S. No. 2077 H. No. 6407; 106 OG No. 7, 904 (February 15, 2010); Business Mirror, c.

c. "Pre-need company" refers to any corporation registered with the Commission

December 17, 2009 and authorized/licensed to sell or offer to sell pre-need plans. The term "pre-need
company" also refers to schools, memorial chapels, banks, nonbank financial
institutions and other entities which have also been authorized/licensed to sell or
offer to sell pre-need plans insofar as their pre-need activities or business are
[ REPUBLIC ACT NO. 9829, December 03, 2009 ] concerned.
d. "Planholder" refers to any natural or juridical person who purchases pre-need
AN ACT ESTABLISHING THE PRE-NEED CODE OF THE PHILlPPlNES plans from a pre-need company for whom or for whose beneficiaries' benefits are
to be delivered, as stipulated and guaranteed by the pre-need company. The term
includes the assignee, transferee and any successor-in-interest of the planholder.
e. "Beneficiary" refers to the person designated by the planholder as the recipient of
Be it enacted by the Senate and House of Representatives of the Philippines in the benefits in the pre-need plan.
Congress assembled: f. "Contract price" refers to the stipulated price in the pre-need plan.
g. "Benefits" refers to the payment of monetary considerations and/or performance
of future services which the pre-need company undertakes to deliver either to the
CHAPTER I planholder or his beneficiary at the time of actual need or agreed maturity date,
as specified in the pre-need plan.
GENERAL PROVISIONS h. "Sales counselors" refers to natural persons who are engaged in the sale of, or
offer to sell, or counsel of prospective planholders for the purpose of selling,
whether or not on commission basis, pre-need plans upon the authority of the
SECTION 1. Title. — This Act shall be known as the "Pre-need Code of the Philippines". pre-need company.
i. "Affiliate of, or affiliated with, a specified person" refers to a person that directly
SEC. 2. Declaration of Policy. — It is the policy of the State to regulate the or indirectly, through one (1) or more intermediaries, controls, or is controlled by,
establishment of pre-need companies and to place their operation on sound, efficient or is under common control with, the person specified. Exercising control over a
and stable basis to derive the optimum advantage from them in the mobilization of legal entity shall mean any one of the following; (1) owning either solely or
savings and to prevent and mitigate, as far as practicable, practices prejudicial to public together with affiliated persons more than twenty — five percent (25%) of the
interest and the protection of planholders. outstanding capital stock of a legal entity; and (2) being an officer or director of
such legal entity.
The State shall hereby regulate, through an empowered agency, pre-need companies j. "Trust fund" refers to a fund set up from the planholders' payments to pay for the
based on prudential principles to promote soundness, stability and sustainable growth cost of benefits and services, termination values payable to planholders and other
of the pre-need industry. costs necessary to ensure the delivery of benefits or services to planholders as
provided for in the contracts.
SEC. 3. Construction. — Any doubt in the interpretation and implementation of any k. "Pre-need reserve liabilities" refers to the measure of the liabilities of the pre-
provision in this Code shall be interpreted in favor of the rights and interests of the need company for its in-force plans or lapsed plans as of valuation date.
planholder. l. "Liquidity reserve" refers to a portion of the trust fund set aside by the trustee to
cover benefits due to planholders for the ensuing year.
SEC. 4. Definition of Terms. — Whenever used in this Code, the following terms shall m. "Fixed value plans" refers to pre-need plans whose benefits and costs are fixed
have their respective. meanings: and predetermined at the inception or purchase of the plan.
n. "In-force plan" refers to a plan for which the pre-need company has an
outstanding obligation for the delivery of benefits or services or payment of
a. "Commission" "refers to the Insurance Commission.
termination value.
b. "Pre-need plans" are contracts, agreements, deeds or plans for the benefit of the
o. "Lapsed plan" refers to a plan that is delinquent in payment of installments
planholders which provide for the performance of future service/s, payment of
provided for in the contract, the delinquency, of which extends beyond the grace
monetary considerations or delivery of other benefits at the time of actual need or
period provided for in the plan or contract.
agreed maturity date, as specified therein, in exchange for cash or installment
p. "Cancelled plan" refers to a plan that can no longer be reinstated by reason of
amounts with or without interest or insurance coverage and includes life, pension,
delinquency in the payment of installments for more than two (2) years or a
education, interment and other plans, instruments contracts or deeds as may in
longer period as provided in the contract, counted from the expiry of the grace
the future he determined by the Commission.
period provided for in the plan or contract.
 q. "Scheduled benefit plans" refers to plans the date of availment of the benefits of act with transparency and dispatch and shall have, among others, the following powers
which is set at the inception or purchase of the plan. and functions;
r. "Contingent benefit plans" refers to plans the timing of the provision of the
benefits of which is conditional on the occurrence of the contingency.
s. "Risk-based capital" refers to a method to measure the minimum amount of a. Approve, amend, renew or deny any license, registration or certificate issued
capital that a pre-need company needs to support its overall business operation. under this Code;
It is used to set capital requirements, considering the size and degree of risk b. Fix and assess fees and/or charges as it may find reasonable in the exercise of
taken by the pre-need company. regulation;
t. "BSP" refers to "Bangko Sentral ng Pllipinas". c. Regulate, supervise and monitor the operations and management of pre-need
companies to ensure compliance with the provisions of this Code, existing laws,
rules and regulations including, but not limited to:
The terms not otherwise defined under this Code shall be construed in their usual and
commonly understood trade, business, commercial or investment meaning. 1. Revoking or nullifying investments made and/or entered into by a pre-need
company or a trustee which are contrary to existing laws, rules and
regulations;
CHAPTER II 2. Demanding for the conversion of the investments made by the trustee to
cash or other liquid assets to protect the interest of the planholders; and
AUTHORITY OF THE COMMISSION 3. Regulating, investigating or supervising activities of pre-need companies,
their officers, employees, sales counselors, consultants or agents;

SEC. 5. Supervision. — All pre-need companies, as defined under this Act, shall be d. Issue cease and desist orders to prevent fraud and injury to the investing public;
under the primary and exclusive supervision and regulation of the Insurance e. Issue subpoena duces tecum and ad testificandum, order the examination, search
Commission. The Commission is hereby authorized to provide for its reorganization, to and seizure of documents, papers, files, tax returns, books of accounts and other
streamline its structure and operations, upgrade its human resource component to records, in whatever form, of any entity or person under investigation;
enable it to effectively and efficiently perform its functions and exercise its powers f. Punish for contempt of the Commission, both direct and indirect, in accordance
under this Code. with the pertinent provisions of and penalties prescribed by the Rules of Court;
g. Impose sanctions, institute cases and/or prosecute offenders for violation of this
All positions of the Commission shall be governed by compensation and position Code, related laws, rules, regulations and orders issued pursuant thereto;
classification systems and qualification standards approved by the Commission based h. Suspend or revoke licenses
on a comprehensive job analysis and audit of actual duties and responsibilities. The i. Enlist the aid and support of and/or deputize any and all enforcement agencies of
compensation plan shall be comparable with the prevailing compensation plan in the the government in the implementation of its powers and in the exercise of its
Bangko Sentral ng Pilipinas (BSP) and other government financial institutions and shall functions under this Code;
be subject to periodic review by the Commission no more than once every two (2) j. Take over pre-need companies which fail to comply with this Code, related laws,
years without prejudice to yearly merit reviews or increases based on productivity and rules, regulations and orders issued pursuant thereto, either through the
efficiency. The Commission shall, therefore, be exempt from laws, rules and regulations appointment of a conservator, receiver or liquidator;
on compensation, position classification and qualification standards. The Commission k. Prepare, approve, amend or repeal rules, regulations and orders, and issue
shall, however, endeavor to make its system conform as closely as possible with the opinions and provide guidance on and supervise compliance with such rules,
principles under the Compensation and Position Classification Act of 1989 (Republic Act regulations and orders;
No. 6758, as amended). l. Formulate policies and recommendations on issues concerning the pre-need
industry, including proposed legislations;
The salary and allowances or personal services expense of the employees of the m. Retain and utilize, in addition to its annual budget, an amount up to One hundred
Insurance Commission shall be sourced from the retained amount of the fees, charges million pesos (P100,000,000.00) of the fees, charges and other income derived
and other income derived from the regulation of pre-need companies and from the from the regulation of the pre-need companies; and
Insurance Fund under Section 418 of the Insurance Code of the Philippines (Presidential n. Exercise such other powers as may be provided by law as well as those which
Decree No. 612, as amended) and Section 286 of the National Internal Revenue Code. may be implied from, or which are necessary or incidental to carry out the
If the personal services expense cannot be covered by the retained amount and the express powers granted the Commission to achieve the objectives and purposes
Insurance Fund, it shall be appropriated in the General Appropriations Fund. of the law.

