. 
THIRTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
Y: 
Introduced by Senator S. R. Osmeiia 111 
EXPLANATORY NOTE 
Pension educational, memorial and other pre-need plans partake of the 
nature of insurance. These plans offer insurance benefits as part of the package 
and undertake to pay some obligation in the future. The fiduciary nature of pre- 
need plans involve the interest of the public which the calls for protection by the 
State. 
This bill proposes a regulatory framework for pre-need companies under 
the supervision and administration of the Insurance Commission, which is 
deemed best equipped to exercise supervision over pre-need plan companies. 
Among other, this bill provides that every pre-need company must: 
1. 
Have a minimum paid-up capital of at least P50 million; 
2. 
Establish a trust fund which will finance all the guaranteed benefits 
and services, to be administered by a trustee bank authorizes to perform 
trust functions; 
3. 
Utilize the services of duly accredited resident or consulting 
actuaries who will be responsible for the actuarial computations involved 
in their business transactions; 
4. 
Publish the annual statement of its trust funds as approved by the 
Commission; 
5. 
Render its financial statement in accordance with a uniform 
accounting system that may be prescribed by the Commission; and 
6. 
Maintain a margin of solvency as may be required by the 
Commission; 
This bill also provides guidelines and sanctions for claim settlements; 
procedures for the appointment of a conservators, and proceedings in cases of 
insolvency, consolidation and mergers of pre-need companies. It also provides 
for the creation of a Planholders’ Protection Fund for the payment of claims 
against pre-need companies which remain unpaid by reason of insolvency on the 
part of the pre-need companies. 
As of 1997, over 88 companies engaged in the sale of pre-need plans 
reported sales amounting to P9.0668 billion, with total trust fund amounting to 
some P I  3.8 billion. Pre-need plan companies, just like insurance companies 
perform the important function of pooling individual contributions to contribute to 
capital formation in the economy. 


With the regulatory framework proposed in this bill, we hope to provide an 
environment marked with prudence and flexibility where pre-need companies will 
serve the needs of the public and perform their role in capital formation. 
-.. 
In view of the foregoing, early passage of this bill is earnestly requested 
e-- & 
SERGIO OSMENA Ill 
Senator 


~~~~ 
THIRTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
Introduced by Senator S. R. Osmefia 111 
AN ACT 
ESTABLISHING THE PRE-NEED PLAN CODE OF THE PHILIPPINES 
Be it enacted by the Senate and House of Representatives of the Republic of the 
Philippines in Congress assembled: 
1 
SECTION I. 
Short Title. - This Act shall be known as the "Pre-Need Plan 
2 
Code Of The Philippines." 
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SECTION 2. Definition of Terms. - Whenever used in this Act, the 
4 
following terms shall have the respective meanings hereafter set forth or 
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indicated, unless the context requires: 
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(a) "Commission" means the Insurance Commission. 
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(b) "Pre-Need Plans" are contracts which provide for the performance of 
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future servicekervices or payment of monetary consideration at the 
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time of actual need, payable either in cash or installment by 
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planholders at prices stated in the contract, such as life/memorial plan, 
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pension plan, education plan; cremation plan, interment plan and 
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similar contracts and investments. 
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(c) "Pre-Need Company" means any company or corporation registered 
I4 
with the Commission who offers and/or sells pre-need plans. 
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(d) "Planholder" means any natural or juridical person, who purchases 
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pre-need plans for whom or for whose beneficiaries future 
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servicedpayments are to be rendered or made at the time of need or 


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payment benefits to be delivered as stipulated and guaranteed by the 
pre-need company which sold or issued the plans at the time of need 
or maturity of the contracted benefit. 
(e) "Traditional actual cost plans" refer to such plans whose costs are 
fixed at the time or purchase or inception but with its corresponding 
benefits/services guaranteed in spite of increases in costs of such 
benefitslservices at the time of availment on account of the 
contingencies 
of 
inflation 
and 
interest 
yield 
rate 
fluctuations. 
(9 "Fixed value plans" refer to plans whose benefits and costs are fixed 
and pre-determined at the inception or purchase of the plan. 
(9) "Sales Counsellors" means natural persons who are engaged in the 
sale, whether on commission basis, of pre-need plans and contracts 
upon authority of the pre-need company, registered and licensed by 
the Commission to engage in the business of selling said pre-need 
plans and contracts. 
(h) "Trust Fund" means a fund set up, separate and distinct from the paid- 
up capital of the pre-need company registered and licensed by the 
Commission to engage in the business of selling pre-need plans and 
contracts, from the planholders' payments, deposited with a trustee 
bank 
..under 
a 
trust 
agreement 
approved 
by 
the 
Commission, to pay for annuities, services or property as provided for 
in the contracts. 
(i) "In Force Plan" means a plan, the installments of which are promptly 
and regularly paid in accordance with the contract and remains to be 
so up to the time the plan has been fully paid by the planholder. 
(j) "Lapsed Plan" means a plan which is delinquent in payment of 
installments, provided for in the contract, the delinquency of which 
extends beyond the grace period provided for in the plan or contract 
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which shall not be less than two (2) months from the due date of the 
last unpaid installment. 
(k) "Cancelled Plan" means a plan which has remained lapsed for two (2) 
years counted from the date of delinquency. 
(I) "Liquidity Reserve Fund" means the amount representing at least ten 
percent (10%) of the trust fund but in no case less than FIVE 
HUNDRED THOUSAND PESOS (P500,000.00) set aside by the 
trustee appointed by the pre-need company house in cash or short 
term liquid investments, whichever is higher. 
SECTION 3. Supervision. - All pre-need companies shall be under the 
supervision and regulation of the Insurance Commission. The Commission shall 
create a new department within its control, headed by a deputy commissioner to 
regulate and supervise the operations and activities of pre-need plan companies 
in the country. 
SECTION 4. Paid-up Capifal, - A pre-need company shall have a paid-up 
capital of at least FIFTY MILLION PESOS (P50,000,000.00) 
in cash or property, 
provided that the commission may increase such minimum paid-up capital stock 
under such terms and conditions it may impose, to an amount which on its 
opinion, would reasonably assure the safety of the interest of the planholders and 
the public. Pre-need companies who are currently licensed as such with paid-up 
capital less than FIFTY MILLION PESOS (P50,000,000.00) 
may be allowed to 
continue to operate as such but shall be required to build up such minimum paid- 
up capital in accordance with the schedule prescribed by the Commission. 
CHAPTER I - REGISTRATION REQUIREMENTS FOR PRE-NEED 
COMPANIES; CANCELLATION 
SECTION 5. Cancellation . 
Registration requirements for pre-need 
companies - (a) Any pre-need company organized or otherwise created under 
the laws of the Philippines may register for purposes of this Act by filing with the 
Commission an application for registration under oath in such form as the 
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Commission by rule may prescribe. The application shall set forth the,following: 
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(1)The names, addresses and business experience for the last five years, 
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of the directors and officers of the pre-need company. 
