign corporations licensed to do business in the Philippines, such as branches, representative offices, and regional headquarters. The rules require the identification and disclosure of all beneficial owners, and only natural persons can be beneficial owners. They include any natural person who owns, directly or indirectly through a chain of ownership, at least 20% of the voting rights, voting shares, or capital of the reporting entity (Category A), as well as persons who control it through contracts, board election power, dominant influence, nominee arrangements, or other means (Categories B to H); senior management is disclosed only if no one is identifiable under those categories (Category I).

For foreign-invested corporations, this means that every natural person who holds, directly or indirectly, 20% or more must be disclosed as a beneficial owner — including their name, nationality, residential address, tax identification number (or passport number), the category and nature of their ownership or control, and the percentage of their interest. For corporations with complex ownership structures — multiple foreign investors, holding companies, private equity funds, or structures involving intermediate holding entities — the disclosure must trace through to the ultimate beneficial owners at the natural person level. Indirect ownership is computed by multiplying percentages at each tier, and a person who exercises effective control at any level must be identified even if the multiplied figure is below 20%.

Centralized Beneficial Ownership Registry

MC 15-2025 requires all beneficial ownership information to be submitted through the SEC's designated Beneficial Ownership Registry. The SEC is directed to endeavor to provide timely access to that information — subject to the Data Privacy Act — to authorized SEC personnel, law enforcement agencies, competent authorities (a term that includes anti-money laundering authorities such as the AMLC), and other government agencies, and it may grant access to covered persons under the AMLA, media organizations, and the general public to the extent allowed by law. The circular also allows the SEC to set up a mechanism for reporting discrepancies in the registry. The Registry represents a significant shift in the enforcement posture of the Anti-Dummy Law: whereas enforcement previously depended on complaints or incidental discovery during SEC reviews, the Registry gives enforcement agencies a proactive tool for identifying structures that warrant further scrutiny.

Reporting Obligations and Timelines

Under MC 15-2025, existing corporations must provide beneficial ownership information with their next General Information Sheet (GIS) following the circular's effectivity on January 1, 2026. Until the SEC issues a Notice declaring the Beneficial Ownership Registry operational, beneficial ownership information continues to be submitted through the GIS filed via eFAST; after that Notice, it must be submitted exclusively through the web-based Registry, and the GIS section on beneficial ownership is removed. New corporations must submit beneficial ownership information at the time of incorporation or registration, and no certificate of incorporation or license to do business is issued until it is provided. Any change in beneficial ownership — including changes in the identity of beneficial owners, changes in ownership percentages, or changes in the nature of control — must be reported within seven calendar days from the date of the event.

Penalties for Non-Compliance

MC 15-2025 sets administrative penalties, imposed after due notice and hearing. A corporation that fails to disclose faces fines scaled to its retained earnings or fund balance — for a stock corporation with retained earnings under PHP 500,000, from PHP 50,000 for a first violation to PHP 500,000 from the fourth, and up to four times those amounts for larger corporations — plus PHP 1,000 for each day of delay, capped at PHP 2 million. A false declaration can lead to a fine of up to PHP 2 million and dissolution, and responsible directors, trustees, and officers can be fined up to PHP 1 million each and disqualified for five years. Willful violations can lead to suspension or revocation of the certificate of incorporation. Because law enforcement agencies and competent authorities can be given access to the Registry, beneficial ownership disclosures can also inform Anti-Dummy Law inquiries.

For foreign investors, the practical implication is clear: inaccurate, incomplete, or late beneficial ownership disclosure is not merely a technical SEC filing violation — it is a potential trigger for Anti-Dummy Law investigation. A foreign investor whose beneficial ownership disclosure identifies them as a 40% shareholder who exercises management influence over the corporation will want to ensure that their governance role is consistent with what their disclosure states, and that the legal structure supports the governance arrangement they are actually operating.

V. The Authorised to Employ Aliens Framework: A Parallel Compliance Obligation

Foreign investors who are bringing expatriate personnel to work in their Philippine operations face a parallel compliance framework: the Authority to Employ Aliens (AEA) issued by the DOJ, and the Alien Employment Permit (AEP) issued by DOLE. These are not merely immigration documents — they are directly relevant to Anti-Dummy Law compliance because they are the mechanism through which the government monitors the presence and role of foreign nationals in partially nationalized enterprises.

The AEA Process

An employer seeking to hire a foreign national for a position in a partially nationalized enterprise must first obtain an AEA from the DOJ. The application demonstrates that the position requires specialized expertise not readily available from qualified Filipino nationals, and that the employment of the foreign national will generate meaningful training and transfer of technology to Filipino employees. AEA approvals are typically granted for periods of up to five years, renewable for additional periods not exceeding five years each, subject to conditions including the employer's demonstrated compliance with its technology transfer obligations.

