FOURTEENTH CONGRESS OF THE 1 
REPUBLIC OF THE PHILIPPINES 1 
FIRST REGULAR SESSION 
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COMMITTEE REPORT NO. 
3 9 
Submitted jointly by the Committee on Banks, Financial Institutions and Currencies 
and the Committee on Trade and Commerce on FFR 1 3 
RE 
: Senate Bill No. 
'91 
Prepared by the Committee on Banks, Financial Institutions & Currencies and the 
Committee on Trade and Commerce4 
Recommending its approval in substitution of Senate Bill Nos. 64, 105, and 1094. 
Sponsor 
: Senator Angara 
Mr. President 
The Committees on Banks, Financial Institutions and Currencies; and Trade 
and Commerce to which were referred Senate Bill No. 64 introduced by Senator 
Angara, entitled; 
"AN ACT TO REGULATE THE PRE-NEED PLANS INDUSTRY OF THE 
PHILIPPINES", 
Senate Bill No. 105, introduced by Senator Mar Roxas, entitled; 
"AN ACT TO REGULATE THE PRE-NEED PLANS INDUSTRY 
OF THE 
PHILIPPINES", 
Senate Bill No. 1094, introduced by Senator Loren B. Legarda, entitled: 
"AN ACT ESTABLISHING THE PRE-NEED PLAN SECURITIES CODE" 
have considered the same and have the honor to report them back to the Senate with 
the recommendation that the attached Senate Bill No. 
07'9 prepared by 
the Committees, entitled: 
"AN ACT ESTABLISHING THE PRE-NEED CODE OF 2008" 


be approved in substitution of Senate Bill No. 64, 105 and 1094 with Senators Angara, 
Roxas, Legarda and the members of the Committees on Banks, Financial Institutions 
and Currencies; Trade and Commerce as authors thereof. 
.
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Respectfully Submitted: 
MAR ROXAS 
EDGARDO . ANGARA 
Chairman 
Chairman 
Committee on Trade and Commerce 
Member, Committee on Banks 
Financial Institutions and Currencies 
committee on Banks, Financial 
Financial Institutions and Currencies 
. 
Financial Institutions and Currencies' 
Member, Committee on Trade and Commerce 
Members: 
ALAN PETER COMPANERO s. CAYETANO 
Committee on Banks, Financial 
Institutions and Currencies 
RICHARD J. GORDON 
Committee on Banks, Financial 
Committee on Trade and Commerce 
Institutions and Currencies 
Institution and Currencies 
Committee on Trade and Commerce 
PANFILO "PING" LACSON 
Committee on Banks, Financial 
Institutions and Currencies 
LOREN B. LEGARDA 
Committee on Banks, Financial 
Institutions and Currencies 
COMPANERA PIA S. CAYETANO 
Committee on Trade and Commerce 
MAN de 
L "LITO" M. LAPID 
Committee on Trade and Commerce 


FRANCIS "CHIZ" G. ESCUDERO 
Committee on Trade and Commerce 
Committee on Trade and Commerce 
M.A. MADRIGAL 
Committee on Trade and Commerce 
Ex-Officio Members: 
AQUILINO Q. PIMENTEL JR. 
Minority Leader 
DA 
HONORABLE MANNY VILLAR 
Senate President 
Senate of the Philippines 
Pasay City 


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14TH CONGRESS OF THE REPUBLIC) 
FEB 13 j':! 
:05 
OF THE PHILIPPINES 
1 
First Regular Session 
1 
p*E<;L;t,qfi :;y< 
~ . 
S'E N A T E 
S..No. 
(In substitution of Senate Bill Nos. 64, 105 and 1094) 
Prepared and submitted jointly by the Committee on Banks, Financial Institutions 
and Currencies; and Trade and Commerce 
AN ACT 
ESTABLISHING THE PRE-NEED CODE OF 2008 
Be it enacted by the Senate and House of Representatives of the Republic 
of the Philppines in Congress assembled: 
CHAPTER 1 - GENERAL PROVISIONS 
Section 1. 
Short Tifle. - This Act shall be known as the "Pre-Need 
Code of 2008." 
Section 2. 
Declaration of Policy. - It is hereby declared the policy of 
the State to regulate the establishment of pre-need companies and to place their 
operation on sound efficient and stable basis to derive the optimum advantages 
from them in the mobilization of savings and to prevent and mitigate, as far as 
practicable, practices prejudicial to public interest and the protection of 
planholders. 
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The State shall hereby regulate, through an empowered agency, Pre-Need 
Companies based on prudential principles to promote soundness, stability and 
sustainable growth of the pre-need industry. 


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Section 3. 
Construction, - Any doubt in the interpretation and 
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implementation of any provision in this Code shall be interpreted in favor of the 
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rights and interests of the Planholder. 
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Section 4. 
Definition of Terms. - Whenever used in this Code, the 
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following terms shall have the respective meanings hereafter set forth or 
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indicated, unless the context requires otherwise: 
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(a) "Commission" refers to the Insurance Commission (IC). 
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(b)"Pre-Need Plans" are contracts, agreements, deeds or plans for the benefit of 
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the Planholders which provide for the performance of future service/s, 
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payment of monetary considerations or delivery of other Benefits at the time 
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of actual need or agreed maturity date, as specified therein, in exchange for 
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cash or installment amounts with or without interest or insurance coverage 
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and includes life, 
pension, 
education, 
interment, 
and other 
plans, 
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instruments, contracts or deeds as may in the future be determined by the 
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Commission. 
