Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____ 
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.,  
HON. MIGUEL LUIS R. VILLAFUERTE, HON. TSUYOSHI ANTHONY “HORI” G. 
HORIBATA AND HON. NICOLAS “NICK” ENCISO VIII 
EXPLANATORY NOTE 
The Constitution, Article II, Section 5 provides: 
“The promotion of the general welfare is essential for the enjoyment by all 
people of the blessings of democracy.” 
Pawnshops provide an additional source of credit, especially for small borrowers left 
unserved by banking and other financial institutions in the country.  
P.D. No. 114, also known as the “Pawnshop Regulation Act,” governs pawnshop 
establishments and provides definite and uniform standards for their operation. 
However, the law is no longer responsive, given the growing complexities of the 
pawnshop business. 
Hence, this bill seeks to lay down amended requirements and standards that will 
place the operation of pawnshops on a sound and stable basis, deriving the optimum 
advantages from them as an additional source of credit and preventing, as far as 
practicable, practices prejudicial to the interests of the public. 
LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR. 
 MIGUEL LUIS R. VILLAFUERTE  
TSUYOSHI ANTHONY “HORI” G. HORIBATA 
NICOLAS “NICK” ENCISO VIII 
September 13, 2022
8:00 am
4724


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____ 
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.,  
HON. MIGUEL LUIS R. VILLAFUERTE, HON. TSUYOSHI ANTHONY “HORI” G. 
HORIBATA AND HON. NICOLAS “NICK” ENCISO VIII 
AN ACT 
REGULATING PAWNSHOP ESTABLISHMENTS AND OPERATIONS 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. – This Act shall be known as the “Pawnbroking Regulation 
Act.” 
SECTION 2. Definitions. – In this Act, unless the context otherwise requires — 
(A) “Paw “Pawnshop” means any person, partnership, association, or corporation lending 
money on the deposit or pledge of personal property, or who deals in the 
purchase of personal property on the condition of selling the property, or who 
deals in the purchase of personal property on the condition of selling the 
property back again at a stipulated price, other than choices in action, securities, 
or printed evidence of indebtedness; and shall be synonymous and may be 
used interchangeably, with pawnbroker or pawn brokerage. 
(B) 
“Pledge” means the person who delivers personal property into the possession 
of a pawnbroker as security for a loan. 
(C) 
“Pledger” means the person who delivers personal property into the possession 
of a pawnbroker as security for a loan unless such person discloses that the 
person is or was acting for another; and in such event “pledger” means the 
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disclosed principal.  
 
(D)  “Property” shall include only such personal property as may actually be 
delivered to the control and possession of the pawnshop; provided, however, 
that certain specified chattels such as guns, knives and similar weapons whose 
reception in pawn is expressly prohibited by laws or regulations shall not be 
included.  
 
(E) “Person” means an individual, firm, association, a limited liability company, a 
partnership, a joint stock association, a trust or a corporation.  
 
SECTION 3. Registration and Licensing. – 
(A)  No person or entity shall engage in business as a pawnbroker, act as a 
pawnbroker, or advertise, transact, or solicit business as a pawnbroker except 
as authorized by this chapter and without first obtaining a license from the 
department.  
 
(B)  Application for a pawnbroker’s license shall be submitted on a form prescribed 
by the appropriate agency and must include all information required by said 
agency.  
 
(C)  Any person or entity desiring to engage in the pawnshop business shall register 
with the Securities and Exchange Commission (hereinafter referred to as the 
“Commission”) and secure a license from the appropriate city or municipality 
having territorial jurisdiction over the place of establishment and operation.  
 
SECTION 4. Requirement of Registration with the Bangko Sentral ng Pilipinas. 
– Any individual, corporation or association duly registered and licensed to engage in 
the pawnshop business shall file an information sheet, under oath, with the Bangko 
Sentral ng Pilipinas (hereinafter referred to as “BSP”) before commencement of 
actual operations; provided, however, that pawnshops duly licensed and operating 
before the approval of this Act shall, within six (6) months from the date of effectivity 
of the same, register with the BSP. For this purpose, the BSP shall furnish pawnshops, 
upon request, with necessary copies of the prescribed information sheet.  