SEC. 6. Powers and Functions of the Commission. — The Commission shall, at all times,
 SEC. 11. Qualification and Disqualification of Directors and Officers. — To maintain the
CHAPTER III quality of management of pre-need companies and afford better protection to
planholders and beneficiaries, the Commission shall prescribe, pass upon and review
ORGANIZATION, LICENSING AND MANAGEMENT OF PRE-NEED COMPANIES the qualifications and disqualifications of individuals elected or appointed directors or
officers of pre-need companies, including its actuaries, and disqualify those found unfit.
The Commission may disqualify, suspend or remove any director or officer who
SEC. 7. Prerequisites to Incorporation. — Except upon favorable recommendation of the commits or omits an act which renders him unfit for the position.
Commission, the Securities and Exchange Commission (SEC) shall not accept or
approve the articles of incorporation and bylaws of any pre-need company. In determining whether an individual is fit and proper to hold the position of a director
or officer of a pre-need company, regard shall be given to his integrity, experience,
A foreign corporation may be allowed to engage in a pre-need business in the education, training and competence. The following persons, and those determined by
Philippines: Provided, That it shall comply with the pertinent laws, rules and the Commission to be unfit, shall in no case be allowed to serve or act in the capacity
regulations. of an officer, employee, director, consultant or sales counselor of any pre-need
company:
SEC. 8. Amendment of the Articles of Incorporation and Bylaws. — Amendments to the
articles of incorporation and bylaws of a pre-need company, including merger,
consolidation and dissolution, shall not be approved by the SEC without the favorable a. Any person convicted of any crime involving any pre-need plan, security or
recommendation from the Commission. financial product;
b. Any person convicted of an offense involving moral turpitude or involving fraud or
SEC. 9. Paid-up Capital. — A pre-need company incorporated after the effectivity of this embezzlement, theft, estafa or other fraudulent acts or transactions;
Code shall have a minimum paid-up capital of One hundred million pesos c. Any person who, by reason of any misconduct, is enjoined by order, judgment or
(P100,000,000.00). Existing pre-need companies shall comply with the following decree by any court, quasi-judicial body or administrative agency of competent
minimum unimpaired paid-up capital: jurisdiction from acting as a director, officer, employee, consultant, agent or
occupying any fiduciary position;
d. Any person found by the Commission to have willfully violated or willfully aided,
a. One Hundred million pesos (P100,000,000.00) for companies selling at least abetted, counseled, commanded, induced or procured the violation of this Code,
three(3) types of plan; the Insurance Code, the Securities Regulation Code or any related laws and any
b. Seventy-five million pesos (P75,000,000.00) for companies selling two (2) types rules or orders thereunder;
of plan; and e. Any person judicially declared to be insolvent or incapacitated to contract; and
c. Fifty million pesos (P50,000,000.00) for companies selling a single type of plan. f. Any person found guilty by a foreign court, regulatory authority or government
agency of the acts or violations similar to any of the acts or misconduct
enumerated in the foregoing paragraphs: Provided, That conviction in the first
Existing pre-need companies with traditional education plans shall have a minimum instance shall be considered as sufficient ground for disqualification.
unimpaired paid-up capital of One hundred million pesos (P100,000,000.00)

The Commission may adopt risk-based principles on capital adequacy based on SEC. 12. Independent Directors. — Pre-need companies shall have at least two (2)
internationally accepted standards. In the exercise of its authority under this independent directors or twenty percent (20%) of the members of the board,
paragraph, the Commission may prescribe a higher minimum unimpaired paid-up whichever is higher. For this purpose an "independent director" shall refer to a person
capital for pre-need companies. other than an officer, employee or any person having a fiduciary relation to the pre-
need company, its parent or subsidiaries, or any other individual having a relationship
SEC. 10. Licensing of Pre-need Companies. — No person shall operate as a pre-need therewith, which may interfere with the exercise of independent judgment in carrying
company or engage in the business of a pre-need company unless licensed by the out the responsibilities of a director.
Commission in accordance with this Code.
SEC. 13. Investment Restrictions of Directors and Officers. — No director or officer of
The license under this section shall expire one (1) year from the time of the any pre-need company shall, after his election or appointment as such, directly or
registration. It may be renewed upon compliance with the prescribed requirements of indirectly, for himself or as the representatives or agent of others, have an investment
the Commission. Such renewal shall be deemed approved if not acted upon within in excess of Five million pesos (P5,000,000.00) in any corporation or business
thirty (30) days from the time of filing of the application for renewal. undertaking in which the pre-need company’s trust fund has an investment in or has a
financial interest with. No relatives of directors or officers of the pre-need company director of the board, chief executive officer or chief financial officer of the company or
within the fourth degree of consanguinity or affinity shall, directly or indirectly, have an any such position that the Commission may determine to have an inherent conflict of
investment of more than Five million pesos (P5,000,000.00) in any corporation or interest to the position of an actuary.
business undertaking in which the pre-need company’s trust fund has an investment in
or has a financial interest with during the incumbency or term of the director or officer SEC. 17. Approval of Contract Forms. — All forms, including amendments thereto,
involved. relating to the pre-need plans shall be approved by the Commission. No pre-need
contracts or certificates shall be issued or delivered within the Philippines unless in the
form previously approved by the Commission.
CHAPTER IV
SEC. 18. Pre-need Advertising Rules. — Pre-need plans shall be advertised and sold in
REGISTRATION OF PRE-NEED PLANS an appropriate non-misleading manner in accordance with the rules to be prescribed by
the Commission.