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(2) A statement whether any of the persons referred to in paragraph (1) is 
subject to any disability enumerated in Section 
(a) of this Act. 
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(3) The Articles of Incorporation and By-Laws of the pre-need company. 
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(4) Evidence indicating that the pre-need company when registered, will 
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comply with the structural and capital requirements set forth in this code. 
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(5) A statement of the capitalization of the pre-need company including the 
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authorized and subscribed capital stock and the amount paid thereon; the 
number and classes of shares, the description of the respective rights, voting 
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powers, preferences and restriction of the class. 
(b) (I). 
Within sixty (60) days after the filing of such application for the 
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registration the Commission shall, (a) by order grant registration, or (b) 
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institute proceedings to determine whether to deny registration 
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(2) The order of the 'Commission granting registration shall become 
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effective after completion of publication thereof, at the expense of the 
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registrant, once a week for two consecutive weeks in two newspapers of 
general circulation in the Philippines. 
(c) The Commission may by order, after hearing, deny an application for 
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registration as pre-need company if it finds that- 
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(1) The pre-need company made or caused to be made a materially 
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false or misleading statement in its application for registration, or 
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omitted to state in such application a material fact which was required 
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to be stated therein. 
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(2) The pre-need company or any affiliated person thereof did not 
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comply with the provisions of the Act or the rules of the Commission 
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thereunder, or in the case of an affiliated person would be subject to a 
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disability enumerated in Section 
(a) of this Act if such company 
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was a registered pre-need company. 
3) The pre-need company has not paid the registration fee prescribed 
by the Commission. 
(d). Within a period of forty-five (45) days after the grant of registration, the 
pre-need company shall file with the Commission a registration statement 
pursuant to this Act and the rules of the Commission thereunder appertaining 
to the registration statements of its pre-need plans containing such other 
information and documents as the Commission may prescribe. 
(e). The Commission, in the exercise of its sound judgment and discretion, 
shall have power to limit the registration of pre-need companies to such 
number as the market then obtaining would permit, to prevent industry 
overcrowding and undue competition, and to allow the registration of new pre- 
need companies only when the conditions warrant it. 
(f) If it appears to the Commission that a registered pre-need company has 
failed to file the registration statement required by this Section or a report 
required pursuant to Section 
, has filed such registration statement or 
report but omitted therefrom material facts required to be stated therein, or 
has filed such a registration statement or report in violation of 
,the 
Commission shall notify such company by registered mail of the failure to file 
such registration statement or reports, or of the respects in which such 
registration or report appears to be materially incomplete or misleading, as 
the case may be, and shall fix a date which shall not earlier than thirty (30) 
days after the mailing of such notice prior to which such company may file 
such registration statement or report or correct the same. If such registration 
statement or report is not filed or corrected within the time so fixed by the 
Commission or any extension thereof, the Commission, after appropriate 
notice and opportunity for hearing, upon such conditions and with such 
exemptions as it deems appropriate for the protection of planholders may by 
order, suspend the registration of such company until such statement or 
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report is filed or corrected, or may, by order, revoke such registration if the 
evidence finds that such suspension or revocation is in the public interest. 
(9) The Commission may by order, after hearing, revoke or cancel the 
registration of a pre-need company if it finds that the pre-need company was 
not so registered, its application for registration would be subject to denial 
under subsection (c). 
(h) Whenever the Commission, on its own motion or upon application, finds 
that a registered need company has ceased to be a pre-need company, it 
shall so declare by order and upon the effectivity of such order, the 
registration of such company shall cease to be in effect. If necessary for the 
protection of planholders, an order under this subsection may be made upon 
appropriate co nd i tions . (7a) 
SECTION 6. Federation Membership. - All pre-need companies shall be 
registered members of the federation of pre-need plan companies within one (1) 
year from the approval of this Act. A newly licensed pre-need company shall be a 
registered member of the Federation within sixty (60) days after the Commission 
shall have its registration. 
SECTION 7. lneligibilify of Certain Persons. -- (a) It shall be unlawful 
for any of the following persons to serve or act in the capacity 
of officer, 
employee, director, sales counsellors or solicitors for any pre-need company: 
(1) any person who has been convicted of any felony or misdemeanor 
involving 
the purchase or sale of any pre-need plan security, or 
proprietary or non-proprietary membership certificate, commodity 
futures contract, pre-need plan, pension plan, or life plan, or out of 
such person's conduct as underwriter, broker, dealer, investment 
company 
manager, investment adviser, futures commission 
merchant, commodity trading advisor, floor broker, or as an 
affiliated person, salesman, or other employee of any of the 
foregoing; 
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(2) any person who, by reason of any misconduct, is permanently or 
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temporarily enjoined by order, judgment, or decree or any court or 
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quasi-judicial of competent jurisdiction from acting as an underwriter, 
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broker, dealer, investment company manager, investment adviser, 
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futures commission merchant, commodity trading advisor, floor broker, 
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or as an affiliated person, salesman, or other employee of any of the 
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foregoing, from 
engaging in or continuing any conduct or practice in 
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connection with any such activity or in connection with the purchase or 
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sale of any plan or security. 
(3) any person found guilty of an offense involving moral turpitude or 
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involving fraud, or embezzlement, theft, estafa or other fraudulent acts 
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or transactions; 
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(4) any person found to have wilfully violated, or wilfully aided, abetted, 
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counselled, commanded, induced, or procured the violation of this Act, 
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Insurance Code, the Revised Securities Act, or any other laws and any 
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Commission rules or orders thereunder, or who has filed a materially 
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false or misleading application, report or registration statement with the 
Commission required to be filed under this Act, the Revised Securities 
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Act, or other laws; 
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(5) any person judicially declared to be insolvent, or incapacitated to 
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cont rad; 
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(6) any person found guilty by a foreign court or equivalent financial 
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regulatory authority of the acts or violations similar to any of the acts or 
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misconduct enumerated in paragraphs (1) to (5) above. 
The Commission may, by rule or regulation, require other matters to be 
26 
set forth in the application. 
27 
CHAPTER II - LlCENSlN 
28 
SECTION 8. Licensing of Pre-Need Companies. - Any pre-need 
29 
company shall be required to be licensed by the Commission as such and 
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comply with all the provisions thereof. 
The pre-need company must post a surety bond from a bonding company 
acceptable to the Commission in the amount of Three Hundred Thousand Pesos 
(P300,OOO.OO) in favor of the Government of the Philippines and conditioned 
upon faithful compliance with. the provisions of this Act. The Commission may 
require additional surety bond depending on the volume of sales of the pre-need 
company. 
Every license under this Section shall expire every thirty-first day of 
December, but new registration for the succeeding year shall be issued upon 
application and payment of the fee, without filing of further statements or 
furnishing any further information unless specifically required by the Commission. 