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(c) "Pre-Need Company" refers to any corporation registered with the 
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Except as used in Sections 7, 8, 9, 44 and 45 of this Code, the term 
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"Pre-Need Company" shall also refer to schools, memorial chapels, banks, 
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non-bank financial institutions and other entities that sell or offer to sell Pre- 
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interest of such Planholder. 
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Commission and authorized/licensed to sell or offer to sell Pre-Need Plans. 
Need Plans insofar as their Pre-Need activities or business are concerned. 
(d) "Planholder" refers to any person, natural or juridical, who purchases a Pre- 
Need Plan 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 
(e)"Beneficiary" refers to the person designated by the Planholder as the 
recipient of the Benefits in the Pre-Need Plan. 
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(9) "Benefits" refer to the payment of monetary considerations and/or 
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performance of future services which the Pre-Need Company undertakes to 
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deliver either to the Planholder or his beneficiary at the time of actual need or 
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agreed maturity date, as specified in the Pre-Need Pian. 
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(9 "Contract Price" refers to the stipulated price in the Pre-Need Plan. 
(h)"Sales Counselor" refers to a natural person engaged in the sale, whether on 
commission or salary basis, of Pre-Need Plans upon authority of a registered 
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Pre-Need Company and registered by the Commission to engage in the 
business of selling Pre-Need Plans. 
(i) "Trust Fund" refers to a fund set up from Planholders' payments, separate 
and distinct from the paid-up capital of a Pre-Need Company, established 
with a Trustee under a trust agreement approved by the Commission, to 
guarantee the delivery of Benefits. 
(j) "Liquidity Reserve" refers to a portion of the Trust Fund set aside by the 
Trustee to cover the Benefits due to Planholders for the ensuing year. 
(k) "Actuarial Reserve Liability" (ARL) is the measure of liabilities of the Pre- 
Need Company for its Pre-Need Plans outstanding as of valuation date. 
CHAPTER 2 -AUTHORITY OF THE COMMISSION 
Section 5. 
Supervision and Regulation. - Pre-Need Companies shall 
be under the supervision and regulation of the Commission. The Commission is 
hereby authorized to provide for its reorganization, to streamline its structure 
and operations, upgrade its human resource component to enable it to 
effectively and efficiently perform its functions and exercise its powers under this 
Code. 
All positions of the Commission shall be governed by compensation and 
position classification systems and qualification standards approved by the 
Commission based on a comprehensive job analysis and audit of actual duties 
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and responsibilities. The compensation plan shall be comparable with the 
prevailing compensation plan in the Bangko Sentral ng Pilipinas (BSP) and other 
government financial institutions and shall be subject to periodic review by the 
Commission no more than once every two (2) years without prejudice to yearly 
merit reviews or increases based on productivity and efficiency. The Commission 
shall, therefore, be exempt from laws, rules, and regulations on compensation, 
position classification and qualification standards. 
The Commission shall, 
however, endeavor to make its system conform as closely as possible with the 
principles under the Compensation and Position Classification Act of 1989. 
Section 6. 
Powers and Functjons of the Commission. - The 
Commission shall, at all times, act with transparency and dispatch and shall 
have, among others, the following powers and functions: 
1. Have primary and exclusive jurisdiction and supervision over all Pre-Need 
Companies; 
2. Approve, amend, renew or deny any license, registration or certificate 
issued under this Code; 
3. Fix and assess fees and/or charges as it may find reasonable in the 
exercise of regulation; 
4. 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: 
a. Revoke or nullify investments made and/or entered into by a Pre- 
need Company or a Trustee which are contrary to existing laws and 
regulations; 
b. Demand for the conversion of the investments made by the Trustee 
to cash or other liquid assets to protect the interest of the 
Planholders; 
c. Regulate, 
investigate 
or 
supervise 
activities 
of 
Pre-Need 
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Companies, their officers, employees, Sales Counselors, consultants 
or agents; 
5. Issue cease and desist orders to prevent Fraud and injury to the investing 
public; 
6. Issue subpoena duces tecum and ad testificandum, 
order the 
examination, search and seizure of documents, papers, files, tax returns, 
books of accounts and other records, in whatever form, of any entity or 
person under investigation; 
7. Punish for contempt of the Commission, both direct and indirect, in 
accordance with the pertinent provisions of and penalties prescribed by 
the Rules of Court; 
8. Impose sanctions, institute cases and/or prosecute offenders for violation 
of this Code, related laws, rules, regulations and orders issued pursuant 
thereto; 
9. Suspend or revoke licenses; 
10.Enlist the aid and support of and/or deputize any and all enforcement 
agencies of the Government in the implementation of its powers and 
exercise of its functions under this Code; 
11.Take over Pre-Need Companies which fail to comply with this Code, 
related laws, rules, regulations and orders issued pursuant thereto, either 
through the appointment of a conservator, receiver or liquidator; 
12. Prepare, approve, amend or repeal rules, regulations and orders, and 
issue opinions and provide guidance on and supervise compliance with 
such rules, regulations and orders; 
13. Formulate policies and recommendations on issues concerning the pre- 
need industry including proposed legislation; 
14.Retain and utilize, in addition to its annual budget, an amount equal to 
twenty percent (20%) of the fees, charges and other income derived from 
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the regulation of Pre-Need Companies or one hundred million pesos (P 
100,000,000.00), whichever is higher; 
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15.Exercise such other powers as may be provided by law as well as those 
which may be implied from, or which are necessary or incidental to carry 
out of, the express powers granted the Commission to achieve the 
objectives and purposes of the law. 