SEC. 14. Registration of Pre-need Contracts/Plans. — Within a period of forty-five (45) It shall be unlawful for any pre-need company to advertise itself or its pre-need plans
days after the grant of a license to do business as a pre-need company, and for every unless the Commission has approved such advertising material. The Commission shall
pre-need plan which the pre-need company intends to offer for sale to the public, the have a period of ten (10) working days to approve or deny the advertising material and
pre-need company shall file with the Commission a registration statement for the sale failure to act within the said period shall cause the advertising material to be approved.
of pre-need plans pursuant to this Code. The Commission shall promulgate rules For purposes hereof, the Commission shall have the power to define the scope of its
governing the registration of pre-need plans and the required documents which include, advertising rules to appropriately cover advertising or other communications to the
among others, the viability study with certification, under oath, of a pre-need brochure, public.
a copy of the pre-need plan, and information and documents necessary to ensure the
protection of planholders and the general public. Said rules shall further set forth the Any person who sells or offers to sell any pre-need plan or contract by any means or
conditions under which such registration may be denied revoked, suspended or instruments of communication in violation of this section shall be liable to the person
withdrawn, and the remedies of pre-need companies in such instances. purchasing such pre-need contract who may sue to recover the consideration paid for
such pre-need contract with interest thereon. In addition hereto, the Commission shall
SEC. 15. Registration Requirements. — The Commission shall set forth the have the power to pursue the erring pre-need company in an administrative or criminal
requirements for registration of pre-need plans and shall require the following proceeding.
documents, among others:
A fine of One hundred thousand pesos (P100,000,000.00) shall be imposed on any pre-
need company found to have violated this section: Provided, That a second violation of
a. Duly accomplished Registration Statements; this section shall, in addition to the fine imposed, result in the suspension of the license
b. Board resolution authorizing the registration of applicant’s pre-need plans; of the pre-need company.
c. Opinion of independent counsel on the legality of the issue;
d. Audited financial statements; SEC. 19. Disclosures to Prospective Planholders. — No registered pre-need plan shall be
e. Viability study with certification, under oath, of pre-need actuary accredited by sold to prospective planholders unless an information brochure, which has been filed
the Commission; with the Commission, has been provided to the purchaser. The information brochure
f. Copy of the proposed pre-need plan; and shall contain an explanation of the principal features of the pre-need plan, a statement
g. Sample of sales materials. that the planholder may avail of a default or reinstatement period within which to
reinstate his lapsed plan, and the conditions of the same and the rates of return for
scheduled benefit plans and illustrative yields for contingent benefit plans; and such
Such registration statements and sales materials required under this section shall
other information that the Commission shall require by rule.
contain the appropriate risk factors as may be determined by the Commission.

SEC. 16. Accreditation of Actuary. — The Commission shall have the power to set
CHAPTER V
standards for the accreditation of actuaries directly responsible for the preparation and
certification of the viability study of the pre-need plan submitted by the pre-need
LICENSING OF SALES COUNSELORS AND GENERAL AGENTS
company for registration or amendment with the Commission. It shall further have the
power to define the obligations and liabilities of actuaries accredited by it. No actuary
engaged by a pre-need company shall at the same time be a stockholder or serve as a
SEC. 20. Licensing of Sales Counselors. — No sales counselor shall be allowed to solicit,
sell or offer to sell pre-need plans under this Code without being licensed as such by contracts issued to planholders a grace period of at least sixty (60) days within which
the Commission. No license shall be issued unless the following qualifications have been to pay accrued installments, counted from the due date of the first unpaid installment.
complied with: Nonpayment of a plan within the grace period shall render the plan a lapsed plan. Any
payment by the planholder after the grace period shall be reimbursed forthwith, unless
the planholder duly reinstates the plan. The planholder shall be allowed a period of not
a. The applicant must be of good moral character and must not have been convicted less than two (2) years from the lapse of the grace period or a longer period as
of any crime involving moral turpitude; provided in the contract within which to reinstate his plan. No cancellation of plans shall
b. The applicant has undergone a training program approved by the Commission and be made by the issuer during such period when reinstatement may be effected.
such fact has been certified under oath by a duly authorized representative of a
pre-need company; and Within thirty (30) days from the expiration of the grace period and within thirty (30)
c. The applicant has passed a written examination administered by the. days from the expiration of the reinstatement period, which is two (2) years from the
Commission: Provided, That the administration of the examination may be lapse of the grace period, the pre-need company shall give written notice to the
delegated to an independent organization under the supervision of the planholder that his plan will be cancelled if not reinstated within two (2) years. Failure
Commission. to give either of the required notices shall preclude the pre-need company from
treating the plans as cancelled.

Such license shall automatically expire every thirtieth (30th) day of June or such date of SEC. 24. Termination of Pre-need Plans. — A planholder may terminate his pre-need
every year as may be fixed by the Commission and may be accordingly renewed. plan at any time by giving written notice to the issuer.

SEC. 21. Denial, Suspension, Revocation of License. — An application for the issuance A pre-need plan shall contain a schedule of termination values to which the planholder
or renewal of a license to act as sales counselor may be denied, or such license, if is entitled to upon termination. Such schedule of termination value shall be required for
already issued, shall be suspended or revoked based on the following grounds: all in-force pre-need plans and shall be fair, equitable and in compliance with the
Commission issuances. The termination value of the pre-need plan shall be
a. Materially misrepresented statements in the application requirements; predetermined by the actuary of the pre-need company upon application for
b. Obtained or attempted to obtain a license by fraud or misrepresentation; registration of the pre-need plans with the Commission and shall be disclosed in the
c. Materially misrepresented the terms and conditions of pre-need plan which he contract.
sold or offered to sell;
d. Solicited, sold or attempted to solicit or sell a pre-need plan by means of false or
misleading representation and other fraudulent means; CHAPTER VII
e. Terminated for cause from another pre-need company;
f. Similar grounds found in Section 11 of this Code; CLAIMS SETTLEMENT
g. Willfully allowing the use of one's license by a non — licensed or barred individual;
and
h. Analogous circumstances. SEC. 25. Unfair Claims Settlement Practices. —

a. No pre-need company shall refuse, without just cause, to pay or settle claims
SEC. 22. Licensing of General Agents. — If the issuer should contract the services of a
arising under coverages provided by its plans nor shall any such company engage
general agent to undertake the sales of its plans, such general agent shall be required
in unfair claim settlement practices. Any of the following acts by a pre-need
to be licensed as such with the Commission, in accordance with the requirements
company, if committed without just cause, shall constitute unfair claims
imposed by the Commission.
settlement practices:

1. Knowingly misrepresenting to claimants pertinent facts or plan provisions

CHAPTER VI
relating to coverages at issue;
2. Failing to acknowledge with reasonable promptness pertinent
DEFAULT AND TERMINATION BY PLANHOLDERS
communications with respect to claims arising under its plan;
3. Failing to adopt and implement reasonable standards for the prompt
investigation of claims arising under its plan;
SEC. 23. Default; Reinstatement Period. — The pre-need company must provide in all
 4. Failing to provide prompt, fair and equitable settlement of claims submitted officer:
in which liability has become reasonably clear; or
5. Compelling planholders to institute suits or recover amounts due under its
plan by offering, without justifiable reason, substantially less than the a. One hundred percent (100%) of the capital stock;
amounts ultimately recovered in suits brought by them. b. An amount sufficient to pay all net losses reported, or in the course of settlement,
and all liabilities for expenses and taxes; and
c. Trust fund.
b. Evidence as to the number and types of valid and justifiable complaints to the
Commission against a pre-need company shall be deemed admissible in an
Any dividend declared under the preceding paragraph shall be reported to the
administrative or judicial proceeding brought under this section.
Commission within thirty (30) days after such declaration.
c. Any violation of this section shall be considered sufficient cause for the suspension
or revocation of the company's certificate of authority.