The AEP Requirement

The AEP, issued by DOLE under Article 40 of the Labor Code (for positions in nationalized or partially nationalized enterprises, together with the DOJ authority), is the work authorization document that allows a foreign national to be legally employed in the Philippines. Under DOLE Department Order No. 248, Series of 2025, the AEP is valid for one year unless the employment contract warrants a different period (never more than three years), and it is tied to the specific employer and position. Foreign nationals working in the Philippines without a valid AEP — or working for an employer other than the one specified in the AEP — are in violation of both labor law and, if the enterprise is in a restricted sector, the Anti-Dummy Law.

Foreign investors should note that the process of obtaining an AEA and AEP is not a formality. AEP approval depends on showing that no competent, able and willing Filipino is available for the position, and employers should not treat that showing as automatic for expatriate senior management. Investors whose Philippine operations plan to rely on expatriate management should build the AEA and AEP timeline into their project plan from the earliest stages.

VI. Consequences of Anti-Dummy Law Violations: A Real Risk Assessment

Foreign investors sometimes approach the Anti-Dummy Law as a theoretical risk — something that affects bad actors or clearly egregious dummy arrangements but not their own carefully structured investment. This is a dangerous assumption in 2026. Enforcement has increased materially, and the consequences are severe.

Criminal Penalties

Under CA 108 as amended by RA 134, violations are punishable by imprisonment of not less than five years and not more than fifteen years, and by a fine of not less than the value of the right, franchise, or privilege enjoyed in evasion of the law. For a foreign investor whose Philippine enterprise holds a valuable franchise or operates a significant business, the fine alone can run into hundreds of millions of pesos. The criminal liability is personal — it attaches to the foreign national who evaded the law, not just to the corporation, and does not require that the foreigner be physically present in the Philippines to prosecute (though actual prosecution and sentencing would require the defendant's presence or extradition).

Forfeiture of the Business Enterprise

In addition to imprisonment and fines, Section 2-A of CA 108 provides for the forfeiture of the right, franchise, or privilege and of the property or business enjoyed or acquired in violation of the law. For a foreign investor who has invested significant capital in a Philippine entity that is later found to be in violation, forfeiture means the total loss of that investment. There is no mechanism under CA 108 for the government to compensate a foreign investor for the value of a forfeited enterprise — the forfeiture is a punitive sanction, not a regulated taking.

Administrative Dissolution

CA 108 itself (Section 3) provides for the dissolution of a corporation that violates it, in appropriate proceedings. Under RA 11232, the SEC may also impose sanctions up to suspension or revocation of the certificate of incorporation and dissolution for violations of the Code or its rules (Section 158), and may dissolve a corporation on the grounds listed in Section 138. A dissolved corporation continues only for three years to wind up its affairs (Section 139) — with all the consequences that entails for ongoing contracts, litigation, employment relationships, and regulatory filings.

Deporation of Alien Offenders

CA 108 itself contains no deportation clause. A foreign national convicted under it may, however, face deportation proceedings under Section 37 of the Philippine Immigration Act, for example where the sentence is one year or more for a crime the Bureau of Immigration treats as involving moral turpitude, or where the conduct breached the conditions of the visa. Deportation would be in addition to the criminal sentence.

Enforcement Posture in 2026

Beneficial ownership disclosure under MC 15-2025 reflects the Philippines' commitments on beneficial ownership transparency, including the FATF recommendations, and it gives the SEC a structured record of who ultimately owns and controls each corporation. Foreign investors should assume that a nominee arrangement in their corporate structure is more likely to come to light than before.

VII. A Practical Compliance Roadmap for Foreign Investors

The following framework provides a structured approach to Anti-Dummy Law compliance for foreign investors evaluating or operating in the Philippines in 2026. This is not legal advice for a specific situation — each investment structure requires individual legal analysis — but it is a map of the key decision points and compliance milestones that foreign investors and their Philippine counsel should address.

Step 1: Sector Analysis Before Incorporation

Before selecting a corporate form or registering with the SEC, foreign investors must conduct a thorough analysis of whether their intended business activity is subject to nationality restrictions. This analysis should cover:

• The constitutional provisions applicable to the sector (Articles XII, XIV, XVI of the 1987 Constitution)
• The current Foreign Investment Negative List (FINL) — currently EO 113, Series of 2026, and any subsequent amendments
• Whether the activity constitutes a "public utility" under RA 11659 (the amended Public Service Act)
• Whether the activity is subject to licensing or regulation by a sector-specific agency with its own nationality requirements

This analysis should be conducted with Philippine legal counsel before any binding commitments are made, including before any lease agreements, employment contracts, or commercial contracts that would be difficult to unwind if the intended structure is found to be non-compliant.

Step 2: Entity Structure Selection with Anti-Dummy Law Lens

Once the sector analysis is complete, the choice of entity structure should be made with the Anti-Dummy Law framework explicitly in view. Key considerations include:

• Whether a wholly foreign-owned subsidiary is permitted in the sector, or whether a joint venture with a Filipino partner is required
• If a joint venture is required, the minimum Filipino equity percentage and the governance rights that must be allocated to the Filipino partner
• Whether foreign board seats stay within PD 715's board-proportionality rule, and whether any foreigner would hold an officer or management position that Section 2-A reserves to Filipinos
• Whether any management contract, technical assistance agreement, or franchise arrangement could be characterized as the foreign investor exercising management authority over a restricted enterprise

Foreign investors should resist the temptation to minimize Filipino equity participation without a careful legal analysis of whether that structure is defensible. The cost of an incorrect structure — including forfeiture of the investment and criminal liability — far exceeds the cost of proper legal planning upfront.