CHAPTER 3 - ORGANIZATION, LICENSING AND MANAGEMENT OF PRE- 
NEED COMPANIES 
Section 7. 
Pre-requisites to incorporation. - Except upon favorable 
recommendation of the Commission, the Securities and Exchange Commission 
shall not accept or approve the articles of incorporation and by-laws of any Pre- 
Need Company. 
A foreign corporation may be allowed to engage in a pre-need business in 
the Philippines, Provide4 that it shall comply with the pertinent laws and 
regulations. 
Section 8. 
Amendment of the Articles of Incorporation and By- 
Laws, - Amendments to the articles of incorporation and by-laws of a Pre-Need 
Company, including merger, consolidation and dissolution, shall not be 
approved by the Securities and Exchange Commission without the favorable 
recommendation from the Commission. 
Section 9. 
Paid-up Capital. -A 
Pre-Need Company incorporated 
after the effectivity of this Code shall have a minimum paid-up capital of One 
Hundred Million Pesos (P100, 000,000.00). Existing Pre-Need Companies shall 
comply with the following minimum unimpaired paid-up capital: 
(a) With three-type plans 
100,000,000 
(b) With two-type plans 
75,000,000 
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(c) With one-type plan 
50,000,000; 
Provided, that existing Pre-Need Companies with traditional education plans 
shall have a minimum unimpaired paid-up capital of P100,000,000. 
Provided, further, that the Commission may adopt risk-based principles on 
capital adequacy based on internationally accepted standards. In the exercise of 
its authority under this paragraph, the Commission may prescribe a higher 
minimum unimpaired paid-up capital for Pre-Need Companies. 
Section 10. Licensing of Pre-Need Companies. - No person shall 
operate as a Pre-Need Company or engage in the business of a Pre-Need 
Company unless licensed by the Commission in accordance with this Code. 
Every license under this Section shall expire every thirtieth day of June, or 
such date of every year as may be fixed by the Commission. The license may be 
renewed upon compliance with the prescribed requirements. 
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Section 11. Fit and Proper Rde. - To maintain the quality of 
management of Pre-Need Companies and afford better protection to Planholders 
and beneficiaries, the Commission shall prescribe, pass upon and review 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 commits or omits an act which renders him unfit for the position. 
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, education, training, and competence, provided, however that the 
following persons, and those determined by the Commission to be unfit, shall in 
no case be allowed to serve or act in the capacity of officer, employee, director, 
consultant, Sales Counselor of any Pre-Need Company: 
1. any person convicted of any crime involving any Pre-Need Plan, security 
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or financial product, 
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2. any person convicted of an offense involving moral turpitude or 
involving fraud, or embezzlement, theft, estafa or other fraudulent acts 
or transactions; 
3. any person who, by reason of any misconduct, is enjoined by order, 
judgment, or decree by any court, quasi-judicial body or administrative 
agency of competent jurisdiction from acting as a director, officer, 
employee, consultant, agent or occupying any fiduciary position. 
4. any person found by the Commission to have wilfully violated, or 
wilfully aided, abetted, counselled, commanded, induced, or procured 
the violation of this Code, Insurance Code, the Securities Regulation 
Code, or any related laws and any rules or orders thereunder; 
5. any person judicially declared to be insolvent, or incapacitated to 
contract; 
6. 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 instance shall be considered as 
sufficient ground for disqualification. 
Section 12. Independenf Directors, - The independent directors of a 
Pre-need Company shall be at least two (2) or twenty percent (20%) of the 
members of the board, whichever is higher. For this purpose, an "independent 
director" shall refer to a person 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 therewith, which may interfere with 
the exercise of independent judgment in carrying out the responsibilities of a 
director. 
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CHAPTER 4 - LICENSING OF SALES COUNSELORS 
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Section 13. 
Licensing of Sales Counselom. - 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 the Commission. 
No license shall be issued unless the following qualifications have been 
complied with: 
1. The applicant must be of good moral character and must not have 
been convicted of any crime involving moral turpitude. 
2. The applicant has undergone a training program approved by the 
Commission and such fact has been certified under oath by a duly 
authorized representative of a Pre-Need Company; 
3. The applicant has passed a written examination administered by 
the Commission. Provided, that the administration of the 
examination may be delegated to an independent organization 
under the supervision of the Commission. 
Such license shall automatically expire every thirtieth day of June, or such 
date of every year as may be fixed by the Commission and may be accordingly 
renewed. 
Section 14. Deniab Suspension, Revocation of License. - An 
application for the issuance or renewal of a license to act as Sales Counselor may 
be denied, or such license, if already issued, shall be suspended or revoked 
based on the following grounds : 
materially 
misrepresented 
statements 
in 
the 
application 
requirements; 
obtained or attempted to obtain a 
license by fraud or 
misrepresentation; 
materially misrepresented the terms and conditions of Pre-Need 
Plan which he sold or offered to sell; 
terminated for cause from another Pre-Need Company; 
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(e) 
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Analogous circumstances. 
Similar grounds found in Section 11 of this Code; or 
CHAPTER 5- REGISTRATION OF PRE-NEED PLANS 
Section 15. 
Registration of Pre-Need Plans.- No Pre-Need Company 
shall sell or offer to sell Pre-Need Plans unless such plans are registered with the 
Commission. The Commission shall have the authority to determine the number 
of Pre-Need Plans to be sold under each certificate of registration. 