CHAPTER VIII
SEC. 26. Payment of Plan Proceeds. — In the case of scheduled benefit plans, the
proceeds of the plan shall be paid immediately upon maturity of the contract, unless TRUST FUND
such proceeds are made payable in installments or as an annuity, in which case the
installments or annuities shall be paid as they become due. Refusal or failure to pay the
claim within fifteen (15) days from maturity or due date will entitle the beneficiary to SEC. 30. Trust Fund. — To ensure the delivery of the guaranteed benefits and services
collect interest on the proceeds of the plan for the duration of the delay at the rate provided under a pre-need plan contract, a trust fund per pre-need plan category shall
twice the legal interest unless such failure or refusal to pay is based on the ground that be established. A portion of the installment payment collected shall be deposited by the
the claim is fraudulent: Provided, That the planholder has duly complied with the pre-need company in the trust fund, the amount of which will be as determined by the
documentary requirements of the pre-need company. actuary based on the viability study of the pre-need plan approved by the Commission.
Assets in the trust fund shall at all times remain for the sole benefit of the planholders.
In the case of contingent benefit plans, the benefits shall be paid by the pre-need At no time shall any part of the trust fund be used for or diverted to any purpose other
company thirty (30) days upon submission of all necessary documents. than for the exclusive benefit of the planholders. In no case shall the trust fund assets
be used to satisfy claims of other creditors of the pre-need company. The provision of
SEC. 27. Recovery of Investment. — The planholder may institute the necessary legal any law to the contrary notwithstanding, in case of insolvency of the pre-need
action in court to recover his/her investment in the pre-need company in case of its company, the general creditors shall not be entitled to the trust fund.
insolvency or bankruptcy.
Except for the payment of the cost of benefits or services, the termination values
However, in case the insolvency or bankruptcy is a mere cover-up for fraud or illegality, payable to the planholders, the insurance premium payments for insurance-funded
the planholder may institute the legal action directly against the officers and/or benefits of memorial life plans and other costs necessary to ensure the delivery of
controlling owners of the said pre-need company. benefits or services to planholders, no withdrawal shall be made from the trust fund
unless approved by the Commission. The benefits received by the planholders shall be
SEC. 28. Consequences of Delay or Default. — In case of any litigation for the exempt from all taxes and the trust fund shall not be held liable for attachment,
enforcement of any pre-need plan, it shall be the duty of the Commission to determine garnishment, levy or seizure by or under any legal or equitable processes except to pay
whether the payment of the claim of the planholder has been unreasonably denied or for the debt of the planholder to the benefit plan or that arising from criminal liability
withheld. If found to have unreasonably denied or withheld the claim, the pre-need imposed in a criminal action.
company shall be liable to pay damages, consisting of actual damages, attorney’s fees
and legal interest, to be computed from the date the claim is made until it is fully The trust fund shall at all times be sufficient to cover the required pre-need reserve.
satisfied: Provided, That the failure to pay any such claim within the time prescribed in
Section 26 hereof shall be considered prima facie evidence of unreasonable delay in SEC. 31. Deposits to the Trust Fund. —
payment.

a. The pre-need company shall make monthly deposits to the trust fund in an
SEC. 29. Distribution of Profits. — A pre-need company may declare divided: Provided,
amount determined by the accredited actuary, sufficient to pay the benefits
That the following shall remain unimpaired, as certified under oath by the president and
promised under the contract. For plans paid for in full, the pre-need company
the treasurer with respect to items (a) and (b); and in the case of item (c), by the trust
shall deposit into the trust fund at least forty-five percent (45%) for life plans and
 fifty-one percent (51%) for education and pension plans of said full payment or execution and shall contain the following salient provisions, among others:
such higher amount as determine by the actuary.

In case of installment payments, the minimum limits of the deposit contributions a. The manner in which the trust fund is to be operated;
to the trust fund, unless the viability study done by the actuary requires b. Investment powers of the trustee with respect to trust deposits, including the
otherwise, shall be in accordance with the following schedule: character and kind of investment;
c. Auditing and settlement of accounts of the trustee with respect to the trust fund;
Other d. Basis upon which the trust fund may be terminated;
Life Plans e. Provisions for withdrawals from the trust fund;
Plans
f. That the trustee shall submit to the power of the Commission to examine and
Collection of the 1st 20% of verify the trust fund;
5% 5% g. An undertaking by the trustee that it shall abide by the rules and regulations of
Contract Price
Collection of the 2nd 20% of the Commission with respect to the trust fund; and
10% 10%
Contract Price h. An undertaking by the trustee that it shall submit such other data or information
Collection of the 3rd 20% of as may be prescribed by the Commission.
70% 80%
Contract Price
Collection of the 4th 20% of
70% 80%
Contract Price SEC. 33. Responsibilities of the Trustee. — The trustee shall:
Collection of the 5th 20% of
70% 80%
Contract Price
a. Administer and manage the trust fund with utmost good faith, care and prudence
required by a fiduciary relationship;
Contributions to the trust fund shall not form part of the income or gross receipts b. The trustee shall have the exclusive management and control over the funds and
of the pre-need company and, therefore, shall not be available for dividend the right at any time to sell, convert, invest, change, transfer or otherwise change
declaration or payment to creditors. or dispose of the assets comprising the funds within the parameters prescribed,
by the pre-need company and provided these parameters are compliant with the
b. The deposits to the trust fund shall be made within twenty (20) days from the end Commission's regulations; and
of each reference month for payments received from plans whether paid for in full c. Not use the trust fund to invest in or extend any loan or credit accommodation to
or in installments. Failure to make the trust fund deposit shall subject the pre- the pre-need company, its directors, officers, stockholders, and related interests
need company to administrative liability as provided for under this Code. as well as to persons or enterprises controlling, owned or controlled by, or under
c. Should the Commission discover a deficiency in the trust fund, it shall give notice common control with said company, its directors, officers, stockholders and
of the same to the pre-need company and require the said company to make related interests except for entities which are direct providers of pre-need
additional deposits. The pre-need company shall have thirty (30) days from companies.
receipt of notice to make the said deposits and correct the deficiency. Failure to
pay the deficiency inspite of notice by the Commission shall subject the pre-need
SEC. 34. Investment of the Trust Fund. — To ensure the liquidity of the trust fund to
company to the payment of a penalty, in addition to other sanctions imposable
guarantee the delivery of the benefits provided for under the plan contract and likewise
under this Code.
obtain sufficient capital growth to meet the growing actuarial reserve liabilities, all
d. For plans sold prior to the effectivity of this law, the minimum contributions to the
investments of the trust fund/s of a pre-need company shall be limited to the following
trust fund shall be governed by rules and regulations in force at the time of sale.
and subject to limitations, to wit:

SEC. 32. Terms and Conditions of a Trust Fund. — A trust fund must be established
a. Fixed income instruments. — These may be classified into short-term and long-
separately for each type of pre-need plan with the trust department of a trust company,
term instruments. The instrument is short-term if the maturity period is three
bank or investment house doing business in the Philippines. No trust fund shall be
hundred sixty-five (365) days or less. This category includes:
established by a pre-need company with an affiliate trust entity subject to Section 38
hereof.
1. Government securities which shall not be less than ten percent (10%) of the
trust fund amount;
The trust agreement shall be submitted to the Commission for approval before
2. Savings/time deposits and unit investment trust funds maintained with and
managed by a duly authorized bank with satisfactory examination rating as
 of the last examination by the BSP;
3. Commercial papers duly registered with the SEC with a credit rating of "1" The amount to be allocated for this purpose shall not exceed thirty percent (30%)
for short-term and "AAA" for long-term based on the rating scale of an of the total trust fund while the investment in any particular issue shall not
accredited Philippine Rating Agency or its equivalent at the time of exceed ten percent (10%) of the allocated amount. The investment shall be
investment. recorded at the aggregate of the lower of cost or market.

