ADMINISTRATIVE SANCTIONS AND CRIMINAL PENALTIES UNDER THE PRE-NEED CODE OF THE PHILIPPINES

After reading Administrative Sanctions and Criminal Penalties under the Pre-Need Code of the Philippines, read also Conservatorship and Proceedings upon Insolvency of Pre-Need Companies

Unauthorized sale of pre-need plans shall subject the issuer to a fine

A criminal charge may be filed even after the imposition of administrative sanctions
Selling or offering to sell a pre-need plan by unregistered persons are penalized by imprisonment

Under the Pre-need Code of the Philippines, the Insurance Commission (Commission), after proper notice and hearing, may impose any or all of the administrative sanctions provided for by law for the following offenses:

the making of any untrue statement of a material fact in a registration statement, information brochure and its supporting papers and other reports required to be filed with the Commission;
the failure to disclose any material fact required to be stated in the registration statement or other reports required to be filed with the Commission;
the refusal to permit any lawful examination into its affairs; and
any violation of the Pre-need Code of the Philippines or its implementing rules and regulations.

What are the administrative sanctions that may be imposed in relation to these offenses or violations?

The law says:

The imposition of the following administrative sanctions does not affect the filing of criminal charges against the individual responsible for the violation:

Cease and Desist Order. – The Commission may, on its own or upon verified complaint by any party, issue a cease-and-desist order (CDO) against any pre-need company upon proof, after due notice and hearing, of violation of any provision;
Suspension of License. – The Commission shall issue upon a suspension order against the pre-need company if it fails to comply with the CDO within thirty days from issuance;
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;
A fine of not less than Ten Thousand Pesos (P10, 000.00) nor more than One Million Pesos (P1,000,000.00) plus not more than Two Thousand Pesos (P2,000.00) for each day of continuing violation;
Disqualification from being an officer, a member of the board of directors or principal stockholders of a pre-need company; or
Other penalties within the power of the Commission under existing laws.

As for the unauthorized sale of pre-need plans, the issuer shall be subject to a fine as follows:

First violation – thirty percent (30%) of the aggregate gross pre-need price of the plans sold;
Second violation – for percent (40%) of the aggregate gross pre-need price of the plans sold; and
Third violation – suspension or revocation of license.

Failure to pay the above-mentioned fines within three (3) months from receipt of notice to pay will cause the Commission to issue a suspension order.

What are the acts that are considered by the Pre-need Code of the Philippines as criminal in nature?

The law says:

The following acts are criminal in nature:

	Acts	Penalties
1.	Selling or offering to sell a pre-need plan by unregistered persons	Imprisonment of one (1) year and a fine equivalent to triple the contract price.
2.	Selling or offering to sell an unregistered pre-need plan or any product that has pre-need plan features	Imprisonment of one (1) year and a fine equivalent to triple the contract price.
3.	Soliciting, selling or offering to sell a pre-need plan by means of false or misleading representation and other fraudulent means	Imprisonment of six (6) years and one (1) day to twelve (12) years and a fine in the amount of Fifty thousand pesos (P50,000.00) to Five hundred thousand pesos (P500, 000.00).
4.	Any negligent act or omission that is prejudicial or injurious to the planholder	Imprisonment of one (1) year and one (1) day to six (6) years and a fine in the amount of Fifty thousand pesos (P50, 000.00) to Five hundred thousand pesos (P500,000.00)
5.	Any fraudulent act or omission that is prejudicial or injurious to the planholder	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, 000.00) to One million pesos (P1, 000,000.00)
6.	Willful violation of the provisions of the Pre-need Code of the Philippines or orders of the Commission	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, 000.00) to One million pesos (P1, 000,000.00)

Finally, note that any person who violates any other provisions of the Pre-need Code of the Philippines or rules and regulations promulgated by the Commission shall, upon conviction, be punished by a fine of not less than Fifty Thousand Pesos (P50, 000.00) nor more than Five million pesos (P5,000,000.00) or imprisonment of not less than one (1) year nor more than fourteen (14) years, or both, at the discretion of the court.

Should the offense or violation be committed by a juridical person such as corporations, the penalty may, in the discretion of the court, be imposed on such juridical entity and upon the officer or officers of the juridical entity responsible for the violation. If such officer is a foreigner, he shall, in addition to the penalties prescribed, be deported without further proceedings after service of sentence.

Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding illegal dismissal, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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