Application for renewals must be made not less than thirty (30) days before the 
first day of the ensuing year, otherwise, they shall be treated as original 
a p p I ications. 
The fee for original application and every renewal thereof shall be 
prescribed by the Commission. 
SECTION 9. Licensing of Salesmen, Counsellors or Solicifors. - No 
sales counsellors shall be allowed to solicit, sell or offer to sell pre-need plans 
under this Act, without being licensed as such by the Commission. License shall 
be issued upon certification under oath by the pre-need company that the sales 
counsellor has been duly trained. Provided, that said training program has been 
approved by the Commission. 
Such license shall automatically cease upon the termination of the agency 
contract of such sales counsellor by the pre-need company, provided that it may 
be renewed for the ensuing year in accordance with the third paragraph of the 
p reced i ng sect io n . 
The fee for original application and every renewal thereof shall be 
prescribed by the Commission. 
SECTION' I O .  Qualificafions of a Licensee. - An applicant for a license 
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as sales counsellor must be of good moral character and must not have been 
convicted of any crime involving moral turpitude. He must satisfactorily show to 
the Commissioner that he has undergone extensive training in pre-need plans 
under a training program approved by the Commission. 
SECTION 11. Refusal, Suspension, Revocation of a License of a 
Sales Counsellor. An application for the issuance or renewal of a license to act 
as sales counsellor may be refused, or such. license, if already issued or 
renewed, shall be suspended or revoked if the Commissioner finds that the 
applicant for, or holder of, such license: 
(a) 
(b) 
has wilfully violated any provision of this Code; or 
has intentionally made a material misstatement in the application to 
qualify for such license; or 
(c) 
has obtained or attempted to obtain a license by fraud or 
misrepresentation; 
has been guilty of fraudulent or dishonest practices; or 
(d) 
(e) 
has misappropriated or converted to his own use or illegally 
withheld moneys required to be held in fiduciary capacity; or 
has not demonstrated trustworthiness and competence to transact 
a business as a plan adviser in such manner as to safeguard the 
public; or 
has materially misrepresented the terms and conditions of pre-need 
plan which he seeks to sell or has sold. 
(f) 
(9) 
23 
CHAPTER 111 - SUSPENSION I REVOCATION OF LICENSE 
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SECTION 12, Suspension of License or Permif. If, at any time the 
information contained in the plan agreement or prospectus has been found to be 
misleading, incorrect, inadequate or incomplete or the sale or offering for sale of 
. 
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the plans or contracts may work or tend to work a fraud, the Commission may 
require from the person filing such statement further information as may, in its 
judgment, be necessary to enable the Commission to ascertain whether the 
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registration of such security should be revoked on any ground specified in 
Section -of this Act, and the Commission may also suspend the right to sell such 
plan pending further investigation, by entering an order specifying the grounds for 
such action with due notice expressly or by personal service, on the person filing 
such statement and every broker who shall have notified the Commission of an 
intention to sell such plan. Refusal to furnish information required by the 
Commission within a reasonable time to be fixed by the Commission, may be a 
proper ground for the entry of such order of suspension. Upon entry of such 
order of suspension, no further sales of such plan shall be made until the 
Commission orders otherwise. 
Upon entry of such order of suspension, the Commission shall conduct a 
hearing with proper notice to the parties to determine whether the sale of any 
such plan should, be revoked on any ground under Section - of this Act. It shall 
make the necessary findings and enter a final order prohibiting the sale of such 
plans or contracts is not fraudulent nor will result in fraud, it shall forthwith enter 
an order revoking the suspension. 
SECTION 13. Grounds for Revocation of Permit or License [of a Pre- 
Need Company. 
(a) The Commission may, after due notice and hearing, revoke the permit 
to sell plans by issuing an order to such effect, setting forth its findings in respect 
thereto, if upon examination it shall appear that the pre-need company: 
Is insolvent; 
Has' violated any of the provisions of this Act, or the rules 
promulgated pursuant thereto, or any order of the Commission of 
which the pre-need company had notice; 
Has been or is engaged or is about to engage in fraudulent 
transactions; 
Has made fraudulent representation in any prospectus, circular, 
literature or other form of broadcast or media communication 
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concerning its plans; or 
Does not conduct its business in accordance with law. 
(5) 
The Commission may compel the production of all books and records of 
the pre-need company, and may administer oaths and examine the officers or 
employees of the pre-need company. 
Failure by the pre-need company to submit the statements or books 
required or refusal to permit any examination thereof by the Commission shall be 
proper grounds for the revocation of the registration of and permit to sell its pre- 
need plans. 
If the Commission deems it necessary, it may issue an order suspending 
the right to sell plans pending any investigation stating the grounds therefore. 
Upon the issuance thereof, no further sale of such pre-need plan shall be made 
until the suspension order is lifted of set aside by the Commission. Any such 
sales in the interim shall be void. 
Notice of such suspension order or lifting thereof shall be made expressly 
or by personal service upon the pre-need company who shall have notified the 
Commission of his intention to sell such pre-need plan. 
(b) A registration statement may be revoked by the Commission upon 
petition made for its withdrawal by the pre-need company as herein provided. An 
application for the withdrawal of a registration statement should be accompanied 
by the following: 
Petition or application withdrawal of the License/Permit to Sell 
Plans to the Public, stating the reasons therefore; 
Proof 
of 
publication of 
Notice 
to 
Planholders 
of 
said 
revocation/withdrawaI; 
Board of Resolution approving such application for withdrawal 
certified under oath by the Corporate Secretary and attested to by 
the President; 
List of all Planholders; 
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A certification under oath by the Treasurer attested to by the 
President that the planholders' contribution were refunded and their 
claims fully settled; 
A joint and several assumption of liability executed by the President 
and Treasurer of the pre-need company for settlement of all for 
proved claims that may arise as a result of said withdrawal; and 
Sufficiency 
of 
trust 
fund 
to 
cover 
payment 
of 
cash 
s u rre n d e rlte rm i n at i o n va I u es . 
Upon payment of filing fee of 1,000.00, the petition shall be published by 
the Commission, at the expense of the issuer in two (2) newspapers of general 
circulation, once a week for two (2) consecutive weeks, with notice to the general 
public, plan holders, stockholders or other persons affected by said withdrawal, 
who may file their claims with the pre-need company and the Commission. 
After publication and upon the findings of the Commission that the petition 
with all papers and documents attached thereto is on its face complete and that 
no party stands to suffer damage thereby, it shall issue an ORDER revoking said 
Registration/License or Permit to Sell Plans to the public. 