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Section 16. Registration Requirements. - The Commission shall set 
forth the requirements for registration of Pre-Need Plans and shall require the 
following documents, among others: 
(a) 
Duly accomplished Registration Statements; 
(b) 
Board resolution authorizing the registration of applicant’s 
Pre- 
Need Plans; 
(c) 
(d) 
Audited financial statements; 
(e) 
Opinion of independent counsel on the legality of the issue; 
Viability study with certification, under oath, of pre-need actuary 
accredited by the Commission; 
(f) 
(9) 
Sample of sales materials. 
Section 17. Approva/ of Forms, - All forms, including amendments 
Copy of the proposed Pre-Need Plan; and 
thereto, relating to the Pre-Need Plans shall be approved by the Commission. 
Section 18. Advertising of Pre-Need Plans, - All advertisements or 
information disseminated to the public involving Pre-Need Plans and/or Pre-Need 
Companies shall be approved by the Commission. The lapse of twenty (20) 
working days from submission or request for approval without action from the 
Commission shall be deemed an approval. 
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CHAPTER 6 - DEFAULT AND TERMINATION BY PLANHOLDERS 
Section 19. 
Default: Reinstatement Period. - A Pre-Need Company 
shall provide a grace period of at least sixty (60) days within which to pay unpaid 
installments on Pre-Need Plans. The said grace period shall be counted from the 
due date of the first unpaid installment. Non-payment beyond the grace period 
shall render the Pre-Need Plan without further force and effect but the 
Planholder shall be allowed a period of not less than two (2) years from the lapse 
of the grace period within which to reinstate his plan. The Pre-Need Company 
shall not cancel the Pre-Need Plan within the reinstatement period, during which, 
such Pre-Need Plan shall still be considered as outstanding. The Pre-Need 
Company must give written prior notice to the Planholder that his Pre-Need Plan 
will lapse if no payment is received within the grace period or that his Plan will 
be cancelled if not restored within the reinstatement period. 
Section 20. 
Termination of Pre-Need Plans - A Planholder may 
terminate his Pre-Need Plan at any time by giving written notice to the issuer. 
A Pre-Need Plan shall contain a schedule of termination values to which 
the Planholder is entitled 'to upon termination. Such schedule of termination 
value shall be required for all outstanding 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 computed at the end of each anniversary 
year and pre-determined by the actuary of the Pre-Need Company upon 
application for registration of the Pre-Need Plans with the Commission. 
CHAPTER 7 - CLAIMS SETTLEMENT 
Section 21. 
Unfair Claim Sefflement Practices, - (1) No Pre-Need 
Company shall refuse, without just cause to pay or settle claims and/or Benefits 
arising from the Pre-Need Plans, nor shall any such company engage in dilatory 
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acts or practices prejudicial to the settlement of the claim. Any of the following 
acts by a Pre-Need Company, when performed with such frequency as to 
indicate a general business practice, shall constitute unfair claim settlement 
knowingly misrepresenting to claimants pertinent facts or plan 
provisions relating to coverages at issue; 
failing to acknowledge communications with respect to claims 
arising under its plan with reasonable promptness; 
failing to adopt and implement reasonable standards for the 
prompt investigation of claims arising under its plan; 
failing to effect prompt, fair and equitable settlement of claims 
submitted in which liability has become reasonably clear; or 
offering, without justifiable reason, amount and/or services not in 
accordance with the Pre-Need Plans, 
thereby compelling 
Planholders to resort to court action. 
(2) I f  it is found that a Pre-Need Company has violated this section, each 
instance of non-compliance with paragraph (1) may be treated as a separate 
violation of this section and shall be considered sufficient cause for the 
suspension or revocation of the Pre-Need Company's license to operate. 
Section 22. 
Payment of P/an Proceeds, - The proceeds of the Pre- 
Need Plan shall be paid immediately upon maturity of the contract, 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 fifteen (15) days from maturity or due date will entitle the 
beneficiary to collect interest on the proceeds of the plan for the duration of the 
delay at the rate twice the legal interest unless such failure or refusal to pay is 
based on the ground that the claim is fraudulent. Provided, that the planholder 
has duly complied with the documentary requirements of the Pre-Need Company 
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as approved by the Commission. 
Section 23. 
Consequences of delay or default - In case of any 
litigation for the enforcement of any Pre-Need Plan, it shall be the duty of the 
Commission to determine whether the payment of the claim of the Planholder 
has been unreasonably denied or withheld. I f  found to have unreasonably denied 
or withheld the claim, the Pre-Need 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 satisfied; Provided, That the 
failure to pay any such claim within the time prescribed in the preceding section 
shall be considered prima facie evidence of unreasonable delay in payment. 
CHAPTER 8 - TRUST FUND 
Section 24. 
Trust Fund - To guarantee the delivery of property or 
performance of services in the future, a portion of the installment payment 
collected shall be deposited by the Pre-Need Company in the appropriate Trust 
Fund, the amount of which will be determined by an actuary and shaii be 
sufficient to pay the Benefits promised under the Pre-Need Plan. 
Should the Commission, based on its experience in implementing the 
Trust Fund framework, determine that the admitted asset framework will better 
protect the interests of the Planholders, it may instead adopt such framework as 
provided in the Insurance Code. 
In such case that the Commission adopt the admitted asset framework, it 
shall likewise have the authority to prescribe appropriate rules for registration of 
Pre-Need Plans. 
Section 25. 
