Philippine Securities and Exchange Commission

PROCEDURES GOVERNING COMPLAINTS FILED AGAINST PRE-NEED PLAN COMPANIES

Section 1. Coverage/Applicability.

This circular shall govern the procedures to be observed by the Non-Traditional, Securities and Instruments Department (NTD) of the Securities and Exchange Commission and Extension Offices of the Securities and Exchange Commission in connection with the filing of a complaint by a planholder against pre-need companies for any violation of Section 16, Chapter IV of the Securities and Regulation Code, Republic Act 8799, otherwise known as the "Securities Regulation Code of 2000".

Section 2. Construction.

These procedures shall be liberally construed in Order to promote public interest and to assist the parties in obtaining just, expeditious and inexpensive resolution of controversies before the NTD, arising from any transaction made by planholders with the pre-need companies. Requisites of form shall not take preeminence over the substance of a complaint nor affect the validity of a proceeding, provided that the facts alleged can be clearly determined for the proper disposition of the case.

Section 3. Venue.

All proceedings covered herein shall be commenced and terminated before the main office of the Securities and Exchange Commission, EDSA, Mandaluyong City, unless otherwise delegated to the Extension Office with territorial jurisdiction thereof.

Section 4. Who shall be the complainant.

The complainant shall be the planholder or his/her legal representative or in case the planholder is deceased at the time the complaint is brought, any of the deceased's beneficiaries.

Section 5. Designation of Parties.

In accordance with these procedures, in all complaints filed with the NTD, the party initiating the action shall be called the "complainant" and the party / entity against whom the action is brought shall be called the "respondent". In the event and for whatever reason, there should be a cross-claim against a party other than the complainant and the respondent the party shall be designated as a "cross-complainant" or "cross-respondent" as the case maybe.

Section 6. Service of Pleadings.

Service of any pleading or document required by these procedures may be made through personal service or registered mail in accordance with Section 6 or 7 of the Rules of Court.

When so authorized by the Commission, any pleading or document required by these procedures may be filed by facsimile transmission (fax) or electronic mail (e-mail). In such cases, the date of transmission shall be deemed to be prima facie the date of service.

Section 7. Where Complaint filed.

The complaint required by these procedures shall be filed, served, and released through the Central Receiving and Record Division (CRRD) of the Commission; Provided that, if complainant resides outside Metro Manila, he may file his complaint before the Receiving Section of the nearest Extension Office of the Securities and Exchange Commission. The said Extension Office shall then forward or send the complaint to the CRRD within five (5) working days from receipt thereof.

Section 8. Contents of Complaint.

The complaint sheet shall be in writing or in the standard from provided by the SEC under oath and drawn in clear and concise language familiar to the complainant and must be verified and shall contain the following details/items:

1. Name, address and contact number of the complainant and other personal circumstances pertinent to the complaint;

2. Name of the respondent pre-need company, its principal office address and (if known) the identity of the person to be contacted to answer the material allegations or questions in the complaint (i.e. V.P. for sales);

3. Brief Statement of Facts that shall include the type of plan, its effectivity, number of installment/s paid, total payment made and all other material facts or allegations which shall establish his/her complaint against the pre-need company;

4. Issue/s to be resolved such as but not limited to the following:

a. Non-payment of Claim;

b. Non-registration of pre-need company;

c. Non-registration of pre-need plan;

d. Refusal to reinstate pre-need plan;

e. Inaccurate Termination Value;

f. Mismanagement of Trust Fund;

g. Illegal Closure;

h. Any other misrepresentation and fraudulent act of the Pre-Need Company, its Agents or Salesmen;

5. Brief Claim/s or Relief/s sought by the complainant.

As much as practicable, the format of the complaint attached herewith as Annex "A" may be utilized. However, non-use thereof shall not in any manner cause the dismissal of the complaint.

Section 9. Transmission of Complaint.

The Central Receiving and Record Division (CRRD) shall forward the complaint to the Non-Traditional Securities and Instruments Department (NTD) within twenty four (24) hours from receipt thereof should the same fall on a working day otherwise not later than the same hour of the next working day.

Section 10. Docket Numbers and Calendar of Cases.

All complaints cognizable by the Non-Traditional Securities and Instruments Department (NTD) shall be numbered and docketed consecutively and entered into an appropriate separate docket book as well as corresponding codes as may be used for ready reference.

Section 11. Mandatory Mediation Hearings.

The Non-Traditional Securities and Instruments Department (NTD) shall require complainant and respondent to appear in a mediation hearing not later than fifteen (15) days from receipt of the complaint in order to determine whether or not an amicable settlement of dispute may be reached. Notice of mediation hearing to the parties shall be served by NTD at least five (5) days prior to the said hearing. Mediation shall only be limited to three (3) hearings unless extended by the NTD for justifiable reasons.

Failure of complainant to appear without prior notice and justifiable reason during the initial mandatory mediation hearing shall cause the dismissal of the complaint for lack of interest. A similar failure on the part of the respondent shall be cause to allow the complainant to present his evidence ex- parte and a decision or finding on the basis thereof shall ensue.

The Securities and Exchange Commission in the exercise of its administrative control and supervision may in its better judgment transfer the mediation hearings to the proper Extension Office.

Section 12. Filing of Position Paper.

If both parties fail to enter into an amicable settlement during the mediation proceedings, they and all the parties in interest (i.e. cross-claimants) shall be required to file their respective position paper together with supporting documents and affidavits within a non-extendable period of ten (10) days from the termination of the said mediation proceedings at the Non-Traditional Securities and Instruments Department (NTD) containing the following:

a. Statement of Facts;

b. Statement of Issues to be resolved;

c. Discussions or arguments that shall establish his/her complaint or defense which shall refer to the supporting documents and affidavits annexed to the position paper;

d. Claim/s or Relief/s sought by the parties.

The position paper must be verified and must be served to all parties concerned prior to its filing in the NTD.

Section 13. Decision.

The Director of the Non-Traditional Securities and Instruments Department (NTD) NTD shall issue a decision not later than ten (10) working days counting from the day following receipt of the last pleading. The decision shall state clearly and distinctly the facts and the rule or law on which it is based.

The Director of NTD may forward a copy of the decision to the Compliance and Enforcement Department (CED) of the SEC within five (5) days from its issuance for whatever legal action it may deem necessary to protect the rights and interests of the parties.

Section 14. Appeal.

Appeal of the decision may be taken by the aggrieved or losing party within ten (10) calendar days from receipt of the said decision before the Commission sitting en banc, the said appeal to be subject to the rules of procedure for appeals of the Commission.

Section 15. Severability.

If any provision of these procedures is held invalid, the remaining provisions shall not be affected thereby.

Section 16. Effectivity.

These procedures shall take effect fifteen (15) days after publication in a newspaper of general circulation.

Mandaluyong City, 10 October 2002.

(Original Signed)

LILIA R. BAUTISTA