CHAPTER IV - CONTRACTS AND FORMS 
SECTION 14. Approval of Confracfs. - Pre-need contracts of certificate 
shall be issued or delivered within the Philippines unless in the form previously 
approved by the Commissioner, and no application form shall be used with, and 
no rider, clause, warranty or endorsement shall be attached to, printed or 
stamped upon such contract or certificate unless the form of such application, 
rider, clause, warranty or endorsement has been approved by the Commissioner. 
SECTION 15. Amendments fo fhe Plan Agreement or other 
Documents - No plan agreement, trust agreement, contract or other documents 
pertinent to the plan, shall be amended or modified without the prior approval of 
the Commission, and such amendment or modification shall either affect 
adversely the planholders thereof nor impair any term or condition in the plan or 
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other related documents. 
CHAPTER V - TRUST FUND 
SECTION 16. Trusf Fund. - To guarantee the delivery of property or 
performance of services in the future, a portion of the installment collected should 
be deposited by the pre-need company with a trustee or trustee bank, the 
amount of which will be determined by an actuary sufficient to pay the benefits 
promised under the contract. For fully paid plans in cash, the amount contributed 
to the trust fund should be no less than forty per centum (40%) of the gross pre- 
need price of the plan. For plans sold on installment basis, the actuary shall 
likewise determine the trust fund contribution rates required to sufficiently pay for 
the benefits contracted for but in no case lower than the following schedule: 
Collections on the 1st 20% of Gross Pre-Need Price ................ 5% 
Collections on the 2nd 20% of Gross Pre-Need Price. . . . . . . .  5% 
Collections on the 3rd 20% of Gross Pre-Need Price ............... 60% 
Collections on the 4th 20% of Gross Pre-Need Price ............ .65% 
Collections on the 5'h 20% of Gross Pre-Need Price ............ 65% 
The minimum trust fund contribution as prescribed above should be 
deposited within sixty (60) days following the end of each quarter of the fiscal 
year of the pre-need company. 
SECTION 17. Actuarial Valuation of fhe Trusf Fund- An actuarial 
valuation to determine all contractual liabilities of the pre-need company shall be 
made and submitted to the Commission within one hundred twenty (120) days 
from the end of the fiscal year of the pre-need company. The actuarial valuation 
report containing the actuarial assumption, methodology, and results should be 
certified by the actuary accredited by the Commission. Upon approval by the 
Commission of the actuarial computation, any deficiency in the trust fund shall be 
covered through additional deposit according to the schedule approved by the 
Commission may allow. After receipt of notice of deficiency from the Commission 
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. 
and in the process of filling up such deficiency, the current year's pay put from 
the trust fund must be deposited in the form of cash and/or liquid securities upon 
submission of the valuation report. Projected deficiency beyond the current year's 
requirements may be filled up by additional deposits and/or performance bond 
acceptable to the Commission:Any 
excess of the trust fund shall be credited for 
future deposit requirements. 
SECTION 18. Administration of Trust Fund. - The trust fund (inclusive 
of earnings) shall be administered and managed by a trustee bank authorized to 
perform trust functions in the Philippines. The trustee shall perform and exercise 
the functions, cares and duties of a TRUSTEE with the utmost good faith, care 
and prudence required by a fiduciary relation. 
No withdrawal shall be made from the trust fund except for paying the cost 
of services rendered or property delivered, bank charges and investment 
expenses in the operation of the trust fund, planholders' insurance premiums, 
expenses in the delivery of the benefits or services, cash surrender/termination 
values payable to the planholders, annuities, contributions to the fund of 
cancelled plans, taxes on trust funds, and other costs necessary to insure the 
delivery of benefits or services. 
SECTION 19. Trust Agreement. - The Trust Agreement shall be 
submitted for approval of the Commission and shall contain, among others, the 
following provisions: 
Manner in which the trust fund is to be operated; 
Investment powers of the trustee with respect to the trust deposits, 
including the character and kind of investment; 
Allocation, apportionment, distribution dates of income, profits and 
losses; 
Terms and conditions governing the admission and withdrawal of 
investment or participation in the fund; 
Auditing and settlement of accounts of the trustee with respect to 
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the fund: 
Basis upon which the fund may be terminated; 
Provisions for withdrawal of the fund; 
Such other matters as may be necessary or proper to define clearly 
the rights of the issuer with regard to the trust fund. 
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(h) 
SECTION 20. Investment Powers of Trustee. - The TRUSTEE shall, 
from time to time, invest and reinvest the FUND and keep the same invested, in 
its sound discretion without d'istinction between principal and income in any 
property, real, personal, or mixed, or any share or part thereof, or part interest 
therein, including but not being limited to: capital, common and preferred stocks, 
personal, corporate and government obligations, secured mortgages, leaseholds, 
fees and other interests in listed companies whether in realty, rights, royalties, 
payments or other interests in such property contracts, conditional sale 
agreements, chooses in action, trust and. Participation certificates, or other 
evidences of ownership, interest or part interest including participation in 
common trust funds; and in making such investment and reinvestments, the 
TRUSTEE shall not be limited as to the amount or type of any investment in 
relation to the FUND as a whole. Provided further, that investments in any 
property, real, personal or mixed shall have the prior approval of the 
Commission. 
SECTION 21. Investment Policy and Objective.- That as a matter of 
investment policy and objective, the TRUSTEE shall direct the investment of the 
FUND taking the following factors into consideration: security of the principal, 
growth, yield or income and liquidity in the order of priority. 
SECTION 22. Powers and Authorities of Trustee. - Without any sense 
limiting the general powers granted to the TRUSTEE, the TRUSTEE shall 
manage, improve, protect and maintain the FUND with full power and authority: 
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(a) 
to treat all amounts in, or payments made to, the FUND as one 
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aggregate amount for purposes of investment, and to deposit all or 
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any part thereof with a reputable bank or trust company including 
the TRUSTEE'S own bank either on current account or 
otherwise; 
to pay all costs, expenses and charges incurred in connection with 
the administration, preservation, maintenance and protection of the 
FUND or any part thereof and for this purpose, to employ or appoint 
such agents or employees as the said TRUSTEE may deem 
necessary and proper, and to determine whether such payments 
shall be charged against principal or income; with solely in 
accordance with the expressed provisions of this code. 
SECTION 23. Liquidity Reserve Fund, - At least ten percent (1 0%) of the 
trust fund but in no case less than P500,OOO.OO or any amount as may be 
prescribed by the Commission, must be set aside and maintained as a liquidity 
reserve fund. The reserve fund shall be invested only in the following 
transactions: 
(a) 
loans secured by a hold-out on assignment or pledge deposits 
maintained either with the TRUSTEE or other banks, or of deposit 
substitute of the TRUSTEE itself or mortgage and chattel mortgage 
bonds issued by the TRUSTEE; 
treasury notes or bills, Central Bank Certificates of indebtedness 
which are short-term and other government securities or bonds, 
and such other evidences or indebtedness or obligations the 
servicing and repayment of which are fully guaranteed by the 
Republic of the Philippines; 
repurchase agreements with any of those mentioned in Item "b" 
above, as underlying instruments thereof; 
(b) 
(c) 
(d) 
savings or time deposits with government-owned banks or 
commercial banks; provided, that in no case shall any such savings 
or time deposit account be accepted or allowed under a "Bearer", 
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"Numbered Account" or other similar arrangements; and 
other investments as the Commission may allow. 