The maximum exposure to long-term commercial papers shall not exceed Existing investments which are not in accordance herewith shall be disposed of
fifteen percent (15%) of the total trust fund amount while the exposure to within three (3) years from the effectivity of this Act.
each commercial paper issuer shall not exceed ten percent (10%) of the
allocated amount; and c. Real Estate. — These shall include real estate properties located in strategic areas
of cities and first class municipalities. The transfer certificate of title (TCT) shall be
4. Direct loans to corporations which are financially stable, profitable for the in the name of the seller, free from liens and encumbrances and shall be
last three (3) years and have a good track record of paying their previous transferred in the name of the trustee in trust for the planholders unless the
loans. seller/transferor is the pre-need company wherein an annotation to the TCT
relative to the sale/transfer may be allowed. It shall be recorded at acquisition
These loans shall be fully secured by a real estate mortgage up to the extent cost.
of sixty percent (60%) of the zonal valuation of the property at the time the
loan was granted. However, the real estate shall be appraised every three (3) years by a licensed
real estate appraiser, accredited by the Philippine Association of Real Estate
The property shall be covered by a transfer certificate of title registered in Appraisers, to reflect the increase or decrease in the value of the property. In case
the name of the mortgagor and free from liens and encumbrances. the appraisal would result in an increase in the value, only sixty percent (60%) of
the appraisal increase is allowed to be recorded in the books of the trust fund but
The maximum amount to be allocated for direct loans shall not exceed five in case of decline in value, the entire decline shall be recorded. Appraisal
percent (5%) of the total trust fund amount while the amount to be granted increment should not be used to cover up the required monthly contribution to
to each corporate borrower shall not exceed ten percent (10%) of the the trust fund.
amount allocated.
The total recorded value of the real estate investment shall not exceed ten
The maximum term of the loan should be no longer than four (4) years. percent (10%) of the total trust fund amount of the pre-need company. In the
event that the existing real estate investment exceeds the aforesaid limit, the
Direct loans to planholders are exempt from the limitations set forth under same shall be leveled off to the prescribed limit within three (3) years from the
this section: Provided, That such loans to planholders shall not exceed ten effectivity of this Code.
percent (10%) of the total trust fund amount.
Investment of the trust fund, which is not in accordance with the preceding
paragraphs, shall not be allowed unless the prior written approval of the
b. Equities. — Investments in equities shall be limited to stocks listed on the main Commission had been secured: Provided, further, That no deposit or investment
board of a local stock exchange. in any single entity shall exceed fifteen percent (15%) of the total value of the
trust fund: Provided, finally, That the Commission is authorized to adjust the
Investments in duly registered collective investment instruments such as mutual percentage allocation per category set forth herein not in excess of two
funds are allowed hereunder: Provided, That such funds are invested only in fixed percentage (2%) points upward or downward and no oftener than once every five
income instruments and blue chips securities, subject to the limitations prescribed (5) years. The first adjustment hereunder may be made no earlier than five (5)
by laws, rules and regulations. years from the effectivity of this Act. The pre-need company shall not use the
trust fund to extend any loan to or to invest in its directors, stockholders, officers
These investments shall include stocks issued by companies that are financially or its affiliates.
stable, actively traded, possess good track record of growth and have declared
dividends for the past three (3) years. Notwithstanding the prohibition against
transactions with directors, officers, stockholders and related interests, the SEC. 35. Valuation of Reserve Liabilities of the Pre-need Company. — To determine the
trustee may invest in equities of companies related to the trustee provided these sufficiency and adequacy of the fund, an annual pre-need reserve valuation report
companies comply with the foregoing criteria provided in this paragraph for equity establishing the reserve requirement and contractual liabilities of the pre-need
investments. company shall be made and submitted to the Commission, within one hundred twenty
(120) days from end of the calendar year. The valuation report shall contain the a. A written approval of the Commission has been previously obtained; and
assumptions, methodology, formulas used, a summary of the pre-need plans that were b. Public disclosure of the affiliation with the trust entity be included in all materials
subject of valuation and the results of such valuation. in whatever form.

The report shall be duly certified to by a professional as may be determined by the

Commission. Upon approval by the Commission of the reserve computation, any The Commission shall have the authority to prescribe appropriate rules that shall
deficiency in the fund shall be covered by the pre-need company, in the manner as may ensure that the yield of the trust fund is maximized, consistent with the requirements
be prescribed by the Commission. In case of an excess of the fund over the reserve of safety and liquidity.
liability, the excess shall be credited for future deposit requirements.

SEC. 36. Trust Fund Deficiencies. — Upon approval by the Commission of the pre-need CHAPTER IX
reserve computation submitted in the preceding section, any deficiency in the trust
fund, when compared to the reserve liabilities as reported in the pre-need reserve ACTUARIES FOR PRE-NEED COMPANIES
valuation report, shall be funded by the pre-need company within sixty (60) days from
such approval. Failure to cover the deficiency in an appropriate manner within the time
required shall subject the pre-need company to the payment of a penalty, in addition to SEC. 39. Required Actuarial Reports. — The following documents which are from time
other remedies exercisable by the Commission, as provided for in this Code. Any excess to time submitted to the Commission by a pre-need company shall be duly certified by
of the trust fund over the actuarial reserve liabilities may be credited to future deposit an Insurance Commission accredited actuary:
requirements.

a. Actuarial valuation of all Iiabilities pertaining to pre-need contracts;

SEC. 37. Liquidity Reserve. — The trustee shall at all times maintain a liquidity reserve
b. Asset share studies when applying for approval of new products or enhancement
which shall be sufficient to cover at least fifteen percent (15%) of the trust fund but in
or repricing of existing products;
no case less than one hundred twenty — five percent (125%) of the amount of the
c. Accounts in the financial statement of the pre-need company pertaining to
availing plans for the succeeding year. For this purpose, the pre-need company shall
actuarial reserve liabilities and other actuarial reserve items;
timely submit to the trustee a summary of benefits payable for the succeeding year.
d. Financial projections showing the probable income and reserve requirements,
enumerating the actuarial assumptions and bases of projections; and
The following shall qualify as investments for the liquidity reserve:
e. Such other reports as may be required by the Commission.

a. Loans secured by a hold-out on assignment or pledge deposits maintained either

It shall be the duty of an actuary to immediately report to the Commission any matter
with the trustee or other banks, or of deposit substitute of the trustee itself or
contained in arising out of or in relation to the above reports requiring intervention of
mortgage and chattel mortgage bonds issued by the trustee;
the Commission to protect the interests of planholders: Provided, That the actuary shall
b. Treasury notes or bills, other government securities or bonds, and such other
not be liable to the pre-need company for any acts done under this paragraph, unless
evidences or indebtedness or obligations the servicing and repayment of which
there is a clear showing of bad faith, malice or gross negligence.
are fully guaranteed by the Republic of the Philippines;
c. Repurchase agreements with any of those mentioned in Item "b" above, as
SEC. 40. Disaccreditation of an Actuary. — An actuary shall be disaccredited by the
underlying instruments thereof; and
Commission on the following grounds:
d. Savings or time deposits with government-owned banks or commercial banks.