Contri&utions to the Trust Fund. - The minimum limits 
of the deposit contribution to the Trust Fund shall be 45% of the amount 
collected for life plans and 51% of the total amount collected for Pre-Need Plans 
other than life plans unless a higher deposit contribution is determined by the 
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actuary and duly approved by the Commission 
In case of installment payments, the minimum limits, unless the actuary 
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and the Commission determine otherwise, of the deposit contributions to the 
Trust Fund shall be in accordance with the following schedule: 
Payment Received 
'Collection of the 1st 20% of Contract Price 1 
10% 
100/0 
Collection of the 2nd 20% of Contract Price 
20% 
2 0 Yo 
Collection of the 3rd 20% of Contract Price 
70% 
80% 
iLife Plan Other Plan 
. .. , . 
, . . . . . ,, , . .. .. . . 
,.,,, . ,. . ,, , . -. .. . . 
Collection of the 4th 20% of Contract Price 1 
70% 
'Collection ofthe 5th 20% of Contract Price j 70% 
8 0 
o/o 
8 0 Yo 
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...,,., "",1 
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All Pre-Need Companies shall incorporate in the Pre-Need Plan the 
schedule of the minimum Trust Fund contribution. Likewise, each Pre-Need 
Company shall inform the Planholders of the annual actual contributions to the 
Trust Fund. 
Trust Fund Contributions shall not form part of the income or gross 
receipts of the Pre-Need Company and therefore, not available for dividend 
declaration or payment to creditors. 
No withdrawal shall be made from the Trust Fund except for payment of 
Benefits, cost of other services related to the delivery of Benefits and investment 
expenses in the operation of the Trust Fund, including trust fees and bank 
charges. 
Section 26. 
Terms and Conditions o f a  Trust Fund. - A Trust Fund 
must be established separately for each type of Pre-Need Plan with the trust 
department of a trust company, bank or investment house doing business in the 
Philippines. No Trust Fund shall be established by a Pre-Need Company with an 
affiliate trust entity. However, such may be allowed provided the following 
conditions are complied with: 
(1) A written approval of the Commission has been previously obtained; 
(2) Public disclosure of the affiliation with the trust entity be included in 
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all sales materials, in whatever form; and 
(3) No director and/or officer of the Pre-Need Company shall at the same 
time serve as director and/or officer of the affiliate or related trust 
entity. 
The Trust Agreement shall be submitted to the Commission for approval 
before execution and shall contain the following salient provisions, among 
others: 
(a) 
(b) 
The manner in which the Trust Fund is to be operated; 
Investment powers of the trustee with respect to trust deposits, 
including the character and kind of investment; 
(c) 
Auditing and settlement of accounts of the trustee with respect to 
the Trust Fund; 
(d) 
(e) 
(9 
Basis upon which the Trust Fund may be terminated; 
Provisions for withdrawal of the Trust Fund; 
That the trustee shall submit to the power of the Commission to 
examine and verify the Trust Fund; 
(9) 
An undertaking by the Trustee that it shall abide by the rules and 
regulations of the Commission with respect to the Trust Fund; and 
(h) 
An undertaking by the Trustee that it shall submit such other data 
or information as may be prescribed by the Commission. 
Section 27. 
Responsibiities of the Trustee, -The trustee shall: 
(a)Administer and manage the Trust Fund with utmost good faith, care 
and prudence required by a fiduciary relationship; 
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(b)The Trustee shall have the exclusive management and control over the 
funds and the right at any time to sell, convert,. invest, change, 
transfer or otherwise change or dispose of the assets comprising the 
funds; and 
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(c) Not use the Trust Fund to invest in or extend any loan or credit 
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accommodation. to the Pre-Need Company, its directors, officers, 
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stockholders, and related interests as well as to persons or enterprises 
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controlling, owned or controlled by, or under common control with said 
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company, its directors, officers, stockholders and related interests. 
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Section 28. Investment of the Trust Fund. - All investments of the 
Trust Fund/s of a Pre-Need Company shall be limited to the following and subject 
to limitations to wit: 
(1)Fixed Income Instruments. These may be classified into short term 
and long term instruments. The instrument is short term if the 
maturity period is three hundred sixty five (365) days or less. This 
category includes: 
a. Government securities; 
b. Savings/time deposits with a commercial bank with satisfactory 
examination rating as of the last examination by the Bangko Sentral 
ng Pilipinas; 
c. Commercial papers duly registered with the Commission with a 
credit rating of "1" for short term and "AAA" for long term based on 
the rating scale of an accredited Philippine Rating Agency or its 
equivalent at the time of investment; and 
d. Direct loans to corporations which are financially stable, profitable 
for the last three (3) years and have a good track record of paying 
their previous loans from the Trust Fund of Pre-Need Companies. 
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These loans shall be fully secured by a real estate mortgage up 
to the extent of sixty per cent (60%) of the appraised value of the 
property at the time the loan was granted. 
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The property shall be covered by a Transfer Certificate of Title 
registered in the name of the mortgagor and free from liens and 
encumbrances. 
(2) Mutual Funds duly registered with the Securities and Exchange 
Commission and/or Unit Investment Trust Fund (UITF) of any trust 
entity, where such funds are invested only in fixed income instruments 
and blue chip securities subject to the limitations prescribed by law, 
rules and regulations. 
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(3)Investments in equities shall be limited to stocks listed on the Main 
board of a local Stock Exchange. 
In determining these investments, compliance to certain standards 
such as good track record, financially stability and history of dividend 
declaration and payment over the past three years shall be considered. 
(4) Real Estate. These shall include prime real estate properties located in 
cities and first class municipalities free from liens and encumbrances at 
the time of investment. The Commission shall set the allowable level of 
investments in the above-enumerated assets, Provided that no 
investment in any single entity, except for investment in government 
securities, shall exceed twenty five percent (25%) of the total value of 
the Trust Fund. 