(e) 
SECTION 24. Limitation of Trust Fund Invesfment. - The Trust Fund 
shall not be invested in any financing or investment company wherein a majority 
of the outstanding shares of stock is owned by The TRUSTOR or its directors. 
CHAPTER VI - MINIMUM STANDA D OF VALUATION FOR PRE-MEED 
COMPANIES 
SECTION 25. Annual Valuafion. - Every pre-need company shall 
annually make a valuation of all pre-need plans in order to determine its financial 
stability and solvency. All such valuation shall be made by an accredited actuary 
in accordance with actuarially sound and accepted principles and subject to the 
minimum standard of valuation and guidelines set by the Commission. 
CHAPTER VI1 -ACTUARIES FOR PRE-NEED COMPANIES 
SECTION 26. Required Actuary, - No pre-need company shall be 
licensed to do business in the Philippines nor shall any pre-need company doing 
business in the Philippines be allowed to continue doing such business unless 
they shall engage the services of either a resident or consulting actuary duly 
accredited with the Commission who shall, during his tenure of office, be directly 
responsible for the direction and supervision of all actuarial work connected with 
or that may be involved in the business of the pre-need company. 
SECTION 27. 
Qualificafions of the Actuary. - A person shall be 
officially accredited by the Commission to act as an Actuary in any pre-need 
company authorized to do business in the Philippines upon application therefore 
and the payment of the corresponding fee hereinafter prescribed, provided that: 
(I) he is a fellow of good standing of the Actuarial Society of the Philippines at 
the time of his appointment and remains in such good standing during the tenure 
of his engagement; or (2) in the case of one who is not a fellow of the Actuarial 
Society of the Philippines, he should meet all the requirements of the said society 
for accreditation as a fellow of the Society. 
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SECTION 28. Renewal of Certificates. - No certificate of registration 
issued under this chapter shall be valid after the thirtieth day of June of the year 
following its issuance unless it has been renewed by the Commission. 
SECTION 29. Required Reports. - The following documents, which are 
from time to time submitted to the Commission by a pre-need company 
authorized to do business in The Philippines shall be duly certified by an 
accredited actuary employed by such company: 
Actuarial valuation of all liabilities pertaining to pre-need contracts 
issued. 
Statement of asset share studies when applying for approval of 
new product or enhancement of existing products. 
Annual financial statement of the pre-need company pertaining to 
valuation of liabilities and other reserve items. 
Sufficiency and accuracy of the asset share studies used in the 
pricing of a pre-need product. These are necessary for approval of 
a new product, ,for reporting of an existing product, or an 
enhancement of an existing product. 
Valuation of trust funds. 
SECTION 31. Exception. - Any pre-need company authorized to do 
business in the Philippines may employ any person who is not officially 
accredited under either of the qualifications for any kind of actuarial work, 
provided that he shall not, at any time, have the Authority to certify to the 
correctness of the foregoing documents. 
CHAPTER Vlll -ANNUAL STATEMENT 
SECTION 31. Annual Statement. - Every pre-need company doing 
business in the Philippines shall terminate its fiscal period on the thirty-first day of 
December every year, or its chosen fiscal year, and within one hundred twenty 
(120) day after the calendar or fiscal year shall annually render to the 
Commission a statement signed and sworn to by the chief Officer of such 
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company in accordance with a uniform accounting system that may be 
prescribed by the Commission, showing in such form and details as may be 
prescribed by the Commission, the exact condition of its affairs within ninety (90) 
days after the calendar or fiscal year. Any entry in the statement which is found 
to be false shall constitute a misdemeanor and the officer signing such statement 
shall be subject to the penalty provided for under this code. 
SECTION 32. Filing of Annual Stafement. - Every pre-need company 
shall annually file with the Commission annual statement of its trust fund. Such 
statement shall be on a form prescribed or approved by the Commission and 
shall include details as the income, disbursements, assets and liability items of 
and associated with the said trust fund accounts. Said statement shall be under 
oath of two officers of the company and shall be filed simultaneously with the 
annual statement required by the preceding section. 
SECTION 33. Publicafion of Annual Sfaternenf. - Within thirty (30) days 
after the receipt of the annual statement approved by the Commission, every pre- 
need company doing business in the Philippines shall publish in two newspapers 
of general circulation a full synopsis of its annual financial statement showing 
fully the conditions of its business, and setting forth its resources and liabilities. 
CHAPTER IX - ASSETS 
SECTION 34. Admitted Assets. - In any determination of the financial 
condition of any pre-need company doing business in the Philippines, there shall 
be allowed and admitted as assets only such assets owned by the pre-need 
company concerned and which consist of: 
I .  
Cash in the possession of the pre-need company or in transit under 
its control, and the true and duly verified balance of any deposit of 
such company in a financially sound commercial bank or trust 
company. 
Investments in securities, including money market instruments, and 
in real property acquired or held in accordance with and subject to 
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the applicable provisions of this Code and the income and 
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unrealized therefrom or accrued thereon. 
Loans granted by the pre-need company concerned to the extent of 
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that portion thereof adequately secured by non-speculative assets 
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limitations imposed by applicable provisions of this Act. 
4. 
Loans and other assets and liens on pre-need contracts or 
certificates of a pre-need company, in an amount not exceeding 
trust fund reserves and other plan liabilities carried on Each 
individual pre-need contract or certificate. 
Deposits or amounts recoverable from underwriting associations, 
syndicates and reinsurance funds, or from any suspended banking 
institution, to the extent deemed by the Commissioner to be 
available for the payment of losses and claims and values to be 
Determined by him. 
Electronic data processing machines, as may be authorized by the 
Commissioner to be acquired by the pre-need company concerned, 
the acquisition cost of which to be amortized in equal annual 
amounts within a period of five years frorn the date of acquisition 
The re of. 
Other assets, not inconsistent with the provisions or paragraphs I to 
9 hereof, which are deemed by the Commissioner to be readily 
realizable and available for the payment of Losses and claims at 
values to be determined by him. 
5. 
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7. 
SECTION 35. Non-Admitted Assets. - In addition to such assets as the 
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Commissioner may from time to time determine to be non-admitted assets pre- 
need companies doing business in the Philippines, the following assets shall in 
no case be allowed as admitted assets of a pre-need company doing business 
in the Philippines, in any determination of its financial condition: 
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Goodwill, trade names, and other like intangible assets. 
Prepaid of deferred charges for expenses and commissions paid by 
such pre-need Company. 