a. Failure to adequately perform his required functions and duties under this Code;
SEC. 38. Trustees. — Upon approval of the Commission or when the Commission
b. Failure to meet the requirements of Section 11 of this Code;
requires for the protection of planholders, the pre-need company shall entrust the
c. Failure to disclose conflict of interest;
management and administration of the trust fund to any reputable bank's trust
d. Failure to comply with the Code of Conduct of the Actuarial Society of the
department, trust company or any entity authorized to perform trust functions in the
Philippines; or
Philippines: Provided, That no director and/or officer of the affiliate or related trust
e. Such other grounds that may be determined by the Commission.
entity: Provided, further, That no trust fund shall be established by a pre-need
company with a subsidiary, affiliate or related trust entity. However, such may be
allowed: Provided, That the following conditions are complied with:
 CHAPTER X
"In this regard, management maintains a system of accounting and
REPORTS AND EXAMINATION reporting which provides for the necessary internal controls to ensure that
transactions are properly authorized and recorded, assets are safeguarded
against unauthorized use or disposition and liabilities are recognized. The
SEC. 41. Annual Pre-need Reserve Valuation Report. — Every pre-need company shall management likewise discloses to the company's audit committee and to its
annually determine its reserve requirement and contractual liabilities, and submit to the external auditor: (i) all significant deficiencies in the design or operation of
Commission an annual pre-need reserve valuation report within one hundred twenty internal controls that could adversely affect its ability to record, process, and
(120) days from the end of the fiscal year of the pre-need company. The valuation report financial data; (ii) material weaknesses in the internal controls; and
report shall contain the assumptions, methodology, formulas used, a summary of the (iii) any fraud that involves management or other employees who exercise
pre-need plans that were the subject of the valuation and the results of such valuation. significant roles in internal controls."
The report should be duly certified by an actuary accredited by the Commission in the
case of contingent plans such as memorial/life plans and by the pre-need company's "The board of directors reviews the financial statements before such
external auditors or by a qualified actuary in the case of scheduled-benefit plans such statements are approved and submitted to the stockholders of the company.
as pre-need pension and education plans, the liabilities of which are not actuarial in
nature. The reserving formula, bases and limits of the assumptions to be used in the "The (name of the auditing firm), the independent auditors appointed by the
valuation of reserves shall be prescribed by the Commission. stockholders, has examined the financial statements of the company in
accordance with generally accepted auditing standards in the Philippines and
The Commission may require any pre-need company to submit an interim pre-need has expressed its opinion on the fairness of the presentation upon
reserve valuation report if any of the following events occurred: completion of such examination, in its report to the board of directors and
stockholders."

a. When there is sufficient evidence that a subsequent event or transaction occurred

after the end of the fiscal year and such event would materially affect the Any material omission of disclosures, misstatement or misleading information found in
computation of the pre-need reserve valuation report submitted; and the financial statements, whether interim or annual, shall constitute a violation of this
b. When the company ceased operation six (6) months after the end of the fiscal Code and the officer signing such statement shall be subject to the penalty provided for
year. under this Code and such other sanctions as may be imposed by the Commission.

SEC. 43. Annual Statement of Trust Fund. — Every pre-need company shall file with
SEC. 42. Annual Audited Financial Statements. — Every pre-need company shall the Commission an annual statement of its trust fund for each type of plan. Such
terminate its fiscal period on the thirty-first (31st) day of December every year. Within statement shall be in a form prescribed by the Commission and shall include details as
one hundred twenty (120) days after the calendar or fiscal year, the pre-need company to all of the income, disbursements, assets and liability items of and associated with
shall render to the Commission annual financial statements signed and sworn to by its the said trust fund accounts. Said statement shall be made under oath by two (2)
chief executive officer, chief finance officer and external auditors in accordance with a officers of the company and shall be filed simultaneously with the annual statement
uniform accounting system that shall be prescribed by the Commission, showing in required by the preceding section.
such form and details the exact condition of its affairs.
Where the trust fund is managed and administered by a trustee as provided under
The audited financial statements should be accompanied by the Statement of Section 30 of this Code, an annual statement of trust fund for each type of plan shall
Management's Responsibility signed under oath by the company’s chairman of the instead be filed with the Commission. It shall include details such as the income,
board, chief executive officer and chief financial officer, containing the following disbursements, assets and liability items, and shall be certified under oath by at least
declaration: two (2) of the highest ranking officers of the trustee.

SEC. 44. Publication of Annual Statement. — Within thirty (30) days after receipt of the
"The management of (name of the pre-need company) is responsible for all annual statement approved by the Commission, every pre-need company shall publish
information and representations contained in the financial statements for the in two (2) newspapers of general circulation a full synopsis of its annual financial
year(s) ended (date). The financial statements have been prepared in statements, including the trust fund annual statement showing fully the conditions of
conformity with rules and regulations of the Commission on accounting and its business, and setting forth its resources and liabilities in a standardized format to be
reflect amounts that are based on the best estimates and informed designed by the Commission.
judgment of management with an appropriate consideration to materiality."
The Commission may require pre-need companies to create and maintain a website
wherein its planholders may readily access updated information pertaining to the status The Commission may not lift the order of suspension or revocation of the said authority
of financial condition and results of information of the company. The sufficiency and until the concerned pre-need company shall have submitted a viable business plan
truthfulness of the contents of such website shall be the responsibility of the company. showing the company’s estimated receipts and disbursements, as well as the basis
therefor for the next succeeding three (3) years.
SEC. 45. Keeping of Records. — The Commission shall require every pre-need company
to keep its books, records, accounts and vouchers in such manner that the
Commission's authorized representatives may readily verify the company's annual CHAPTER XIII
statements and ascertain whether the company is solvent and has complied with the
provisions of this Code or the circulars, instructions, rulings or decisions of the CONSERVATORSHIP AND PROCEEDINGS UPON INSOLVENCY
Commission.

