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THIRTEENTH CONGRESS OF THE 
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REPUBLIC OF THE PHILIPPINES 
1 
First Regular Session 
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INTRODUCED BY HONORABLE MAR ROXAS 
EXPLANATORY NOTE 
This bill seeks to address the absence of a statute that regulates the pre-need 
industry by establishing the Pre-Need Industry Act of 2005 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 approximately 50 
billion pesos. It represents the investment of millions of Filipinos in their future financial 
security. 
This bill is even more timely since there have been numerous and persistent 
reports surrounding the industry having to do with failed or delayed release of benefits to 
plan holders, among others. Moreover, the Securities and Exchange Commission (SEC), 
as the only regulatory agency with the legal power and authority to police the 
corporations, had to step in to police the industry. While the 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. 
It is therefore 
imperative that the regulation of the industry be vested with the Insurance Commission to 
ensure that its problems me properly dealt with. 
It is also 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. 
I 
Senator 
1 


THIRTEENTH CONGRESS OF 
1 
THE REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
1 
S E N A T E  
INTRODUCED BY HONORABLE MAR ROXAS 
AN ACT TO REGULATE THE PRE-NEED PLANS INDUSTRY OF THE 
PHILIPPINES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress Assembled: 
Section 1. Title. - This Act shall be known as the “Pre-Need Industry Act of 
2005.” 
Section 2. Declaration of Policy. - It is hereby declared the policy of the state to 
regulate the establishment of pre-need companies and to ensure that all transactions 
related thereto are conducted in an efficient and responsible manner so that benefits 
appurtenant to each plan and the industry are maximized for the benefit of the 
planholders and the pre-need companies. 
Any doubt in the interpretation of any provision in this Act shall be interpreted in 
favor of the rights and interests of the planholder. 
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 consideratiodbenefits at the time 
of 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 
authorized/licensed 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 paymentdbenefits 
delivered as guaranteed by the issuer at the time of need or maturity of the 
contract. 
(9 “Traditional or actual cost plans” refer to such plans whose corresponding 
benefitdservices are guaranteed, in spite of increase in costs of such 
benefitdservices 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. 
Section 4. Supervision and Regulation. - Every pre-need company shall be 
subject to the supervision and regulation of the Insurance Commission. The Commission 
shall create a new 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 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. 
CHAPTER 11. REGISTRATION 
Section 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 provided in its original agreements. 
Section 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 
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 (115) 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 (P1,OOO.OO). 
(c) The fact of such filing shall be immediately published by the Commission at 
the expense of the registrant in two (2) newspapers of geueral 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 
3 


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. 
Section 7. Minimum Capital Requirements. - (a) The issuer engaged in the 
issue and sale 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. 
(b) All existing pre-need companies shall 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 granted subject to the discretion of the Commission. 
Section 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 111. TRUST FUND 
Section 9. Trust Fund. - 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 (1) 
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 surrenderhermination 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. 
Section 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. 
(b) For plans sold on installment basis, the following minimum percentages on 
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: 
(I) collections on the first 20% of plan value 
(3) collections on the third 20% of plan value 
(5) collections on the fifth 20% of plan value 
- 
70% 
70% 
60% 
50% 
50% 
(2) collections on the second 20% of plan value 
(4) collections on the fourth 20% of plan value 
- 
- 
- 
- 
(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 fund 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. 
4 


(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. 
Section 11. Actuarial Valuation of the 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 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. 
Section 12. Trust 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; (Q 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. 
Section 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 Counttyside 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 functions in the Philippines. 
Furthermore, 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. 
Section 14. Liquidity Reserve Fund. - At least fifteen percent (1 5%) of the trust 
fund but in no case less than Fifteen Million Pesos (PI 5,000000.00) 
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 
underlying instruments thereof; 
5 