Step 3: Beneficial Ownership Disclosure Compliance

With MC 15-2025 in effect, foreign-invested corporations must ensure their SEC filings accurately and completely disclose all beneficial owners. This means:

• Identifying every natural person who qualifies as a beneficial owner — under the 20% ownership threshold or any of the control categories — including indirect beneficial owners through holding companies, trusts, and other intermediate structures
• Confirming that the disclosed beneficial ownership structure accurately reflects the actual economic and governance arrangements in the enterprise
• Reporting any change in beneficial ownership within seven calendar days
• Ensuring that the General Information Sheet (GIS) filed with the SEC is current, accurate, and complete — and, once the SEC declares its Beneficial Ownership Registry operational, that beneficial ownership is filed through the Registry

Step 4: AEA and AEP Planning for Foreign Personnel

For investors deploying expatriate management or technical personnel to the Philippines:

• Identify every foreign national who will hold a management, supervisory, or technical position in the enterprise
• Determine whether an AEA from the DOJ is required (partially nationalized sectors) or whether a standard AEP from DOLE is sufficient (non-nationalized sectors)
• Build the AEA/AEP application timeline into the project plan — these processes can take three to six months for initial applications
• Ensure that foreign personnel are not placed in roles that constitute management authority over a restricted enterprise beyond what their equity position and the AEA/AEP authorize

Step 5: Ongoing Monitoring and Governance Compliance

Anti-Dummy Law compliance is not a one-time event at incorporation — it is a continuous obligation. Foreign-invested corporations should:

• Conduct annual reviews of their governance structure to confirm continued compliance as the business evolves, new directors are appointed, and ownership interests change
• Monitor any changes in the FINL, sector-specific regulations, or SEC guidance that might affect their compliance posture
• Maintain documentation — board resolutions, equity structuring documents, governance records — that demonstrates the genuine Filipino character of any partially nationalized enterprise's governance
• Respond promptly to any SEC or DOJ inquiry regarding corporate governance, beneficial ownership, or the employment of foreign nationals

VIII. The Interaction Between Anti-Dummy Law Compliance and Investment Incentives

Foreign investors registering their Philippine enterprise with an investment promotion agency (IPA) — the Board of Investments (BOI), the Philippine Economic Zone Authority (PEZA), the Clark Development Authority (CDA), or the Subic Bay Metropolitan Authority (SBMA) — should understand that IPA registration does not provide immunity from the Anti-Dummy Law. IPAs are not the primary enforcement agencies for nationality compliance, and registration with an IPA does not create a safe harbor against Anti-Dummy Law liability.

In practice, this means that an enterprise can be simultaneously enjoying CREATE MORE Act incentives under RA 12066 and be the subject of an Anti-Dummy Law enforcement proceeding. For foreign investors in partially nationalized sectors who are considering IPA registration to access fiscal incentives, the compliance analysis must be two-track: (1) does the structure satisfy the investment incentive eligibility requirements, and (2) does the structure satisfy the Anti-Dummy Law? Both questions must be answered affirmatively before the structure is implemented.

Conclusion

The Anti-Dummy Law (Commonwealth Act No. 108, as amended) is not a relic of an earlier, more restrictive era of Philippine economic policy. It is an active, enforced, increasingly consequential statute that every foreign investor in the Philippines must understand as a core compliance obligation — not a peripheral concern. The SEC's Beneficial Ownership Disclosure Rules of 2026 under MC 15-2025 have materially strengthened the enforcement infrastructure available to government agencies, and the current enforcement posture reflects a government that is serious about corporate transparency and the integrity of its nationality-based investment restrictions.

For foreign investors, the strategic and compliance imperatives are straightforward: conduct sector analysis before incorporating; structure the investment with Anti-Dummy Law compliance as a binding constraint, not an afterthought; comply fully with beneficial ownership disclosure obligations; ensure all expatriate personnel have the required AEA and AEP authorization; and maintain ongoing governance discipline throughout the life of the enterprise.

The Philippines offers substantial opportunities for foreign investors in sectors ranging from manufacturing and technology to infrastructure and consumer services. Those opportunities are fully available within a framework of lawful compliance with the Anti-Dummy Law — and the investors who understand this, and build their Philippine operations accordingly, will find a market that rewards careful planning with long-term, defensible market access.

If you are structuring or reviewing a Philippine investment, discuss how the Anti-Dummy Law applies to it with Philippine counsel.

This article is for informational and educational purposes only and does not constitute legal advice. For specific legal guidance on Anti-Dummy Law compliance, beneficial ownership disclosure, or foreign investment structuring in the Philippines, please consult a qualified Philippine attorney.