FOURTEEN.” CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
S E N A T E  
S. No: 
10 
INTRODUCED BY THE HONORABLE MAR ROXAS 
EXPLANATORY NOTE 
This bill seeks io address the absence of a statute that regulates the pre-need industry 
by establishing the Pre-Need Industry Act of 2007 to govern the operations of firms which 
issue or sell pre-need plans or similar contracts and investments. 
The present estimated value of the pre-need industry amounts to 50 billion pesos. It 
represents the investment of millions of Filipinos in their future financial security. This bill 
is even more timely due to the demise of educational pre-need companies, to the detriment 
of planholders and their children’s future, who are still seeking justice until now. 
While the Securities and Exchange Commission (SEC) may be capable of policing 
corporations in general, it is perceived to be lacking in capability to address the highly 
specialized needs and growing problems of the pre-need industry, thus, the need to transfer 
of the regulation of the industry to the Insurance Commission. 
It is necessary that the responsible management of the trust fund beginning from its 
sale, collection of payments and investment must be ensured. Aggressive selling strategies of 
pre-need sales agents and the prevailing front-end loading investments contributions mix 
must be tempered for a more planholder-friendly business model. Additional disclosure 
requirements must also be imposed so that the pre-need companies adequately inform all 
prospective planholders. 
It is likewise proposed in this bill that a Planholders Protection Fund be set up 
through the proportional and joint contributions of the all the duly registered pre-need 
companies for the purpose of providing a buffer fund out of which any failed or insolvent 
pre-need company may recompense to some extent the payments of its planholders. 
Lastly, due to the lack of any strong remedial measures against any violations of the 
rules governing the pre-need industry particularly in the trust relationships relative to the 
management of the trust funds of pre-need companies, this bill will impose stronger penalties 
consisting of fine and/or imprisonment for specific offenses that cause harm to the interests 
of the planholder or the pre-need industry as a whole. 
In view of the foregoing, approval of this bill is earnestly requested. 


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FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
1 
First Regular Session 
1 
S E N A T E  
S. No: 
105 
INTRODUCED BY THE HONORABLE MAR R O U S  
AN ACT 
TO REGULATE THE PRE-NEED PLANS INDUSTRY OF THE PHILIPPINES 
Be it enacted by the Senate and the House OfRepresentatives of the Philippines in 
Congress Assem bled: 
SECTION 1. Tide. - This Act shall be known as the “Pre-Need Industry Act of 2005.” , 
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SEC. 2. Declaration ofPolicy. - It is hereby declared the policy of the state to regulate 
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the establishment of pre-need companies and to ensure that all transactions related thereto 
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are conducted in an efficient and responsible manner so that benefits appurtenant to each 
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plan and the industry are maximized for the benefit of the planholders and the pre-need 
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companies. 
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Any doubt in the interpretation of any provision in this Act shall be interpreted in 
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favor of the rights and interests of the planholder. 
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Section 3. Definition of Terms. - Whenever used in this Act, the following terms shall 
have the respective meanings hereafter set forth, unless the context otherwise requires: 
(a) “Commission” means the Insurance Commission. 
(b) “Pre-Need Plans” are contracts which provide for the performance/delivery of 
future services and/or payment of monetary considerationbenefits at the time of 
’, 
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actual need or maturity of the contract, payable either in cash or installment, with 
or without insurance coverage, by planholders at prices stated .in the contract, 
such as life memorial plans, pensions plans, education plans, interment plans, and 
similar contracts and investments. 
(c) “Pre-Need Company” is any corporation registered with the Commission and 
authorized/licensed to sell or offer for sale pre-need plans. 
(d) “Issuer” means any corporation registered with the Commission and 
authorizedlicensed to sell or offer for sale pre-need plans and/or similar contracts 
and investments. 
(e) “Planholder” refers to any natural or juridical person who purchases pre-need 
plans or similar contracts and investments for whom or for whose beneficiaries’ 
future services are to be rendered or paymentshenefits delivered as guaranteed by 
the issuer at the time of need or maturity of the contract. 