The Commission may adopt the same investment guidelines as provided 
in the Insurance Code, for Pre-Need Companies and its trust funds. 
Section 29. 
Vahation of Actuarial Reserve Liabilities (ARL). - To 
determine the sufficiency and adequacy of the Trust Fund to guarantee the 
delivery of future Benefits stipulated in the Pre-Need Plan, an annual valuation of 
Actuarial Reserve Liabilities as of valuation date shall be made and submitted to 
the Commission within one hundred five (105) days from the end of the calendar 
year. The actuarial va!uation report containing the actuarial assumption, 
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methodology, and results should be certified by the actuary accredited by the 
Commission in accordance with actuarially sound and accepted principles and 
subject to the minimum standard of valuation and guidelines set by the 
Commission. Upon approval by the Commission of the actuarial computation, any 
deficiency in the Trust Fund shall be covered by the Pre-Need ComDany through 
additional deposit within thirty (30) days from submission of the actuarial 
valuation report or from notice of deficiency whichever is earlier. Any excess of 
the Trust Fund shall be credited for future deposit requirements. 
Section 30. 
Liquidity Reserve. -The trustee shall at all times maintain 
a Liquidity Reserve which shall be sufficient to cover at least fifteen percent 
(i5O/0) of the Trust Fund but shall in no case be less than the amount of the 
Benefits payable for the succeeding year. For this purpose, the Pre-Need 
Company shall timely submit to the Trustee a summary of Benefits payable for 
the succeeding year. 
The following shall qualify as investments for the Liquidity Reserve: 
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, 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; and 
Savings or time deposits with government-owned banks or 
commercial banks. 
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Section 31. 
Distribution of Profits. - A Pre-Need Company may 
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declare dividend provided that the following shall remain unimpaired, as certified 
under oath by the President and the Treasurer: 
(a) 
(b) 
One hundred percent (100%) of the capital stock; 
An amount sufficient to pay all net losses reported, or in the course 
of settlement, and all liabilities for expenses and taxes. 
Any dividend declared under the preceding paragraph shall be reported to 
the Commission within thirty (30) days after such declaration. 
CHAPTER 9 - ACTUARIES FOR PRE-NEED COMPANIES 
Section 32. 
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 an actuary duly accredited with the Commission 
who shall, during his tenure of engagement, 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. 
Actuarial work shall at least include the following: 
1. Determining the contract price for a pre-need pian that is 
submitted, by the Pre-Need Company for 
registration or 
amendment, with the Commission; 
2. Valuing liabilities of the Pre-Need Company referred to as Actuarial 
Reserve Liabilities in Pre-Need Plans that were issued by the 
Company, and other plans in which the Company continues to have 
obligations as of a valuation date; 
3. Issuing a Statement of Actuarial Opinion on the appropriateness of 
the actuarial reserves, when compared with the assets of the trust 
fund that was set up to back the liabilities represented by such 
reserves. Opinion on the appropriateness of actuarial reserves as of 
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a certain date shall be based on a comparison of the amount of 
assets in the trust fund with the amount of reserves, and the 
projection of the income and outgo of the trust fund of at least five 
(5) years, for the purpose of establishing the adequacy of the trust 
fund to pay for the contingent and maturing obligations of the Pre- 
Need Company to the plan holders. 
The work of the actuary shall be performed under guidelines and 
standards that are internationally accepted and shall be subject to the applicable 
rules and regulations of the Commission 
No accredited actuary shall serve more than one client or employer at the 
same time. However, one already in the employ, or is already engaged as a 
consultant, of a Pre-Need Company may be allowed by the Commission to serve 
another Pre-Need Company, provided the following conditions are first complied 
with: 
1. that the request to engage his services by another company is in writing; 
2. that his present employer acquiesced to it in writing; and 
3. that he furnishes the Commission with copies of said agreements from the 
companies. 
Section 33. 
Qualifications of the Actuary. - A person shall be 
officially accredited by the Commission to act as an Actuary in any Pre-Need 
Company upon application therefore and the payment of the corresponding fee 
hereinafter prescribed, provided that: (1) he is a Fellow in good standing of the 
Actuarial Society of the Philippines as having met the continuing education 
requirements of the Society at the time of his application for accreditation with 
the Commission, and remains in such good standing during the tenure of his 
engagement; or (2) in the case he is not a Fellow in good standing of the 
Actuarial Society of the Philippines, he should meet ali the requirements for 
accreditation as a Fellow of the Society and has been given permission by the 
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pertinent government authorities in the Philippines to render service in the 
Philippines as determined by the Commission. 
Provided further, that the accreditation of an actuary shall be subject to 
the approval of the Commission under Section I1 of this Code. 
Section 34. 
RenewaJ of Certdtscates - No certificate of accreditation 
issued under this Chapter shall be valid after the thirty-first day of December of 
the year following its issuance unless it has been renewed by the Commission. 
Section 35. 
Prohibited Posifions, - No actuary engaged by a Pre- 
need Company shall at the same time be a stockholder or serve as a Director of 
the Board, Chief Executive Officer or Chief Financial Officer of the Company or 
any such position that the Commission may determine to have an inherent 
conflict of interest to the position of an actuary. 