 
 
 
SECTION 5. Capital. – The minimum paid-in capital of any pawnshop which may be 
established after the effectivity of this Act shall be Fifteen Million Pesos 
(P15,000,000.00); provided, however, that pawnshops established and in operation 
prior thereto shall comply with the minimum capitalization required under the 
provisions of this section within such time as may be prescribed by the Monetary 
Board.  
 
SECTION 6. Citizenship Requirement. – Upon the effectivity of this Act, only Filipino 
citizens may establish and own a pawnshop organized in the form of a single 
proprietorship; provided, however, that in the case of a partnership, at least seventy 
percent (70%) of its capital shall be owned by Filipino Citizens. Provided, further, that 
in the case of a corporation, at least seventy percent (70%) of the voting capital stock 
shall be owned by citizens of the Philippines, or if there be no capital stock, at least 
seventy percent (70%) of the members entitled to vote, shall be citizens of the 
Philippines.  
 
The percentage of foreign-owned voting stock or non-citizens entitled to vote in any 
domestic pawnshop existing prior to the effectivity of this Act, if such percentage is in 
excess of thirty percent (30%) of the voting stock or members entitled to vote of the 
pawnshop shall not be increased but shall be reduced, and once reduced, shall not 
be increased thereafter beyond thirty percent (30%) of the voting stock, or number of 
members entitled to vote, of the pawnshop.  
 
The percentage of foreign-owned voting stocks in any pawnshop shall be determined 
by the citizenship of the individual stockholders in that pawnshop. In the case of 
corporations owning shares in a pawnshop, the citizenship of the individual owners of 
voting stock in such corporations shall be the basis of computing the percentage.  
 
SECTION 7. Issuance of License. – Upon the filing of the application and the 
payment of the license fee, if the commission shall find the financial standing, 
competence, business experience, and character of the applicant are such that the 
business will be operated honestly, fairly, and efficiently and that the convenience and 
needs of the public exist for the operation of such business in the community wherein 


 
 
such applicant propose to operate, its shall issue and deliver a license to the 
applicant, which license shall authorize the applicant to engage in the business of 
pawnbroking. Such license shall remain in effect until it is surrendered, revoked, or 
suspended.  
 
SECTION 8. Denial. – If the appropriate agency denies the application, it shall notify 
the applicant of the denial and return the sum paid by the applicant as a license fee. 
The agency may hold a public hearing if the department considers the hearing 
necessary.  
 
SECTION 9. Non-Transferability. – The license shall not be transferable or 
assignable. More than one (1) place of business may be maintained under the same 
license.  
 
SECTION 10. Change of place of business. – Whenever a licensee changes its 
place of business to another location, the licensee shall give written notice to the 
department. The licensee shall request approval to add or change one (1) or more 
business locations.  
 
SECTION 11. Suspension or revocation of license. – The commission shall, upon 
ten (10) days notice to the licensee stating the contemplated action and in general the 
grounds therefor, and upon reasonable opportunity to be heard, suspend or revoke, 
by written order, any license issued under this Act if it shall find that: 
(A) The licensee has failed to pay the annual license fee or comply with any 
ruling or requirements of the commission; 
 
(B) The licensee has violated any provision of this Act or any rule made by the 
commission; or 
 
(C) Any fact or condition exists which, if it had existed at the time of the original 
application for such license, would have warranted the commission in 
refusing originally to issue such license.  
 
SECTION 12. Pre-Existing Obligation. – No revocation or suspension or surrender 


 
 
of any license shall impair or affect the obligation of any pre-existing lawful contract 
between the licensee and any borrower.  
 