(0 “Traditional or actual cost plans” refer to such plans whose corresponding 
benefitdservices are guaranteed, in spite of increase in costs of such 
benefits/services at the time of availment on account of the contingencies of 
inflation and interest yield rate fluctuations, among others. 
(g) ”Fixed Value Plans” refer to plans whose benefits and costs of services are fixed at 
the time of purchase of the plan. 
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SEC. 4. Supemision and Regdadon. - Every pre-need company shall be subject to the 
supervision and regulation of the Insurance Commission. The Commission shall create a new 
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department within its control, headed by a director to regulate and supervise the operation 
and activities of pre-need plan companies in the country. For this purpose, an amount 
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equivalent to twenty percent (20%) of the fees, charges, and other income derived from the 
pre-need industry shall be allocated and retained by the Commission. 
The Commission shall have the authority to determine the number of pre-need 
companies in order to prevent industry overcrowding and undue competition. The sales 
agents of pre-need companies shall also be subject to the supervision and regulation of the 
Commission. 
The respective department of the Securities and Exchange Commission handling all 
maters 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 Act. 
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CHAPTER 11. REGISTRATION 
SEC. 5. Registration. - (a) Only corporations duly registered before the Securities and 
Exchange Commission, after due endorsement of its compliance by the Insurance 
Commission, shall be allowed to engage in the business of selling pre-need plans. 
(b) No corporation shall issue or sell pre-need plans unless such have been registered 
and licensed pursuant to the provisions of this Act and other laws as well as any rules which 
the Commission may prescribe hereafter. 
(c) All pre-need plans issued prior to this Act shall be governed by the same terms as 
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provided in its original agreements. 
SEC. 6. Registration Procedure. - (a) All pre-need plans or similar contracts and 
investments shall be registered and licensed through the filing by the issuer with the 
Commission of a sworn registration statement containing the documents required by the 
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Commission and an actuarial viability of the plan duly certified by an accredited actuary. The 
total declared value of the pre-need plans available for sale shall not be more then ten times 
the minimum paid-up capital required by the Act. 
(b) Upon filing of the registration statement, the registrant shall pay to the 
Commission a minimum fee of one fifth (1 15) of one percent (1%) of the maximum aggregate 
price at which such plans or contracts are proposed to be sold, but not less than One 
Thousand Pesos (Pl,OOO,OOO). 
(c) The fact of such filing shall be immediately published by the Commission at the 
expense of the registrant in two (2) newspapers of general circulation in the Philippines, 
once a week for two (2) consecutive weeks, reciting that a registration statement for the sale 
of such plans or contracts has been filed with it, and that the aforesaid registration statement, 
as well as the papers attached thereto, are open for inspection during business hours by any 
interested party. 
(d) Any registered party may file a written opposition to the registration within ten 
(10) days from the date of the last publication. The Commission shall schedule a hearing on 
the written opposition after which it shall submit the matter for resolution before the 
Commission. A resolution shall be issued within thirty (30) days from such submission. 
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SEC. 7. Minimum CapraIRequiremenrs. - (a) The issuer engaged in the issue and sale 
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of pre-need plans or similar contracts or investments shall have a minimum capital of at least 
One Hundred Million Pesos (PlOO,OOO,OOO.OO) plus Ten Million Pesos (PlO,OOO,OOO.OO) for 
every additional pre-need product, which may be invested in cash or property. The 
Commission may increase such minimum paid-up capital stock, under such terms and 
conditions as it may impose, to an amount which, in its discretion, would reasonably assure 
the safety of the interests of the planhoIders and the public. 
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(b) All existing pre-need companies shalI comply with the minimum capital 
requirements provided herein within a period of ninety (90) days from the effectivity of this 
Act; provided, that a written request for a one-time extension of sixty (60) days may be 
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granted subject to the discretion of the Commission. 
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SEC. 8. Federation Membership. - All pre-need plan companies shall be registered 
members of the Federation of Pre-Need Plan Companies, Inc. The Federation of Pre-Need 
Plan Companies, Inc. shall be under the supervision of the Commission. 
CHAPTER rrr. TRUST mm 
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SEC. 9. Tmt Fmd. - To ensure the delivery of the guaranteed benefits and services 
provided under a pre-need plan contract, a trust fund should be established independently 
from the operations of the pre-need company. 