SEC. 46. Examination. The Commission shall, at least once a year and whenever it SEC. 49. Appointment of Conservator. — If at any time before or after the suspension
considers that the public interest so demands, cause an examination to be made into or revocation of the license of a pre-need company as provided in Section 27 hereof,
the affairs, financial condition and method of business of every pre-need company, and the Commission finds that such company is in a state of continuing inability or
of any other person, firm or corporation managing the fund or affairs and/or property unwillingness to comply with the requirements of the Code and/or orders of the
of such pre-need company. Such examination shall be carried in a manner prescribed Commission, a conservator may be appointed to take charge of the assets, liabilities,
by the Commission by rule. and the management of such company, collect all moneys and debts due the company
and exercise all powers necessary to preserve the assets of the company, reorganize its
management, and restore its viability. The conservator shall have the power to overrule
CHAPTER XI or revoke the actions of the previous management and board of directors of the said
company, any provision of law, or of the articles of incorporation or bylaws of the
FINANCIAL ACCOUNTING STANDARDS company, to the contrary notwithstanding, and such other powers as the Commission
shall deem necessary. The conservator may be another pre-need company, by officer or
officers of such company, or any other competent and qualified person, firm or
SEC. 47. Accounting Rules and Regulations for Pre-need Plans. — The Commission shall corporation. The remuneration of the conservator and other expenses attendant to the
have the authority to make, amend and rescind such accounting rules and regulations conservation shall be borne by the pre-need company. The conservator shall not be
applicable for pre-need companies. The Commission may prescribe, among other subject to any action, claim or demand by, or liability to, any person in respect of
things, the form or forms in which required information shall be set forth, the items or anything done or omitted to be done in good faith in the exercise, or in connection with
details to be shown in the components of the financial statements, and the recognition the exercise, of the powers conferred on the conservator.
and measurement basis to be adopted for each account, after considering the nature of
the operation of the pre-need industry. Pre-need companies shall strictly comply with The conservator appointed shall report and be responsible to the Commission until such
such accounting rules and regulations as prescribed by the Commission. time as the Commission is satisfied that the pre-need company can continue to operate
.on its own and the conservatorship shall likewise be terminated should the
Commission, on the basis of the report of the conservator or of his own findings,
CHAPTER XII determine that the continuance in business of the pre-need company would be
hazardous to planholders and creditors, in which case the provisions of Chapter XVI
SUSPENSION OR REVOCATION OF AUTHORITY shall apply.

SEC. 50. Proceedings upon Insolvency. — Whenever, upon examination or other

SEC. 48. Suspension; Grounds. — If the Commission is of the opinion, upon evidence, it shall be disclosed that the condition of any pre-need company is one of
examination or other evidence, that any pre-need company is in an unsound condition, insolvency, or that its continuance in business would be hazardous to its planholders
or that it has failed to comply with the provisions of law or regulations, or that its and creditors, the Commission shall forthwith order the company to cease and desist
condition or method of business is such as to render its proceedings hazardous to the from transacting business and shall designate a receiver to immediately take charge of
public or to its planholders, or that its paid-up capital stock is impaired or deficient, the its trust fund, assets and liabilities, as expeditiously as possible collect and gather all
Commission is authorized to suspend or revoke all certificates of authority granted to the assets and administer the same for the benefit of its planholders and creditors, and
such pre-need company, its officers and agents, after due notice or hearing. No new exercise all the powers necessary for these purposes including, but not limited to,
business shall thereafter be done by such company or for such company by its agent in bringing suits and foreclosing mortgages in the name of the pre-need company.
the Philippines.
The Commission shall thereupon determine within thirty (30) days whether the pre- The receiver or the liquidator, as the case may be, designated under the provisions of
need company may be reorganized or otherwise placed in such condition so that it may this title shall not be subject to any action, claim or demand by, or liability to, any
be permitted to resume business with safety to its planholders and creditors and shall person in respect of anything done or omitted to be done in good faith in the exercise,
prescribe the conditions under which such resumption of business shall take place as or in connection with the exercise, of the powers conferred on such receiver or
well as the time for fulfillment of such conditions. In such case, the expenses and fees liquidator.
in the collection and administration of the pre-need company shall be determined by
the Commission and shall be paid out of the assets of such company. If the Commission SEC. 51. Commission's Power to Assume Trustee Functions. — In cases where the
shall determine and confirm within the said period that the pre-need company is Commission has ordered the liquidation of the pre-need company, the Commission may
insolvent, as defined hereunder, it shall, if the public interest so requires, order its immediately take custody of the trust fund established by the pre-need company, and
liquidation, indicate the manner of its liquidation and approve a liquidation plan and the pre-need company shall forthwith deliver custody and an accounting of the same.
implement it immediately. The Commission shall designate a competent and qualified Henceforth, the Commission shall have the full power and control over the fund to
person as liquidator who shall take over the functions of the receiver previously satisfy the pre-need company's obligations to planholders.
designated and, with all convenient speed, distribute the trust fund exclusively to the
planholders in proportion to termination values of their respective pre-need plans, SEC. 52. Liquidation. —
convert the assets of the pre-need company to cash, or sell, assign or otherwise
dispose of the same to the planholders, creditors and other parties for the purpose of
settling the liabilities or paying the debts of such company and he may, in the name of a. In cases where the Commission determines that the pre-need company shall be
the company. institute such actions as may be necessary in the appropriate court to liquidated, it shall have the power to commence insolvency proceedings in the
collect and recover accounts and assets of the pre-need company, and to do such other appropriate court which shall have jurisdiction over the assets of the pre-need
acts as may be necessary to complete the liquidation as ordered by the Commission. company, excluding trust fund assets that have been established exclusively for
the benefit of planholders.
The provisions of any law to the contrary notwithstanding the actions of the b. Proceedings in court shall proceed independently of proceedings in the
Commission under this section shall be final and executory, and can be set aside by the Commission for the liquidation of claims, and creditors of the pre-need company
court upon petition by the company and only if there is convincing proof that the action shall have no personality whatsoever in the Commission proceedings to litigate
is plainly arbitrary and made in bad faith. The Commission shall then file the their claims against the trust funds.
corresponding answer reciting the proceeding taken and praying for the assistance of c. In liquidating claims of planholders, the Commission shall ensure that all
the court in the liquidation of the company. No restraining order or injunction shall be planholders receive an equitable distribution of their claims, considering the
issued by the court enjoining the Commission from implementing his actions under this amounts each has paid into their plans, the termination values due each
section, unless there is convincing proof that the action of the Commission is plainly planholder, the present value of their claims and other equitable considerations.
arbitrary and made in bad faith and the petitioner files a bond in favor of the The only other claims which may be satisfied by the Commission out of the trust
Commission with the court in an amount fixed by it. The restraining order or injunction funds are the claims for trustees’ fees which are reasonable and can be shown to
shall be refused or, if granted, shall be dissolved upon filing by the Commission, if he so have been incurred in the administration of the trust fund, and taxes incurred
desires, of a bond in an amount twice the amount of the bond of the petitioner under trust.
conditioned that it will pay the damages which the petition may suffer by the refusal or
the dissolution of the injunction.

CHAPTER XIV
The court shall give preference to all proceedings under this chapter. The Commission
shall not be required to pay any fee to any public officer for filing, recording or in any
ADMINISTRATIVE SANCTIONS AND CRIMINAL PENALTIES
manner authenticating any paper or instrument relating to the proceedings.