Section 36. Required Certified Reports. - The following documents, 
which are from time to time submitted to the Commission by a Pre-Need 
Company shall be duly certified by an actuary: 
Actuarial valuation of all liabilities pertaining to pre-need contracts; 
Asset share studies when applying for approval of new products or 
enhancement or repricing of existing products; 
Accounts in the financial statement of the Pre-Need Company 
pertaining to actuarial reserve liabilities and other actuarial reserve 
items; 
Financial projections showing the probable income and reserve 
requirements, enumerating the actuarial assumptions and bases of 
projections; and 
Such other reports as may be required by the Commission. 
It shall be the duty of an actuary to immediately report to the Commission 
any matter contained in, arising out of, or in relation to the above reports 
requiring intervention of the Commission to protect the interests of Planholders. 
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Provided, fhaf, the actuary shall not be liable to the Pre-Need Company for any 
acts done under this paragraph, unless there is a clear showing of bad faith, 
malice or gross negligence. 
Section 37. Disaccreditation of an Actway, - An actuary shall be 
disaccredited by the Commission on the following grounds: 
a) Failure to adequately perform his required functions and duties 
under this Code; 
b) Failure to meet the requirements of Section 11 of this Code; 
c) Failure to disclose conflict of interest; 
d) Failure to comply with the Code of Conduct of the Actuarial Society 
of the Philippines; or 
e) Such other grounds that may be determined by the Commission. 
CHAPTER 10 - MINIMUM REPORTORIAL REQUIREMENTS 
Section 38. Reqwired Certified Reports. - All Pre-Need Companies are 
required to submit to the Commission within one hundred twenty (120) days 
after each calendar year, which shall be the fiscal year, the following reports in 
such form and with such details as may be prescribed by the Commission: 
1.) Annual Report which shall include among others the financial 
statements and the management discussion and analysis of results 
of operations and shall be certified under oath by the Chairman, 
Chief Executive Officer, Chief Finance Officer and the actuary; 
2.) Actuarial Valuation Report which shall be prepared in accordance 
with the minimum standards of valuation for pre-need plans 
prepared by the Actuarial Society of the Philippines and adopted by 
the Commission and certified under oath by the actuary; 
3.) Annual Audited Financial Statement which shall be certified under 
oath to by the Chairman, Chief Executive OfFicer and Chief Finance 
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Officer of the Pre-Need Company and its external auditor in 
accordance 'with a uniform accounting system that may be 
prescribed by the Commission; 
4.) Annual Statement of Trust Fund which shall include details such as 
the income, disbursements, assets and liability 'items and shall be 
certified under oath by the Chairman, Chief Executive Officer and 
Chief Finance Officer of the Pre-Need Company and at least two (2) 
of the highest-ranking officers of the Trustee; and 
5.) Any other report that may be required by the Commission, 
Section 39. Pub/ication of Reports. - Within thirty (30) days after the 
receipt of the annual statements approved by the Commission, every Pre-Need 
Company shall publish in two (2) newspapers of general circulation a full 
synopsis of the annual statements. 
The Commission may require the publication of other reports it may deem 
necessary to apprise Planholders of the condition of the Pre-Need Company. 
CHAPTER 11 - EXAMINATION OF PRE-NEED.COMPANIES 
Section 40. Keeping of Records, - The Commission shall require every 
Pre-Need Company to keep it5 books, records, accounts and vouchers in such 
manner and for such period that he or his authorized 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 circulars, instructions, 
rulings or decisions of the Commission, 
Section 41. Examination, - The Commission shall at least once a year 
and as often as necessary cause an examination to be made into the affairs, 
financial condition and method of business of every Pre-Need Company and of 
any other person or entity managing the affairs and/or property of such Pre- 
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Need Company. Provided, that, for such purpose, the managing person or entity 
shall be deemed to be a Pre-Need Company and subject to the authority of the 
Commission. 
CHAPTER 12 - SANCTIONS AND PENALTIES 
Section 42. Administrative sanctions. - Any violation of this Code shall 
be proceeded against in the following manner: 
1. Cease and Desist Order. The Commission may, motu proprio or upon 
verified complaint by any party, issue a cease and desist order'against any 
Pre-Need Company upon proof, after due notice and hearing, of violation 
of any provision of'this Code, provided, that such cease and desist may be 
issued ex parte if the violation is clearly apparent, injurious to a number 
of Planholders and requires immediate intervention by the Commission. 
The cease and desist order shall specifically enjoin the Pre-need Company 
from performing certain activities and shall impose fines and state the 
required remedial actions. All proceedings before the issuance of the 
cease and desist order shall be confidential. 
2. Suspension of License. The Commission shall issue a suspension order 
against the Pre-need Company if it fails to comply with the cease and 
desist order within thirty (30) days from issuance thereof. 
3. Revocation of License. The Commission may issue a revocation order of 
the license of the Pre-Need Company under suspension for a period of 
ninety (90) days. 
Any administrative sanction shall not prejudice the filing of appropriate 
criminal or civil actions. 
Section 43. Crimina/ penakies, - The following acts are criminal in 
nature: 
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1. Selling or offering to sell a Pre-Need Plan by unregistered persons shall 
be penalized by an imprisonment of one (1) year and fine equivalent to 
triple the contract price; 
2. Selling o r offering t o  sell an unregistered Pre-need P Ian o r a ny p roduct 
that has Pre-need Plan features shall be penalized by imprisonment of 
one (1) year and a fine equivalent to triple the indicated price; 
3. Any negligent act or omission that is prejudicial or injurious to the 
Planholder shall be penalized by imprisonment of one (1) year and one (1) 
day to six (6) years and a fine in the amount of fifty thousand pesos 
(P50,OOO.OO) to five hundred thousand pesos (P500,OOO.OO); 
4. Any fraudulent act or omission that is prejudicial or injurious to the 
Planholder shall be penalized by imprisonment of six (6) years and one (1) 
day to twelve (12) years and a fine in the amount of one hundred 
thousand pesos (P100,OOO.OO) to one million pesos (P1,000,000.00); and 
5. Willful violation of the provisions of the Code or orders of the Commission 
provided that repeated violations shall constitute prima facie evidence 
against the offender, shall be penalized by imprisonment of six (6) years 
and one (1) day to twelve (12) years and a fine in the amount of one 
hundred 
thousand 
pesos 
(PlO0,OOO.OO) 
to 
one 
million 
pesos 
(P1,000,000.00). 