No withdrawal shall be made from the trust fund except for paying the cost of (I) 
services rendered or property delivered, (2) bank charges and investment expenses in the 
operation of the trust fund, (3) expenses in the delivery of the benefits or services, (4) cash 
surrender/termination values payable to the planholders, annuities, contributions to the fund 
of cancelled plans, (5) taxes on trust funds, and (6) other costs necessary to insure the 
delivery of benefits or services. 
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SEC. 10. Deposits in the Trust Fund. - (a) The issuer shall make periodic deposits in 
the trust fund in an amount not less than sixty percent (60%) of the gross pre-need price of 
the plan, if sold for cash, within sixty (60) days upon receipt of payment. 
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(b) For plans sold on installment basis, the following minimum percentages on 
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quarterly gross collections shall be deposited within sixty (60) days following the end of each 
quarter of the fiscal year of the issuer, as follows: 
(1) collections on the first 20% of plan value 
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70% 
70% 
60% 
50% 
(2) collections on the second 20% of plan value 
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(3) collections on the third 20% of plan value 
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(4) collections on the fourth 20% of plan value 
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(5) collections on the fifth 20% of plan value 
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50% 
(c) If the abovestated minimum trust fund deposit requirements are not sufficient in 
accordance with the actuarial viability study of the plan prepared by the Commission 
accredited actuary, the approved trust h n d  deposit rates appearing in the approved actuarial 
pricing by the Commission shall be the required basis for the periodic deposits to the trust 
fund. Unless the Commission expressly declares otherwise, in no case shall the contributions 
to the trust fund be less than fifty percent (50%) of the collections for the first and second 
year of the plan. 
(d) The proceeds of insurance coverage taken from an insurance company shall, in 
appropriate cases, be considered as collections, but shall not be subject to commission and/or 
other charges. 
SEC. 11. Actuarial Valuation ofthe Trust Fund. - An actuarial valuation report of the 
sufficiency of the trust fund to pay the contractual liabilities of the issuer under the plans 
issued, duly certified by an accredited actuary, shall be submitted to the Commission within 
one hundred twenty (120) days after the end of every fiscal year. The Commission shall refer 
the report to its actuarial consultant, if there is one, or to an independent actuary for 
verification and reexamination. The expenses incurred therefore shall be charged to the 
issuer. Upon approval by the Commission of the actuarial computation, any deficiency in the 
actuarially valued reserve liabilities shall be covered through additional deposits within 
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thirty (30) days, or such longer period as the Commission may allow, after receipt of notice 
of deficiency from the Commission. Any excess in the trust fund over the actuarial reserve 
liabilities can not be withdrawn from the trust fund. 
SEC. 12. Tmst Agreement, - The agreement creating the trust fund which shall be 
submitted for approval of the Commission shall define the (a) manner in which the trust 
fund is to be operated (b) the investment powers of the trustee; (c) allocation and 
apportionment of income, profits and losses; (d) terms and conditions governing the 
admission and withdrawal of the investment; (e) audit and settlement of accounts of the 
investee; (f) grounds upon which the fund may be terminated (g) provisions for withdrawal 
of the fund and (h) such other matters as may be necessary or proper to define clearly the 
rights of the issuer with regard to the trust fund. 
SEC. 13. Limits on Trust Fund Investment. - (a) The trustee shall not use the trust fund 
to extend any loan to or invest such in the pre-need company, its directors, officers, 
stockholders and related interests nor to any other entity directly or indirectly controlled by 
the above mentioned; Provided, however, that pre-need companies shall set aside ten 
percent (10%) of the trust fund for lending to Countryside and Business Enterprises 
established under R.A. No. 6810 and low cost housing programs of the government which 
are guaranteed by the Home Mortgage and Guarantee Corporation. 
(b) Any investment of the trust fund to any single and allowable security must not 
exceed Twenty Five Percent (25%) of the total value of the trust fund. 
(c) It shall be administered and managed by at least four (4) reputable banks and/or 
financial institutions authorized to perform trust fhctions in the Philippines. Furthermore, 
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each investment of the trust fund in one qualified bank shall not exceed thirty percent (30%) 
of the total trust fund contributions required by the Act. 