SECTION 13. Investigative Power. – For the purpose of discovering violations of 
this Act and securing information necessary for the enforcement of this Act, the 
commission may investigate any licensee or person that it suspects to be operating 
without a license and in violation of this Act.  
 
SECTION 14. Books, Accounts and Records. –  
(A)  The license shall keep and use in his business such books, accounts, and 
records as will enable the commission to determine whether the licensee is 
complying with this Act and with the rules made by the commission pursuant to 
this Act. Every licensee shall preserve such books, accounts, and records, 
including cards used in the card system for at least two (2) years after making 
the final entry on any loan recorded therein. The books and records of the 
licensee shall be kept so that the pawnbroking business transacted may be 
readily separated and distinguished from any other business in which the 
licensee may be engaged.  
 
(B)  If a pawnbroker, in the conduct of the business, purchases an article from a 
seller, the purchase shall be evidenced by a bill of sale properly signed by the 
seller. All bills of sale must be in duplicate and must recite the following separate 
items: 
(1)  Date of bill sale.  
(2)  Amount of consideration. 
(3)  Name of pawnbroker. 
(4)  Description of each article sold. 
(5)  Signature of seller. 
(6)  Address of seller. 
 
(C)  If a pawnbroker, in the conduct of the business, purchases an article from a 
seller on the condition of selling the property back at a stipulated price, the 
transaction shall be evidenced by a bill of sale properly signed by the seller. All 
such bills of sale must be in duplicate and recite the information in subsection (B) 


 
 
and must also contain the following information: 
(1)  Date of resale.  
(2)  Amount of resale.  
 
(D)  The original copy of the bill of sale shall be retained by the pawnbroker. The 
second copy shall be delivered to the seller by the pawnbroker at the time of 
sale. The heading on all bills of sale forms must be in boldface type.  
 
(E)  Each licensee shall maintain a record of control indicating the number of 
accounts and dollar value of all outstanding pawnbroking receivables. Each 
licensee shall maintain a separate record of transactions subject to subsection 
(c).  
 
SECTION 15. Amount of Loan. – Pawnshops may grant such amount of loans as 
may be agreed upon between the parties; provided, that the amount of loan shall, in 
no case, be less than thirty percent (30%) of the appraised value of the security 
offered for the loan unless the pawner manifests in writing the desire to borrow a 
lesser amount.  
 
SECTION 16. Rates of Interest. –  
(A)  No pawnshop shall directly or indirectly stipulate, charge, demand, take or 
receive any rate higher than twelve percent (12%) per annum. It shall be 
unlawful for a pawnshop to divide the pawn offered by a pawner in order to 
collect greater interest and/or to require the pawner to pay an additional charge 
as insurance premium for the safekeeping and conservation of the article 
pawned.  
 
(B)  Interest shall not be deducted in advance, neither shall the pawnbroker induce 
or permit any borrower to spot up or divide any loans for the purpose of evading 
any provision of this chapter.  
 
(C)  If a pawnbroker charges or receives interest in excess of that provided for in this 
section, or makes any charges not authorized by this Act, the pawnbroker shall 
forfeit the principal and interest and return the pledge upon demand of the 


 
 
pledger and surrender of the pawn ticket without the principal or interest. If such 
excessive or unauthorized charges have been paid by the pledger, the pledger 
may recover the same, including the principal, if paid, in a civil action against the 
pawnbroker.  
 
(D)  In addition to the loan finance charge authorized by this Act, a pawnbroker may 
charge, contract for, and receive a fee not to exceed one-fifth (1/5) of the 
principal amount of the loan per month or any fractional part of a month for 
servicing the pledge that may include investigation of the title, storing, providing 
security, appraisal, handling, making daily reports to local enforcement officers, 
and for other expenses and costs associated with servicing the pledge.  
 