Advances to officers, which are not adequately secured and which 
are not previously authorized by the Commissioner, as well as 
advances to employees, Agents and other persons on mere 
personal security. 
Shares of stock of such pre-need company, owned by it, or any 
equity therein as well as loans secured thereby, or any 
proportionate interest in such shares of stock through the 
ownership by such pre-need company of an interest in another 
Corporation or business unit. 
Furniture, furnishing, fixtures, safes, equipment, library, stationery, 
literature, and Supplies. 
Items of bank credits representing checks, drafts or notes returned 
unpaid after the date of statement. 
The amount, if any, by which the aggregate value of investments as 
carried in the ledger assets of such pre-need company exceeds the 
aggregate value thereof as determined in Accordance with the 
provisions of this Act andlor rules of the Commissioner. 
All non-admitted assets and all other assets of doubtful value or character 
included as ledger or non-ledger assets in any statement submitted by a pre- 
need company to the Commissioner, or in examiner’s report to him, shall also be 
reported, to the extent of the value disallowed as deductions from the gross 
assets of such pre-need company, except where the Commissioner permits a 
reserve to be carried among the liabilities of such pre-need company in lieu of 
any such deduction. 
CHAPTER X - MARGIN OF SOLVENCY 
SECTION 37. Margin of Solvency. - A pre-need company doing business 
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in the Philippines shall at all times maintain a margin of solvency which shall be 
an excess of the value of its admitted assets exclusive of its paid-up capital, over 
the amount of its liabilities. Whenever the aforementioned margin be found to be 
less than that herein required to be maintained, the Commissioner shall forthwith 
direct the company to make good any such deficiency by cash, to be contributed 
by all stockholders or record in proportion to their respective interest, and paid to 
the treasurer of the company, within fifteen days from receipt of the order; 
Provided, That the company in the interim shall not be permitted to take any new 
risk of any kind or character unless and until it make good any such deficiency; 
Provided, further, that a stockholder who aside from paying the contribution due 
from him, pays the contribution due from another stockholder by reason of the 
failure of refusal of the latter to do so, shall have a lien on the certificates of stock 
on the pre-need company concerned appearing in it books in the name of the 
defautting stockholder on the date of default, as well as on any interests or 
dividends that have accrued or will accrue to the said certificates of stock, until 
the corresponding payment or reimbursement is made by the defaulting 
stockholder. 
SECTION 37. Distribution of Profits. - No pre-need company shall 
declare or distribute any dividend on its outstanding stocks except from profits 
attested in a sworn statement to the Commissioner by the president or treasurer 
of the corporation to be remaining on hand after retaining unimpaired,: 
(a) 
Ten percent (10%) of the capital stock; 
(b) 
The margin of solvency required by Section 36; 
(c) 
A sum sufficient to pay all net losses reported, or in the course of 
settlement, and all liabilities for expenses and taxes. 
Any dividend declared or distributed under the preceding paragraph shall 
be reported to the commissioner within 30 days after such declaration or 
distribution 
If the Commissioner finds that any such corporation has been declared or 
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distributed any such dividend in violation of this section, he may order such 
corporation to cease and desist from doing business until the amount of such 
dividend or the portion thereof in excess of the amount allowed under this section 
has been restored to said corporation. 
CHAPTER XI . CLAIMS SETTLEMENT 
SECTION 38. (1) No pre-need company doing business in the Philippines 
shall refuse, without just cause to payor settle claims arising under coverages 
provided by its plans, nor shall any such company engage in unfair claim 
settlement practices. Any of the following acts by a pre-need company, if 
committed without just cause and performed with such frequency as to indicate a 
general business practice, shall 'constitute unfair claim settlement practices: 
knowingly misrepresenting to claimants pertinent facts or plan 
provisions relating to coverages at issue; 
failing acknowledge with reasonable pertinent to promptness 
communications with respect to claims arising under its plan; 
failing to adopt and implement reasonable standards for the 
prompt investigation of claims arising under its plan; 
not attempting in good faith to effectuate prompt, fair and equitable 
settlement of claims submitted in which liability has become 
reasonably clear; or 
compelling planholders to institute suits or recover amounts due 
under its plan by offering without justifiable reason substantially 
less than the amounts ultimately recovered in suits brought by 
them. 
(2) Evidence as to numbers and types of valid and justifiable complaints to 
the Commissioner against a pre-need company shall be admissible in evidence 
in an administrative or judicial proceeding brought under this section. 
(3) If it is found, after notice and an opportunity to be heard, that a pre- 
need company has violated this section, each instance of non-compliance with 
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paragraph (I) 
may be treated as a separate violation of this section and shall be 
considered sufficient cause for the suspension or revocation of the company's 
license to operate. 
SECTION 39. The proceeds of the plan shall be paid immediately upon 
maturity of the policy, unless 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 the time prescribed herein 
will entitle the beneficiary to collect interest on the proceeds of the plan for the 
duration of the delay at the prevailing interest rate unless such failure or refusal 
to pay is based on the ground that the claim is fraudulent. , 
SECTION 40. In case of any litigation for the enforcement of any pre- 
need contract, it shall be the duty of the Commissioner or the Court, as the case 
may be, to make a finding as to whether the payment of the claim of the 
planholder has been unreasonably denied or withheld; and in the affirmative 
case, the pre-need company shall be adjudged to pay damages which shall 
consist of attorney's fees and other expenses incurred by the planholder or his 
beneficiary by reason of such unreasonable denial or withholding of payment 
plus interest of the amount of the claim due the planholder or his beneficiary, 
from the date the plan is filed until the claim is fully satisfied; Provided, That the 
failure to pay any such claim within the time prescribed in said sections shall be 
considered prima facie evidence or unreasonable delay in payment. 
CHAPTER XI1 - EXAMINATION OF PRE-NEED COMPANIES 
SECTION 41. Keeping of Records. - The Commissioner shall require 
every pre-need company doing business in the Philippines to keep its books, 
records, accounts and vouchers in such manner that he or his authorized 
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representatives may readily verify its annual statements and ascertain whether 
the company is solvent and has complied with the provisions of this Code or the 
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circulars, instructions, rulings or decisions of the Commissioner. 
SECTION 42. Examination. - The Commissioner shall at least once a 
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year and whenever he considers the public interest so demands, cause an 
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examination to be made into the affairs, financial condition and method of 
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business of every pre-need company authorized to transact business in the 
. 
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Philippines and of any other person, firm or corporation managing the affairs 
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and/or property of such pre-need company. Such company, as well as such 
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managing person, firm or corporation, shall submit to the examiner all such 
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books, papers and securities as he may require and such examiner shall also 
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have the power to examine the officers of such company under oath touching its 
business and financial condition, and the authority to transact business in the 
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Philippines of any such company shall be suspended by the Commissioner if 
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such examination is refused and such company shall not thereafter be allowed to 
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transact further business in the Philippines until it has fully complied with the 
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provisions of this section. 