SEC. 14. Liquidity Reserve Fund. - At least fifteen percent (1 5%) of the trust fund but 
in no case less than Fifteen MiIIion Pesos (Pl5,000000.00) must be set aside and maintained 
as a liquidity reserve fund which shall be invested only in the following transactions: 
(a) Loans secured by a hold-out or assignment or pledge of deposits maintained either 
with the trustee or other banks, or of deposit substitutes of the trustee itself or 
mortgage and chattel mortgage bonds issued by the trustee; 
(b) Short-term government securities or bonds, and such other evidences of 
indebtedness or obligations, the servicing and repayment of which are fully 
guaranteed by the Republic of the Philippines; 
(c) Repurchase agreements with any of those mentioned in item (b) above, as 
underIying instruments thereof; 
(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”, “numbered account” or other similar 
arrangements; and 
(e) Such investments as the Commission may allow. 
CHAPTER IV. PLAN AGREEMENT, AMENDMENT AND PUBLICATIONS 
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SEC. 15. Compliance with the Contract. - Upon full payment of the contract price by 
the plan holder, the issuer shall render to him or his assigns the services or give value thereof 
or deliver the property as stipulated in the contract. Within thirty (30) days from the 
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completion of the payments, the pre-need company shall issue a written and express 
undertaking addressed to the planholder stating that it is ready to honor all the provisions in 
the pre-need plan. 
SEC. 16. Amendments to the Plan, Agreements, Contracts or Other Documents 
Pertinent to Registration. - No plan agreement, trust agreement, contract, or other 
documents of the plan or contracts shall be amended or modified without the prior and 
written approval of the Commission and the planholders. Pre-need plans may be transferred 
or assigned only once by the planholder and shall only require a written notice to the issuer 
to be given to the pre-need company ten (IO) days before the date of transfer. 
SEC. 17. Default: Reinstatement Period. - (a) Every issuer must provide in all contracts 
issued to planholders, a grace period of at least three (3) months within which planholders 
may pay accrued installments without any charges. Non-payment beyond the grace period 
shall render the plans without further force and effect. 
(b) However, any payment by the planholder after the grace period but within a 
period of two (2) years from the date when the earliest unpaid installment is due shall allow 
the planholder to reinstate his plan. Except for interest charges, the issuer may impose no 
other fees attributable to the delay. The issuer shall not cancel any plan during the two (2) 
year period when reinstatement may be effected. 
(c) The planholder of cancelled or lapsed plans shall be entitled to termination values 
as provided in the following section. 
SEC. 18. Termination Values. - Holders of surrendered and lapsed or cancelled policies 
are entitled to such values in accordance with a schedule of minimum termination values 
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that the Commission may formulate to protect the equities of planholders. The termination 
values shall in no case he less than fifty percent (50%) of the total payments made. 
CHAPTER V. ACTUARIES 
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SEC. 19. RequiredActuBiy - 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 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. 
SEC. 20. Qualifications of the Actuav. -Any person who is a fellow of good standing 
in the Actuarial Society of the Philippines may be officially accredited by the Commission to 
act as an actuary in any pre-need company upon application therefore and the payment of 
the prescribed fee. 
CHAPTER VI. REPORTS 
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SEC. 21. Actuarial Valuation Report. - Every pre-need company shall annually make a 
valuation of all pre-need its plans in order to determine its financial stability and solvency. 
The valuation shall be made 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. The results of such valuation shall be filed and reported to the Commission 
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accompanied by a sworn statement of opinion of the company’s resident actuary or 
consulting actuary within one hundred twenty (120) days after the end of each fiscal period. 
SEC. 22. Audited Financial Statement. - Every pre-need company doing business in 
the Philippines shall annually render to the Commission within one hundred twenty (120) 
days after the end of each fiscal period a statement signed and sworn to by the president and 
chief financial officer of such company showing the exact condition of its financial affairs in 
accordance with a uniform accounting system that may be prescribed by the Commission. 
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Any entry in the statement that is found to be false shall constitute a misdemeanor 
and the officer signing such statement shall be subject to the penalty provided for under 
Section 32 (b) of this Act. 