SECTION 17. Submission of Report. – Each licensee shall, annually on or before 
June 1, file a report with the commission, giving such relevant information as the 
commission may reasonably require concerning the business and operations during 
the preceding calendar year of each licensed place of business conducted by such 
licensee. Such report shall be made under oath and shall be in the form prescribed by 
the commission. The commission shall annually make an analysis and a 
recapitulation of such reports, which shall be a matter of public record. The 
commission may impose a fee of Two Hundred Pesos (P200.00) per day on any 
annual report that is not received by June 1.  
 
SECTION 18. Maintenance of Record. – 
(A)  Every pawnbroker shall keep a record in ink, in Filipino or English with 
corresponding translation in the local dialect of every pawn, that must include 
the following: 
(1) 
The name and address of the pledger, or where the pledge is made by a 
person acting as agent for a disclosed principal, the names and addresses 
of principal and agent; 
(2) 
The date of the transaction; 
(3) 
The amount of the loan; 
(4) 
The article or articles pledged; 
(5) 
The serial number of the loan;  
(6) 
The date on which each loan was paid in full, renewed, or unredeemed; 


 
 
(7) 
An itemization of principal, interest and additional fees collected; 
(8) 
The total of all charges collected. 
 
(B)  Other methods of recording data, such as electronic or computerized methods, 
may be used provided written print-outs or hard copies of the required data are 
readily available. The record keeping system of a licensee shall be made 
available for examination. The commission shall determine the sufficiency of the 
records and whether the licensee has made the required information reasonably 
available.  
 
SECTION 19. Signature and Thumbprint. – The pawnbroker shall at the time of 
making a loan or purchase require the signature and right thumbprint of the pledger 
on all pawn tickets, bills of sale, or ledger cards retained by the licensee. If the person 
is unable to write, the person shall sign by mark. In such event, the pawnbroker shall 
record on the signature card such information as will enable the pawnbroker to 
identify the person in case of the loss of the ticket. If the person does not have a right 
thumb, any other existing finger may be used. However, a clear print must be 
obtained.  
 
 
SECTION 20. Pawn Ticket. – The pawnbroker shall, at the time of making a loan, 
deliver to the pledger or the pledger’s agent a memorandum or ticket on which shall 
be legibly written or printed: 
(A) The name of the pledger;  
(B) The name of the pawnbroker and the place where the pledge is made; 
(C) The articles or articles pledged;  
(D) The amount of the loan;  
(E) The date of the transaction;  
(F) 
The serial number of the loan;  
(G) The sum of the interest as provided in this Act;  
(H) The amount of interest;  
(I)   The amount of charge and principal due at maturity; and  
(J) 
A pawnbroker may insert in such ticket any other terms and conditions not 
inconsistent with this chapter. However, nothing appearing on a pawn 
ticket shall relieve the pawnbroker of the obligations to exercise 


 
 
reasonable care in the safekeeping of the article pledged with him.  
 
SECTION 21. Ticket Holder. – The holder of such ticket shall be presumed to be the 
person entitled to redeem the pledge, and the pawnbroker shall deliver the pledge to 
the person presenting the ticket, upon payment of the principal, interest and charge.  
 
SECTION 22. Mail. – When a ticket, instead of being presented in person, is sent to 
the pawnbroker by mail, accompanied with a money order for the total amount due 
and a reasonable fee for shipping and handling, the pawnbroker may securely pack 
and forward the pledge to the pledger in accordance with the remitter’s instructions. If 
the remittance is insufficient to cover the amount due, the pawnbroker shall either 
notify the remitter of the amount of the deficiency or send the pledge subject to the 
payment of shipping charges by the consignee. The pawnbroker’s liability for the 
pledge shall cease upon delivery of the pledge to the carrier or his agent.  
 
SECTION 23. Presentation of Ticket before Maturity. – Upon presentation of the 
pawn ticket prior to maturity and the payment of accrued interest and charge the 
tender of not less than P50.00 of the principal balance, the pawnbroker shall accept 
the same, showing due credit of principal payment on pawn ticket, together with the 
amount of unpaid principal balance, or issue a new ticket for the reduced amount. 
Future interest charges and charge shall be computed on the unpaid principal 
balance.  
 