(d) Savings or time deposits with government owned banks or commercial hanks; 
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 
Section 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 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. 
Section 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 (10) days before the date of 
transfer. 
Section 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 hrther force and effect. 
(h) 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. 
Section 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 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 
Section 19. 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 engage the services of 
either a resident or consulting actuary duly accredited with the Commission who shall, 
during his tenure of office, be directly responsible for the direction and supervision of all 
actuarial work connected with or that may be involved in the business of the pre-need 
company. 
Section 20. Qualifications of the Actuary. -Any person who is a fellow of good 
standing in the Actuarial Society of the Philippines may be officially accredited by the 
6 


Commission to act as an actuary in any pre-need company upon application therefore and 
the payment of the prescribed fee. 
CHAPTER VI. REPORTS 
Section 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 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. 
Section 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. 
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. 
Section 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 edd 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 
andlor financial institutions handling the trust funds of any pre-need company to issue a 
certification detailing the status and composition of the trnst fund of any pre-need 
company in such form as it may warrant. 
Section 24. Publication of the Annual Financial Statement. - 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 liabilities. 
CHAPTER VII. SUSPENSIONREVOCATION OF LICENSE OR PERMIT 
Section 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 fiom 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 
7 


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 fixed 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 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. 
Section 26. 
Grounds for Revocation of Permit or License. - 
(a) The 
Coinmission may, after due notice and hearing, revoke the registration of any pre-need 
plan and the permit to 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. 
(d) If the Commission deems it necessav, 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. 
Section 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 the 
public, stating the reasons therefore; 
8 


(b) proof of publication of Notice to Stockholdershvestors of said 
(c) Board resolution approving such application for withdrawal certified under 
(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; 
(f) 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 surrender/termination values. 
revocationiwithdrawal; 
oath by the Corporate Secretary and attested to by the President; 
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 RegistratiordLicense or 
Permit to Sell Plans to the Public. 
Section 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 and/or issuers of pre-need companies against one another. 
Section 29. Penalty for Issuance/Sale or Overpricing of Plans in Excess of 
Authorized Amount. - The issuance/sale of pre-need plans and similar contracts and 
investments in excess of the amount authorized under a permitilicense shall subject the 
issuer, to a fine, as follows: 
(a) first violation - 3/10 of 1% of the aggregate gross pre-need price of the plans 
(b) second violation - 1/2 of 1% of the aggregate gross pre-need price of the plans 
(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 and/or downgrading of sales values of any 
plan. 
sold. 
sold. 
Overpricing of plans above the amounts stated under said permit/license 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 
(c) third violation - suspension or revocation of license. 
value and the value of the overpriced plan. 
9 


CHAPTER VIII. PLANHOLDERS’ PROTECTION FUND 
Section 30. Planholders Protection Fund. - (a) The Commission shall establish 
within one year from effectivity of this Act a planbolder’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 
Insurance Commission to investigate the financial status of the pre-need company. 
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 case where the Fund is not satisfied as to the viability of a claim, it may require the 
final 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, body or agency. 
Subject to such rules as the Commission may prescribe in the interest of the 
public, 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. 
CHAPTER IX. SANCTIONS 
Section 31. Administrative Sanctions. - If, after proper notice and hearing, the 
Commission finds that there is a violation of the provision of this Code, or that any 
registrant has, in its registration statement and its supporting papers and other reports 
required to be filed with the Commission, made any untrue statement of a material fact, 
or omitted to state any material fact required to be stated therein or necessary to make the 
statements therein not misleading, or refused to permit any lawful examination into its 
affairs, it shall, in its discretion, impose any or all of the following sanctions: 
(a) Issue a cease and desist order; 
(b) Suspend or revoke the certificate of registration and/or permit to offer for sale 
pre-need plans of the concerned pre-need company; 
10 


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; 
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 are 
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 violation. 
Section 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 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 
Section 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. 
Section 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 provisions hereof. 
Section 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. 
Section 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. 
Section 37. Effectivity 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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