As used in this title, the term "insolvency" shall refer to the financial condition of a pre-
SEC. 53. Administrative Sanctions.
need company that is generally unable to pay its liabilities as they fall due in the
ordinary course of business or that has liabilities that are greater than its assets.
a. The Commission, after proper notice and hearing, may impose any or all of the
In case of liquidation of a pre-need company, after payment of the cost of the sanctions provided in subparagraph (b) of this section for the following offenses:
proceedings, including reasonable expenses and fees incurred in the liquidation to be (1) the making of any untrue statement of a material fact in a registration
allowed by the court, the Commission shall pay all allowed claims against such statement, information brochure and its supporting papers and other reports
company, under order of the court, in accordance with their legal priority. required to be filed with the Commission; (2) the failure to disclose any material
 fact required to be stated therein; (3) the refusal to permit any lawful b. Selling or offering to sell an unregistered pre-need plan or any product that has
examination into its affairs; and (4) any violation of this Code or its implementing pre-need plan features shall be penalized by imprisonment of one (1) year and a
rules and regulations. fine equivalent to triple the indicated price;
b. The imposition of the foregoing administrative sanctions shall be without prejudice c. Soliciting, selling or offering to sell a pre-need plan by means of false or
to the filing of criminal charges against the individual responsible for the violation: misleading representation and other fraudulent means shall be penalized by
imprisonment of six (6) years and one (1) day to twelve (12) years and a fine in
1. Cease and Desist Order. — The Commission may, motu proprio or upon the amount of Fifty thousand pesos (P50,000.00) to Five hundred thousand pesos
verified complaint by any party, issue a cease and desist order (CDO) (P500,000.00);
against any pre-need company upon proof, after due notice and hearing, of d. Any negligent act or omission that is prejudicial or injurious to the planholder
violation of any provision of this Code: Provided, That such CDO may be shall be penalized by imprisonment of one (1) year and one (1) day to six (6)
issued ex parte if the violation is clearly apparent, injurious to a number of years and a fine in the amount of Fifty thousand pesos (P50,000.00) to Five
planholders and requires immediate intervention by the Commission. The hundred thousand pesos (P500,000.00);
CDO shall specifically enjoin the pre-need company from performing certain e. Any fraudulent act or omission that is prejudicial or injurious to the planholder
activities and shall impose fines and state the required remedial actions. All shall be penalized by imprisonment of six (6) years and one (1) day to twelve
proceedings before the issuance of the CDO shall be confidential; (12) years and a fine in the amount of One hundred thousand pesos
2. Suspension of License. — The Commission shall issue a suspension order (P100,000.00) to One million pesos (P1,000,000.00); and
against the pre-need company if it fails to comply with the CDO within thirty f. Willful violation of the provisions of this Code or orders of the Commission:
(30) days from issuance thereof; Provided, That repeated violations shall constitute prima facie evidence against
3. Revocation of License. — The Commission may issue a revocation order of the offender and shall be penalized by imprisonment of six (6) years and one (1)
the license of the pre-need company under suspension for a period of ninety day to twelve (12) years and a fine in the amount of One hundred thousand pesos
(90) days; (P100,000.00) to One million pesos (P1,000,000.00).
4. A fine of not less than Ten thousand pesos (P10,000.00) nor more than One
million pesos (P1,000,000.00) plus not more than Two thousand pesos
(P2,000.00) for each day of continuing violation; Any person who violates any other provisions of this Code or rules and regulations
5. Disqualification from being an officer, a member of the board of directors or promulgated by the Commission under authority thereof shall, upon conviction, be
principal stockholders of a pre-need company; or punished by a fine of not less than Fifty thousand pesos (P50,000.00) nor more than
6. Other penalties within the power of the Commission under existing laws. Five million pesos (P5,000,000.00) or imprisonment of not less than one (1) year nor
more than fourteen (14) years, or both, at the discretion of the court. Should the
offense be committed by a juridical person, the penalty may, in the discretion .of the
c. The unauthorized sale of pre-need plans shall subject the issuer to a fine as court, be imposed on such juridical entity and upon the officer or officers of the juridical
follows: entity responsible for the violation. If such officer is an alien, he shall, in addition to the
penalties prescribed, be deported without further proceedings after service of sentence.
1. First violation — thirty percent (30%) of the aggregate gross pre-need price
of the plans sold;
2. Second violation — forty percent (40%) of the aggregate gross pre-need CHAPTER XV
price of the plans sold; and
3. Third violation — suspension or revocation of license. MISCELLANEOUS PROVISIONS

Failure to pay fines within three (3) months from receipt of notice to pay will SEC. 55. Claims. — The Commission shall have the primary and exclusive power to
cause the Commission to issue a suspension order. adjudicate any and all claims involving pre-need plans. If the amount of benefits does
not exceed One hundred thousand pesos (P100,000.00), the decision of the
Commission shall be final and executory.
SEC. 54. Criminal Penalties. — The following acts are criminal in nature:
SEC. 56. Review of Commission Orders or Decisions. — Any person aggrieved by an
order or decision of the Commission, whether in relation to its settlement of a claim of
a. Selling or offering to sell a pre-need plan by unregistered persons shall be a planholder or in the exercise of its regulatory authority, may appeal the order or
penalized by imprisonment of one (1) year and a fine equivalent to triple the decision to the Court of Appeals by petition for review in accordance with the pertinent
contract price; provisions of the Rules of Court.
 (Sgd.) JUAN PONCE ENRILE (Sgd.) PROSPERO C. NOGRALES
SEC. 57. Transitory Provisions. — Any pre-need company who, at the time of the Speaker of the House of
President of Senate
effectivity of this Code has been registered and licensed to sell pre-need plans and Representatives
similar contracts, shall be considered registered and licensed under the provision of this
Code and its implementing rules and regulations and shall be subject to and governed
by the provisions hereof: Provided, however, That compliance for all sections with the This Act which is a consolidation of Senate Bill No. 2077 and House Bill No. 6407 was
exception of Section 21, may be deferred for such reasonable time as the Commission finally passed by the Senate and the House of Representatives on September 30, 2009
may determine but not to exceed one (1) year unless otherwise specifically provided in and September 29, 2009, respectively.
this Code. With respect to Chapter IV, compliance will cover all new plans sold one
hundred twenty (120) days after the effectivity of this law. Violations committed prior (Sgd.) EMMA LIRIO-REYES (Sgd.) MARILYN B. BARUA-YAP
to the effectivity of this Code shall be punished in accordance with the provisions of the Secretary General House of
Secretary of Senate
laws then in force. Representatives

The Commission shall constitute forthwith a special team of experts to handle all
matters related to the pre-need industry and shall secure and transfer all the files and Approved: DEC 03 2009
records of the SEC to the Insurance Commission within ninety (90) days after the
effectivity of this Code. (Sgd.) GLORIA MACAPAGAL - ARROYO
President of the Philippines
Notwithstanding any provision to the contrary, all pending claims, complaints and cases
filed with the SEC shall be continued in its full and final conclusion. It shall also assist
the Department of Justice in criminal cases involving matters related to the pre-need
industry.
Source: Supreme Court E-Library
SEC. 58. Implementing Rules and Regulations. — The Commission shall adopt such This page was dynamically generated
rules and regulations for the proper and effective implementation of this Code within by the E-Library Content Management System (E-LibCMS)

sixty (60) days from approval hereof. The Commission shall publish once a week for
two (2) consecutive weeks in two (2) newspapers of general circulation the, rules and
regulations promulgated pursuant to the preceding section.

SEC. 59. Effect on Existing Law. — Any person, natural or juridical, or pre-need plan,
authorized, licensed or registered by the SEC under the Securities Regulation Code
shall be deemed to have been licensed or registered under the provisions of this Code.
Such person or plan shall, unless otherwise herein provided, be given a period of one
(1) year from the effectivity of this Code within which to comply with the same. The
rights and remedies provided by this Code shall be in addition to any and all other
rights and remedies that exist under existing laws.

SEC. 60. Separability Clause. — Should any provision of this Act or the application
thereof to any person or circumstance be held invalid, the other provisions or sections
of this Act shall not be affected thereby.

SEC. 61. Repealing Clause. — All acts, laws, executive orders and/or rules and
regulations or any part thereof that are inconsistent with the provisions of this Code are
hereby repealed or modified accordingly.

SEC. 62. Effectivity. — This Act shall take effect upon its approval.

Approved,