CHAPTER 13 - APPOINTMENT OF CONSERVATOR 
Section 44. Appointment of Conservator. - If at any time before, or 
after the suspension or revocation of the license of a Pre-Need Company as 
provided in Section 42 hereof, the Commission finds that such company is in a 
state of continuing inability or unwillingness to comply with the requirements of 
the Code and/or orders of the Commission, a conservator may be appointed to 
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take charge the assets, liabilities, 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 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 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 
corporation. The remuneration of the conservator and other expenses attendant 
to the conservation shall be borne by the Pre-Need Company. 
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The Conservator 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 the conservator. 
The conservator appointed shall report and be responsible to the 
Commission 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 Commission, 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 14 shall apply. 
CHAPTER 14 - INSOLVENCY PROCEEDINGS 
Section 45. Proceedings upon Insolvencp - Whenever upon 
examination or other evidence, it shall be disclosed that the condition of any Pre- 
Need Company is one of insolvency, or that its continuance in business would be 
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hazardous to its Planholders and creditors, the Commission shall forthwith order 
the company to cease and desist from transacting business and shall designate a 
receiver to immediately take charge of its Trust Fund, 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. 
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The Commission shall thereupon determine within thirty (30) days 
whether the Pre-Need Company may be reorganized or otherwise placed 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 fulfillment 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 Commission 
and shall be paid out of the assets of such company. If the Commission shall 
determine and confirm within the said period that the Pre-Need Company is 
insolvent, as defined hereunder, it shall, if the public interest so requires, order 
its liquidation, indicate the manner of its liquidation and approve a liquidation 
plan and implement it immediately. The Commission shall designate a competent 
and qualified person as liquidator who shall take over the functions of the 
receiver previously 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, 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 the 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 
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be necessary to complete the liquidation as ordered by the Commission. 
The provisions of any law to the contrary notwithstanding, the actions of 
the Commission 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 Commission, 
shall then file the corresponding answer reciting the proceeding taken and 
praying for the assistance of the Court in the liquidation of the company. No 
restraining order or injunction shall be issued by the Court enjoining the 
Commission from implementing his actions under this Section, unless there is 
convincing proof that the action of the Commission is plainly arbitrary and made 
in bad faith and the petitioner files a bond in favor of the Commission with the 
Court in an amount fixed by it. The restraining order or injunction shall be 
refused or, if granted, shall be dissolved upon filing by the Commission, if he so 
desires, of a bond in an amount twice the amount of the bond of the petitioner 
conditioned that it will pay the damages which the petition may suffer by the 
refusal or the dissolution of the injunction. 
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 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-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. 
In case of liquidation of a Pre-Need Company, after payment of the cost 
of the proceedings, including reasonable expenses and fees incurred in the 
liquidation to be allowed by the Court, the Commission shall pay all allowed 
claims against such company, under order of the Court, in accordance with their 
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legal priority. 
The receiver or the liquidator, as the case may be, designated under the 
provisions of this title 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 15 - OTHERS PROVISIONS 
Section 46. Adjudicatary power. - The Commission shall have the 
power to adjudicate any and all claims involving Pre-need Plans if the amount of 
Benefits does not exceed one hundred thousand pesos (P100,OOO.OO). 
The 
decision of the Commission shall be final and executory. 
Section 47. Transiory Provisions. - Any Pre-Need Company who at the 
time of the effectivity of this Code has been registered and licensed to sell Pre- 
Need Plans and similar contracts, shall be considered registered and licensed 
under the provision of this Code and its implementing rules and regulations and I 
shall be subject to and governed by the provisions hereof; provided, however, 
that compliance for all sections with the exception of Section 13, may be 
deferred for such reasonable time as the commission may determine but not to 
exceed one (1) year from approval of this code. With respect to Chapter 5, 
compliance will cover all new plans sold one hundred twenty (120) days after the 
effectivity of this law. 
The respective department of the Securities and Exchange Commission 
handling all matters related to the pre-need industry prior to the effectivity of 
this Act shall hereby secure and transfer all its files and records to the Insurance 
Commission within sixty (60) days after the effectivity of this Code. 
Section 48. Implementing Rules and Regulations - The Commission 
shall adopt such rules and regulations for the proper and effective 
implementation of this Code within sixty (60) 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 49. Effect on Existing Laws, - 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. 
Section 50. Separability c/ause. - Any portion or provision of this Act 
that may be declared unconstitutional or invalid shall not have the effect of 
nullifying other portions or provisions hereof as long as such remaining portion or 
provision can still subsist and be given effect in their entirety. 
Section 51. Repealing Clause. - All acts, laws, executive orders and/or 
rules and regulations or any part thereof which are inconsistent with the 
provisions of this Code are hereby repealed or modified accordingly. 
Section 52. Effectivity Clause. - This Code shall take effect upon its 
approval. 
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Approved, 
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