SEC. 23. Annual Statement of Trust Fund - Every issuer shall file with the 
Commission an annual statement of its operations with special focus on its trust fund within 
one hundred twenty (120) days after the end of each fiscal period. Such statement shall be on 
a form prescribed or approved by the Commission and shall include details as to all of the 
income, disbursements, assets and liability items of and associated with the said trust fund 
accounts. Said statement shall be signed under oath by the president and chief financial 
officer of the pre-need company and shall be filed simultaneously with the annual statement 
required in the preceding section. 
The Commission shall have the power to require at any time the qualified banks 
andor financial institutions handling the trust funds of any pre-need company to issue a 
certification detailing the status and composition of the trust fund of any pre-need company 
in such form as it may warrant. 
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SEC. 24. Publication of the AnnualRnancialStaternent. - Within thirty (30) days after 
receipt of the annual statement approved by the Commission, every pre-need company doing 
business in the Philippines shall publish once a week in two (2) newspapers of general 
circulation within a period of two (2) consecutive weeks a full synopsis of its annual financial 
statement showing fully the conditions of its business, and setting forth its resources and 
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liabilities. 
CHAPTER VII. SUSPENSIONREVOCATION OF LICENSE OR PERMIT 
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SEC. 25. Suspension of License or Permit. - (a) If at any time the information 
contained in the statement filed has been found to be misleading , incorrect, inadequate or 
incomplete or the sale or offering for sale of 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 registration of such security should be revoked on any ground specified in this 
Act or any applicable law. The Commission may also suspend the right to sell such security 
pending further investigation, by entering an order specifying the grounds for such action 
and by notifying, expressly or by personal service, the person filing such statement and every 
broker who shall have notified the Commission of an intention to sell such security. Refusal 
to furnish the information required by the Commission within a reasonable time to be Tied 
by the Commission, may be a proper ground for the entry of such order of suspension. 
(b) Upon entry of such order of suspension, no further sales of such security shall be 
made until the Commission orders otherwise. 
(c) 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 security should 
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be revoked on any ground under this Act or any law. It shall make the necessary findings 
and enter a final order prohibiting the sale of such plans or contracts whenever proper. If, 
however, the Commission finds that the sale of the plans or contracts is not fraudulent nor 
will result in fraud, it shall forthwith enter an order revoking the suspension, and such plan 
or contract shall be restored to its status as a security registered under this Act and applicable 
law, as of the date of such order of revocation of suspension. 
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SEC. 26. Grounds for Revocation of Permit or License. - (a) The Commission may, 
after due notice and hearing, revoke the registration of any pre-need plan and the permit t'o 
sell such security by issuing an order to such effect, setting forth its findings in respect 
thereto, if upon examination it shall appear that the issuer: 
(1) is insolvent; 
(2) has violated any of the provisions of this Act or any relevant law, or the rules 
promulgated pursuant thereto, or any order of the Commission of which the 
issuer had notice; 
(3) has been or is engaged or is about to engage in fraudulent transactions; 
(4) has made fraudulent representation in any prospectus, circular, literature, 
brochure or other form of broadcast or media communication concerning its plans 
or securities: or 
(5) does not conduct its business in accordance with law. 
(b) The Commission may compel the production of all books and records of the issuer, 
and may administer oaths and examine the officers or employees of the issuer. 
(c) Failure by the issuer 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 securities. 
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(d) If the Commission deems it necessary, it may issue an order suspending the right 
to sell securities pending any investigation stating the grounds therefore. Upon the issuance 
thereof, no further sale of such security shall be made until the suspension order is lifted or 
set aside by the Commission. Any such sales in the interim shall be void. 
(e) Notice of such suspension order or lifting thereof shall be made expressly or by 
personal service upon the issuer and every dealer or broker or by personal service upon the 
issuer and every dealer or broker who shall have notified the Commission of his intention to 
sell such security. 