SECTION 24. Lost, Destroyed, or Stolen Ticket. – If a ticket is lost, destroyed, or 
stolen, the pledger shall so notify the pawnbroker in writing. Before delivering the 
collateral or issuing a new ticket, the pawnbroker shall require the pledger to make an 
affidavit of the alleged loss, destruction or theft of the ticket. Upon receipt of such 
affidavit, the pawnbroker shall permit the pledger either to redeem the loan or to 
receive a new ticket upon the payment of accrued interest and charges, and the 
pawnbroker shall incur no liability for so doing, unless the pawnbroker had previously 
received written notice of any adverse claim. The pawnbroker may collect reasonable 
fee for reissuing the pawn ticket or affecting the affidavit along with the current lawful 
charge for notary fee.  
 


 
 
SECTION 25. Alteration of Tickets. – The alteration of a ticket shall not excuse the 
pawnbroker who issued it from liability to deliver the pledge according to the terms of 
the ticket as originally issued, but shall relieve the pawnbroker of any other liability to 
the pledge or holder of the ticket.  
 
SECTION 26. Liability for Loss. – A pawnbroker shall be liable for the loss of a 
pledge resulting from the pawnbroker’s failure to exercise reasonable care in regard 
to it, but the pawnbroker shall not be liable for the loss of a pledge which could not 
have been avoided by the exercise of reasonable care. The burden of proof to 
establish due care shall be upon the pawnbroker.  
 
SECTION 27. Redemption. – The pawner who fails to pay his obligation on the date 
it falls due may, within ninety days from the date of maturity of the obligation, redeem 
the pawn by payment of the principal of the debt with interest: Provided, however, that 
for the purpose of computing interest due after the maturity of the obligation, the basis 
shall be the sum of the principal of the obligation and interest earned at the time the 
obligation matured.  
 
SECTION 28. Disposition of Pawn on Default of Pawner. – A pawnbroker may sell 
an article pawned after the expiration of ninety (90) days from the maturity of the loan 
in accordance with the preceding section, provided that not less than ten (10) days 
before making the sale, the pawnbroker gives notice to the pledger by mail addressed 
to the post office address of the pledger as shown on the pawnbroker’s records 
notifying the person that unless the person redeems the article within ten (10) days 
from the date of the mailing, the article becomes the property of the pawnbroker and 
subject to sale. The pawnbroker becomes the owner of all unredeemed pledges held 
for one hundred eighty (180) days after the maturity of the loan and no notice need be 
made to the pledger.  
 
SECTION 29. Public Auction of Pawned Articles. – No pawnbroker shall sell or 
otherwise dispose of any article or thing taken or received in part or pledge except at 
public auction in his place of business as such pawnbroker or in any other public 
place within the territorial limits of the municipality or city where the pawnshop has its 
place of business, under the control and direction of an auctioneer with license duly 


 
 
issued by the corresponding authorities, nor shall any such article or thing be sold or 
disposed of unless said pawnbroker has published a notice once in at least two daily 
newspapers printed in the city or municipality during the week preceding the date of 
such sale. In remote areas where the newspapers are neither published nor 
circulated notice by newspaper publication shall be substituted by posting notices in 
conspicuous public places within the territorial limits of the city or municipality where 
the pawnshop has its place of business. Said notice, whether published or posted, 
shall be in English, and either in Filipino or in the local dialect, and shall contain the 
name of the pawnshop, its owner, address of the establishment, hour, and date of the 
auction sale.  
 
SECTION 30. Lien on Pledges. – A pawnbroker has first lien on all pledges for the 
amount of his loan, interest and charges except:  
(A) When the property that constitutes the pledge is stolen or converted property; or 
(B) Where a prior lien exists under another statute.  
 
SECTION 31. Delivery of Pledge upon Surrender of Ticket. – A pawnbroker shall 
not be required to deliver a pledge except upon surrender of the ticket, unless the 
ticket be impounded or its negotiation enjoined by a court.  
 