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CHAPTER XIII- PLANHOLDERS' PROTECTION FUND 
15 
SECTION 43. .There is hereby created a Planholders' Protection Fund, 
16 
hereinafter referred to as Fund, which shall be used for the payment of claims 
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against a pre-need company authorized to transact business in the Philippines 
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remaining unpaid by reason of insolvency of such company. No payment on 
anyone claim shall exceed Fifty Thousand Pesos (50,000.00) 
SECTION 44. THE FUND - The fund shall consist of all payments made 
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thereto by pre-need companies authorized to do business in the Philippines. The 
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Fund shall be held and administered by the Philippine Federation of Pre-Need 
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Plan Companies, lnc. in accordance with the provisions of this chapter. 
2 4, 
SECTION 45. CONTRIBUTIONS TO FUND; DISBURSEMENT. - All pre- 
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need companies doing business in the Philippines shall contribute to the Fund, 
the aggregate amount of Ten Million Pesos. The contributions of the pre-need 
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companies shall be in direct proportion to the ratio between a particular pre-need 
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company's total sale and the aggregate sales of all pre-need companies as 
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shown in their latest sales reports to the Commission, equivalent to one tenth of 
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one percent of the pre-need price of plans sold. This proportion applied to the 
Ten Million Pesos shall be the contribution of a particular company of the Fund. 
SECTION 46. The amount of Ten Million Pesos shall be in the form of a 
revolving trust fund. The respective contributions of the companies shall remain 
as assets in their books and any disbursements therefrom shall be deducted 
proportionately from the contributions of each company which will be allowed as 
deduction for income tax purposes. Any earnings of the Fund shall be turned 
over to the contributing companies in proportion to their contributions. 
SECTION 47. In case of any disbursements from the Fund as provided in 
the preceding paragraph, the pre-need companies shall replenish the amount 
disbursed in direct proportion to the individual company's sale of the pre-need 
companies as the case may be. However, in no case shall the Fund exceed the 
aggregate amount to Ten Million Pesos. 
SECTION 48. Should the FUND be inadequate as provided fur, the pre- 
need companies shall contribute to the Fund their respective shares in the 
proportion previously mentioned. ] 
CHAPTER XIV - SUSPENSION OR REVOCATION OF AUTHORITY 
SECTON 49. Suspension; Grounds, - If the Commissioner is of the 
opinion upon examination or other evidence that any pre-need company is in an 
unsound condition, or that it has failed to comply with the provisions of the law or 
regulations obligatory upon it, or that its condition or method of business is such 
as to render its proceedings hazardous to the public or to its planholders, or that 
its paid-up capital stock, is impaired or deficient, or that the margin of solvency 
required of such company is deficient, the Commissioner is authorized to 
suspend or revoke all certificates of authority granted to Gsuch pre-need 
company, its officers and agents, and no new business shall thereafter be done 
by such company or for such company by its agent in the Philippines while such 
suspension, revocation or disability continues or until 'its authority to do business 
is restored by the Commissioner, Such suspension or revocation of license shall 
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be done by the Commission after due hearing called for the purpose. Before 
restoring such authority, the Commissioner shall require the company concerned 
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to submit to him a business plan showing the company's estimated receipts and 
disbursements, as well as the basis therefore, for the next succeeding three 
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CHAPTER XV -APPOINTMENT OF CONSERVATOR 
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SECTION 50. Conservator. - If at any time before, or after, the 
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suspension or revocation of the certificate of authority of the pre-need company 
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as provided in the preceding chapter, the Commissioner funds that such 
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company is in a state of continuing inability or unwillingness to maintain a 
condition of solvency or liquidity deemed adequate to protect the interest of 
planholders and creditors, he may appoint a conservator to take charge of the 
assets, liabilities, and the management of such company, collect all moneys and 
debts due said company and exercise all powers necessary to preserve the 
assets of said company, reorganize the management thereof, and restore its 
viability. The said conservator shall have the power to overrule 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 by-laws of the company, 
to the contrary notwithstanding, and such other powers as the Commissioner 
shall deem necessary. 
The conservator may be another pre-need company doing business in the 
Philippines, any officer or officers of such company, or any other competent and 
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qualified person, firm or corporation, The rernuneration of the conservator and 
other expenses attendant to the conservation shall be borne by the pre-need 
company concerned. The conservator shall be subject to any action, claim or 
demand by, or liability to, any person in respect of anything done or omitted to be 
done in good faith in the exercise or in connection with the exercise, of the 
powers conferred on the conservator. 
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Commissioner until such 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 Commissioner, on the basis of the report of the 
conservator or of his own findings, 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 15 apply. 
CHAPTER XVI-PROCEEDINGS UPON INSOLVENCY 
SECTION 51. Cease and Desist Order, - Whenever, upon examination 
or other evidence, it shall be disclosed that the condition of any pre-need 
company doing business in the Philippines is one of insolvency, or that its 
continuance in business would be hazardous to its planholders and creditors, the 
Commissioner shall forthwith order the company to cease and desist from 
transacting business in the Philippines and shall designate a receiver to 
immediately take charge of its assets and liabilities, as expeditiously as possible 
collect and gather all the assets and administer the same for the benefit of its 
planholders and creditors, and exercise all the powers necessary for these 
purposes including, but not limited to, bringing suits and foreclosing mortgages in 
the name of the pre-need company. 
The Commissioner shall thereupon determine within thirty (30) days 
whether the pre-need company may be reorganized or otherwise place in such 
condition so that it may be permitted to resume business with safety to its 
planholders and creditors and shall prescribe the conditions under which such 
resumption of business shall take place as well as the time for fulfilment of such 
conditions. In such case, the expenses and fees 
in the collection and 
administration of the pre-need company shall be determined by the 
Commissioner and shall be paid out of the assets of such company. 
If the Commissioner shall determine and confirm within the said period 
that the pre-need company is insolvent, as defined hereunder, or cannot resume 
business with safety to its planholders and creditors, he shall, if the public 
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interest requires, order its liquidation, indicate the manner of its liquidation and 
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approve a liquidation plan and implement it immediately. The Commissioner shall 
designate a competent and qualified person as a liquidator who shall take over 
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the functions of the receiver previously designated and, with all convenient 
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speed, reinsure all its outstanding pre-need contracts, convert the assets of the 
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pre-need company to cash, or sell, assign or otherwise dispose of the same to 
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the planholders, creditors and other parties for the purpose of settling the 
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liabilities or paying the debts of such company and he may, in the name of the 
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company, institute such actions as may be necessary in the appropriate Court to 
collect and recover accounts and assets of the pre-need company, and to do 
such other acts as may be necessary to complete the liquidation as ordered by 
the Commissioner. 