SEC. 27. Withdrawal of Registration by the Issuer. - Upon petition made for its 
withdrawal by the issuer, the Commission may revoke a registration statement. An 
application for the withdrawal of a registration statement shall be accompanied by the 
following: 
(a) petition or application for withdrawal of the License/Permit to Sell Plans to th'e 
public, stating the reasons therefore; 
(b) proof 
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publication 
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Notice 
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Stockholders/Investors of 
said 
revocatiodwithdrawal; 
(c) Board resolution approving such application for withdrawal certified under oath 
by the Corporate Secretary and attested to by the President; 
(d) list of all stockholders/planholders/investors; 
(e) for pre-need plan issuers, a certification under oath by the Treasurer attested to by 
the President that all of the planholders' contribution were refunded and their 
claims fully settled; 
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(0 a sworn statement of solidary assumption of liability executed by the President and 
Treasurer of the issuer for settlement of all proven claims that may arise as a result 
of said withdrawal; and 
(g) a certification by the pre-need company stating the sufficiency of the trust fund to 
cover payment of cash surrenderhermination values. 
Upon payment of a filing fee to be determined by the Commission which in no case 
shall be lower than One Thousand Pesos (Pl,OOO.OO), 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, planholders, 
stockholders or other persons affected by said .withdrawal, who may file their claims with 
the issuer and the Commission. 
After publication and upon 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 RegistratiodLicense or Permit to 
Sell Plans to the Public. 
SEC. 28. Jurisdiction over Cases. - The Commission shall have jurisdiction to 
adjudicate over all complaints filed by planholders against or by pre-need sales associates, 
solicitors andor issuers of pre-need companies against one another. 
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SEC. 29. Penalty for Issuance/Sale or Overpricing of Plans in Excess of Authorized 
Amount. - The issuancehale of pre-need plans and similar contracts and investments in 
excess of the amount authorized under a permidlicense shall subject the issuer, to a fine, as 
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follows: 
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(a) first violation - 3/10 of 1% of the aggregate gross pre-need price of the plans sold. 
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(b) second violation - 1/2 of 1% of the aggregate gross pre-need price of the plans sold. 
(c) third violation - suspension or revocation of license. 
The recurrence of all violations shall be computed over a three year period. 
The Commission shall act within a period of sixty (60) days from submission of 
completed applications, for price upgrading andor downgrading of sales values of any plaxi. 
Overpricing of plans above the amounts stated under said permitflicense shall be 
penalized, by a fine based on the price difference realized from such sales, as foIIows: 
(a) first violation - 3/10 of 1% of the difference between the authorized plan value 
and the value of the overpriced plan. 
(b) second violation - 1/2 of 1% of the difference between the authorized plan value 
and the value of the overpriced plan. 
(c) third violation - suspension or revocation of license. 
CHAPTER VIII. PLANHOLDERS PROTECTION FUND 
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Section 30. Planholders Protection Fund. - (a) The Commission shall establish within 
one year from effectivity of this Act a planholder’s protection fund for the purpose of 
compensating planholders for the extraordinary losses or damage they may suffer due to 
business failure or insolvency of a pre-need company. 
Any claim for non-payment from existing planholders shall be sufficient for the 
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Insurance Commission to investigate the financial status of the pre-need company. 
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Whenever a pre-need company shall have been suspended or closed on account of 
insolvency by the Insurance Commission, payment of claims shall be made by the Fund as 
soon as possible either (1) by cash or (2) check Provided, however, That the Fund, in its 
discretion may require proof of claims to be filed before paying the claims, and that in any 
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case where the Fund is not satisfied as to the viability of a claim, it may require the final 
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determination by the Insurance Commission: Provided, further, That failure to settle the 
claim within six (6) months from the date of filing of the claim, upon conviction, subject the 
directors, officers or employees of the Fund responsible for the delay, to imprisonment from 
six (6) months to one (1) year: Provided, however, That the period shall not apply if the 
validity of the claim requires the resolution of issues of facts and or law by another office, 
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body or agency. 
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Subject to such rules as the Commission may prescribe in the interest of the public, 
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any payment from the fund on any one claim based on a single pre-need plan shall be equal 
to the total amount of actual payments made but shall not exceed One Hundred Thousand 
Pesos (P100,OOO). 
(b) For this purpose, each pre-need company shall initially be required to contribute 
Pl,OOO,OOO. A contribution of 95 of 1% of tdtal payments, actual or accrued, made on existing 
plans shall be quarterly remitted to the Fund without need of demand. Any income of the 
Protection Fund shall remain within the Fund. 