SECTION 32. Multiple Claims. – If more than one (1) person shall claim the right to 
redeem a pledge, the pawnbroker shall incur no liability for refusing to deliver the 
pledge until the respective rights of the claimants shall have been adjudicated. If no 
action be brought against the pawnbroker by either party within the period for which 
the pawnbroker is required under this Act to hold the pledge, or within thirty (30) days 
after notice of an adverse claim, the pawnbroker may proceed to sell the pledge 
subject of adjudication of the parties’ rights.  
 
SECTION 33. Prohibition. – 
(A)  No pawnbroker shall: 
(1) 
Receive any pledge or make a purchase from a person under eighteen (18) 
years of age; or  
(2) 
Receive any pledge or make a purchase of property that the pawnbroker 
believes or should have reason to believe is stolen property acquired as 


 
 
result of a crime.  
 
(B)  No pawnbroker shall purchase personal property or any other thing of value 
agreeing to sell the same back to the seller at a price other than the original 
price, at a total charge, rate of interest, discount, or other remuneration in 
excess of the rate chargeable under this Act.  
 
 
SECTION 34. Closing and Removal of Business Period. – No pawnbroker shall 
close or transfer his place of business within three (3) months after the expiration of 
the period for which any article or thing shall have been taken or received by him at 
his place of business in pawn or pledge, or before any such article or thing shall have 
been sold or otherwise disposed of in accordance with the provisions of this Act; 
provided, however, that removal or transfer of a pawnbroker’s place of business from 
one place to another within the territorial limits of the same city or municipality may be 
authorized on condition that the pawnbroker shall publish a notice of such removal in 
two local daily newspapers, one in English, another in Filipino or in the local dialect, 
for a period of not less than three (3) days, the last day of which shall take place five 
(5) days before the removal, stating in the notice the date of removal, the address of 
the premises to be vacated and of the premises to which the  pawnshop will transfer; 
and that he shall likewise post in a conspicuous place in both premises one copy of 
the notice in English and another in either Filipino or the local dialect during the period 
of its publication in the said local papers.  
 
 
SECTION 35. Grant of Authority to the Bangko Sentral ng Pilipinas. – The BSP is 
hereby authorized: 
(A)  To issue rules and regulations to implement the provisions contained herein;  
(B)  To require from pawnshops reports of condition and such other reports 
necessary to determine compliance with the provisions of this Act;  
(C)  To exercise visitorial powers whenever deemed necessary; and  
(D)  To impose such administrative sanctions including the imposition of fines for 
violations of this Act and regulations issued by the BSP in pursuance thereto.  
 
 
SECTION 36. Penalties. – A fine of not less than Five Thousand Pesos (P5,000.00) 
and not more than Thirty Thousand Pesos (P30,000.00) or imprisonment for not less 


 
 
than thirty days and not more than one (1) year, or both, at the discretion of the court, 
shall be imposed for violations of the provisions of this Act and its implementing rules 
and regulations; provided, that if the violation is committed by a corporation, 
partnership or an association, the penalty provided for in this Act shall be imposed 
upon the directors, officers, employees or persons therein responsible for the offense, 
without prejudice to civil responsibilities arising from the criminal offense.  
 
SECTION 37. Separability Clause. – If any provision or part hereof, is held invalid or 
unconstitutional, the remainder of the law or the provision not otherwise affected shall 
remain valid and subsisting.  
 
 
SECTION 38. Repealing Clause. – Any law, presidential decree or issuance, 
executive order, letter of instruction, administrative order, rule or regulation contrary to 
or inconsistent with the provisions of this Act is hereby repealed, modified or 
amended accordingly.  
 
 
SECTION 39. Effectivity Clause. – This Act shall take effect fifteen (15) days after its 
publication in at least two (2) newspapers of general circulation.  
 
 
Approved,