The provisions of any law to the contrary notwithstanding, the actions of 
the Commissioner under this Section shall be final and executory, and can be set 
aside by the Court upon petition by the company and only if there is convincing 
proof that the action is plainly arbitrary and made in bad faith. The 
Commissioner, through the Solicitor General, shall then file the corresponding 
answer reciting the proceeding taken and praying the assistance of the Court in 
the liquidation of the company. No restraining order or injunction shall be issued 
by the Court enjoining the Commissioner from implementing his actions under 
this Section, unless there is convincing proof that the action of the Commissioner 
is plainly arbitrary and made in bad faith and the petitioner or plaintiff files with 
the Clerk or judge of the Court in which the action is pending a bond executed in 
favor of the Commissioner in an amount to be fixed by the Court. The restraining 
order or injunction shall be refused or, if granted, shall be dissolved upon filing by 
the Commissioner, if he so desires, of a bond in an amount twice the amount of 
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the bond of the petitioner or plaintiff conditioned that it will pay the damages 
which the petitioner or plaintiff may suffer by the refusal or the dissolution of the 
injunction, The provisions of Rule 58 of the New Rules of Court insofar as they 
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are applicable shall govern the issuance and dissolution of the restraining order 
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or injunction contemplated in this Section. 
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All proceeding under this Chapter shall be given preference in the Courts. 
4 The Commissioner shall not be required to pay any fee to any public officer for 
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filing, recording, or in any manner authenticating any paper or instrument relating 
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to the proceedings. 
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As used in this Chapter, the term "Insolvency" shall mean the inability of 
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pre-need company to pay its lawful obligations as they fall due in the usual and 
ordinary course of business as may be shown by its failure to maintain the 
margin of solvency required under Section 36 of this Act. 
SECTION 52. Liquidafion. - In case of liquidation of a pre-need company, 
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after payment of the cost of the proceedings, including reasonable expenses and 
fees incurred in the liquidation to be allowed by the Court, the Commissioner 
shall pay all allowed claims against such company, under order of the Court, in 
accordance with their legal priority. 
SECTION 53. Receiver, - The receiver or the liquidator, as the case may 
be, designated under the provisions of this chapter shall not be subject to any 
action, claim or demand by, or liability to, any person in respect of anything done 
or omitted to be done in good faith in the exercise, or in connection with the 
exercise, of the powers conferred on such receiver or liquidator. 
CHAPTER XVll - CONSOLIDATION AND MERGER OF PRE-NEED 
COMPANIES 
SECTION 54. Mergers. - Upon prior notice to the Commissioner, two or 
more domestic pre-need companies, acting through their respective board of 
directors, may negotiate to merge into a single corporation which shall be one of 
the constituent corporations, or consolidate into a single corporation which shall 
be a new corporation to be formed by the consolidation. A common agreement of 
the proposed merger or consolidation shall be drawn up for submission to the 
stockholders or members of the constituent companies for adoption and approval 
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in accordance with the provisions of the respective by-laws of the constituent 
companies and all existing laws that may be pertinent. 
SECTION 55. Agreements; Confenfs Thereof - Such agreement shall 
include, aside from the proposed merger or consolidation, provisions relative to 
the manner of transfer of assets to and assumption of liabilities by the absorbing 
or acquiring company from the absorbed or dissolved company or companies; 
the proposed articles of merger or consolidation and by-laws of the surviving or 
acquiring company; the corporate name to be adopted which should not be that 
of any other existing company transacting similar business or one so similar as to 
be calculated to mislead the public; the rights of the stockholders or members of 
the absorbed or dissolved companies; date of effectivity of 
the merger or 
consolidation; and such particulars as may be necessary to explain and make 
manifest the objects and purposes of the absorbing or acquiring company. 
CHAPTER XVlll 2 ADMINISTRATIVE SANCTIONS 
SECTION 56. Administrative Sanctions. -If, after proper notice and 
hearing, the Commission finds that there is a violation of the provision of this Act, 
or that any pre-need company has, in a registration statement and its supporting 
papers and other reports required to be filed with the Commission, made any 
untrue statement of a material fact, or omitted to state any material fact required 
to be stated therein or necessary to make the statements therein not misleading, 
or refused to permit any lawful examination into its affairs, it shall, 
in its 
discretion, impose any or all of the following sanctions: 
(a) Suspension or revocation of its certificate of registration and permit to 
offer securities; 
(b) A fine of no less than Two Hundred Pesos (P200.00) 
nor more than 
Fifty Thousand Pesos (P50,OOO.OO) for each day of continuing 
violation; 
(c) Disqualification from being an officer, member of the board of directors 
or principal stockholders of a pre-need company; and 
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(d) Other penalties within the power of the Commission under existing 
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The imposition of the foregoing administrative sanctions shall be without 
prejudice to the filing of criminal charges against the individual responsible for the 
violation. 
SECTION 57. Jurisdiction Over Cases. - All complaints filed by 
plan holders, plan advisors, solicitors and pre-need companies against one 
another shall be referred for appropriate action to the federation of pre-need 
companies. The Commission shall assume jurisdiction over the complaint upon 
certification from the federation that the parties have chosen to invoke the 
jurisdiction of the Commission. 
CHAPTER XIX - TAXES 
SECTION 58. Exemption From Certain Tax. - Payments for pre-need 
plans shall be exempted from the expanded value-added tax (EV AT) and other 
documentary stamp tax. Any gain and benefit derived from pre-need plans 
purchased by planholders from pre-need companies by way of pension benefit, 
educational benefit, cash benefit, travel benefit, memorial service benefit, shall 
be exempted from income tax. Payments made by companies or corporations for 
pre-need education plans, pension plans and memorial plans as part of the 
benefits shall be considered expenses deductible from income for tax purposes. 
CHAPTER XX - MISCELLANEOUS PROVISIONS 
SECTION 59. Transitory Provisions. - Any pre-need company who at 
the time of the effectivity of this Act has been registered and licensed to sell pre- 
need plans and similar contracts, shall be considered registered and licensed 
under the provision of this Act and its implementing rules and regulations and 
shall be subject to and governed by the provisions hereof. 
SECTION 60. lmplemenfing Rules and Regulations. - The Commission 
shall adopt such rules and regulations 
implementation of this Act within sixty (60) 
for the proper and effective 
days from approval hereof. The 
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Commission shall publish once a week for two (2) consecutive weeks in two 
newspapers of general circulation the rules and regulations promulgated 
pursuant to the preceding section. 
SECTION 61. Effect on Existing Laws. - The rights and remedies 
provided by this Act shall be in addition to any and all other rights and remedies 
that exist under existing laws. 
SECTION 62. Repealing Clause. - All acts, laws, executive orders and/or, 
rules and regulations or any part thereof which are inconsistent with the 
provisions of this Act are hereby repealed or modified accordingly. 
SECTION 63. Effectivity Clause.- This Act shall take effect upon its 
approval. 
Approved, 
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