(c) The fund shall be subrogated to the rights of the planholders who claimed from 
the fund. The fund shall be considered as a preferred creditor in case of liquidation of the 
assets of the pre-need company. 
(d) After due hearing and based on public interest or the protection of planholders, 
the Commission may regulate, supervise, examine, suspend or otherwise discontinue such 
fund which may include taking custody and management of the fund itself as well as 
investments in and disbursements from the fund under such forms and control and 
supervision by the Commission. 
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CHAPTER IX. SANCTIONS 
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SEC. 31. Administrative Sancrions. - If, after proper notice and hearing, the 
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Commission finds that there is a violation of the provision of this Code, or that any registrant 
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has, in its registration statement and its supporting papers and other reports required to be 
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filed with the Commission, made any untrue statement of a material fact, or omitted to state 
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any material fact required to be stated therein or necessary to make the statements therein 
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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) issue a cease and desist order; 
(b) suspend or revoke the certificate of registration andor permit to offer for sale pre- 
need plans of the concerned pre-need company; 
(c) a fine of not less than Five Hundred Pesos (P500.00) but not more than Fifty 
Thousand Pesos (P50,OOO.OO) for each day of continuing violation; 
(d) disqualify any involved person from being an officer, member of the board of 
directors or principal stockholder of an issuer whose pre-need plans are or Ire 
about to be registered pursuant to this Act; and 
(e) other penalties within the power of the Commission as may be provided by law. 
The imposition of the foregoing administrative sanctions shall be without prejudice to 
the filing of the appropriate criminal charges against the individual responsible for the 
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violation. 
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SEC. 32. Penal Sanctions. - (a) Any trustee, together with any signatory officer of the 
pre-need company, who uses the trust fund to extend any loan to or invest such in the pre- 
need company, its directors, officers, stockholders and related interests nor to any other 
entity directly or indirectly controlled by any of the above mentioned shall be punished with 
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imprisonment of at least six (6) years and one (1) day to not more than twelve (12) years 
imprisonment and a fine of not more than One Million Pesos (Pl,OOO,OOO.OO) without 
prejudice to any civil restitution of the amount of funds improperly invested. 
Reimbursement of the amounts misappropriated does not absolve any of the accused of the 
offense prescribed herein. Furthermore, any person found guilty by final judgment based on 
this offense shall never be allowed to engage or hold any position in any other pre-need 
company, bank or financial institution. 
(b) Without prejudice to any other law which imposes a higher penalty, any other 
violation of this Act shall be punishable with imprisonment of not more than six (6) months 
and one (1) day to not more than six (6) years and/or a fine of not more than One Hundred 
Thousand Pesos (PlO0,OOO.OO). 
CHAPTER X. MISCELLANEOUS PROVISIONS 
SEC. 33. Implementing Rules and Regulations. - The Commission shall adopt such 
rules and regulations for the proper and effective implementation of this Act within sixty 
(60) days from approval hereof. The Commission shall publish once a week for two (2) 
consecutive weeks in two newspapers of general circulation the rules and regulations 
promulgated pursuant to his provision. 
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provisions hereof. 
SEC. 34. Transitory Provisions. - Any issuer who at the time of the effectivity of this 
Act has been registered and licensed to issue pre-need plans and similar contracts and 
investments, shall be considered as registered and licensed under the provisions of this Act 
and its implementing rules and regulations and shall be subject to and governed by the 
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SEC. 35. Separability Clause. - Any portion or provisions of this Act that may be 
declared unconstitutional or invalid shall not have the effect of nullifying other portions and 
provisions hereof as long as such remaining portion or provision can still subsist and be given 
effect in their entirety. 
SEC. 36. Repealing Clause. - Section 16 of the Securities Regulation Code is hereby 
repealed. All other laws, decrees, executive orders, proclamations and administrative 
regulations, or parts thereof inconsistent herewith are hereby repealed or modified 
accordingly. 
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SEC. 37. Effectivify Clause. - This Act shall take effect fifteen (15) days after its 
publication in at least two (2) national papers of general circulation. 
Approved, 
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