FOURTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
INTRODUCED BY HON. MANNY VILLAR 
EXPLANATORY NOTE 
The Constitution, Article 2, Section 5 provides: 
The promotion of the general welfare is essential for the enjoyment by 
a11 the 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, a.k.a. 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 operation 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 public interest. 


FOURTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
INTRODUCED BY HON. MANNY VILLAR 
AN ACT REGULATING PAWNSHOP ESTABLISHMENTS AND OPERATIONS 
Be if enacfed by the Senafe and House of Represenfatives of fhe Philippines in 
Congress assembled: 
SECTION 1. Short fifle - This Act shall be known as the "Pawnbroking 
Regulation Act." 
SECTION 2. Definifions - In this Act, unless the context otherwise requires- 
1. Pawnshop - means any person, partnership, association, or corporation 
lending money on the deposit or pledges 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 pawnbrokerage. 
2. Pledge - means personal property deposited with pawnbroker as security for 
a loan. 
3. Pledger - means the persona who delivers personal property into the 
possession of 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 disclosed principal. 
4. 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 a guns, knives and similar weapons 


whose reception is pawn is expressly prohibited by the laws or regulations 
shall not be included. 
5. Person - means an individual, a firm, an 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 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-- 
Anyindividual, corporation or association duly registered and licensed to engage in the 
pawnshop business shall file in 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 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 
established after the effectivity of this act shall be fifteen million pesos 
(Pl5,000,000.00); 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 requirements - 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 partnership, at least seventy per 
cent (70%) of its capital shall be owned by Filipino citizens. Provided, further, that in the 
case of corporation, at least seventy per cent (70%) of the voting capital stock shall be 
owned by citizens of the Philippines, or if there be no stock, at least seventy per cent 
(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 exiting prior to the effectivity of this Act, if such percentage is 
excess of thirty per cent (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 per cent (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 the 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. lssuance of license - Upon the filing of the application and the 
payment of the license fee, id the commission shall find the financial standing, 
competence, business experience, and character of the applicant are such that the 
business will be operated experience, and character of the applicant are such that the 
business will be operated honestly, fairly, and effectively 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, it 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 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 I O .  Change of place of business - Whenever a license 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 (IO) days notice to the licensee stating the contemplated action and in general the 
ground therefore, and upon reasonable opportunity to be heard, suspend or revoke, by 
written order, any license issued under this Act if it shall find that: 
the licensee has failed to pay the annual license fee or comply with ruling 
or requirements of the commission: 
the licensee has violated any provision of this Act or any rule made by the 
commission; or 
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 original to issue such license. 
SECTION 12. Re-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. lnvestigative 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 license 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 record as will enable the commission to 
determine whether the licensee is complying with his 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 in which the licensee 
may be engaged. 
(b) If a pawnbroker, in the conduct of the business, purchases an article form a 
seller, the purchase shall be evidenced by a bill of sale property 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 bill of sale forms must be in boldface type. 
(e) Each licensee should maintain a record of control indicating the number of 
accounts and dollar value of all outstanding pawnbroking receivables. Each license 
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 tess that thirty per cent (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. Rafe of interesfs - (a) No pawnshop shall directly or indirectly 
stipulate, charge, demand, take or receive any rate higher than 12% per annum. It 
should unlawful for a pawnshop to divide that pawn offered by a pawner in order to 
collect greater interest andlor to require the pawner to pay a additional charge as 
insurance premium for the safekeeping and conservation of the article pawned. 
(b) Interest shall be conducted in advance, neither shall the pawnbroker induce 
or permit any borrower to spot up or divide any loans for the purpose of evading any 
provisions of this chapter. 
(c) If a pawnbroker charges or receives interest in excess of that provided in this 
section, or makes any charges not authorized by this Act, the pawnbroker shall forfeit 
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 the title, storing, providing security, appraisal, handling, 
making daily reports to local law 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 operation during the 
preceding calendar year of a 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 P200.00 per day on any annual report that that is not received by June 1. 
SECTION 18. Maintenance ofrecord- (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 that following. 
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. 
The date of the transaction 
The amount of the loan 
The article or articles pledged. 
The serial number of the loan 
The date on which each loan was paid in full, renewed, or 
unredeemed. 
An itemization of principal, interest, and additional fees collected 
The total of all charges collected 
(b) Other methods of recording data, such as electronic or computerized 
methods, may be used provided written printouts or hard copies of the data are readily 
available. The record keeping system of a license shall be made available for 
examination. The commission shall determined the sufficiency of the records and 
whether the licensee has made the required information reasonably available. 
SECTION 19. Signature and fbumbprinfs - 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 able 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. fawn ticket - (a) 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. 
(b) the name of the pledger; 
(c) the name of the pawnbroker and the place where the pledge is made; 
(d) the article or articles pledged; 
(e) the amount of the loan; 
(9 the date of’the transaction 
(9) the serial number of the loan 
(h) he sum of the interest as provided in this Act 
(i) the amount of interest; 
(j) the amount of interest; 
(b) A pawnbroker may inset 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 
articles pledged with him. 
SECTfON 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 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 and 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 charges 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 
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 ticket - The alteration of a ticket shall not excuse the 
pawnbroker who issued it form liability to deliver the pledge according to the terms of 
the ticket as originally issued, but shall relieve the pawnbroker or any other liability to 
the pledger or hold of the ticket. 
SECTION 26. LiabiMy 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 the 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 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 ofpawn on default ofpawner- A pawnbroker may sell 
an article pawned after expiration of ninety (90) days from the maturity of the loan in 
accordance with preceding section, provided that not loss that ten (IO) 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 (IO) days from the date of 
the mailing, the article becomes the property of the pawnbroker and subject to sale. 
The pawnbroker becomes owner of the unredeemed pledged held for one hundred 
eighty (180) days after the maturity of the loan and no notice need be mailed to the 
pledge. 
SECTION 29. Public auction of pawned articles - No pawnbroker shall sell or 
otherwise dispose of any article or thing taken or received in pawn 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 one in at least two daily newspaper 
printed in the city or municipality during the week preceding the date of such sale. In 
remote areas where the 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, where 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: 
(1) when the property that constitutes the pledge is stolen or converted property; 
or 
(2) where a prior lien exist 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 ct 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 stolen 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 purchase 
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 months after the expiration of the 
period for which any article or thing shall have been taken or received by him at his 
place otherwise disposed of in accordance with 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 publishe a notice of such removal in two local 
daily papers, one in English, another in Pilipino or in the local dialect, for a period of not 
less than three days, the last days of which shall take place five days before the 


removal, stating in the notice the date of the 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 ion either Pilipino or the local dialect during the period of its publication in 
the said local papers. 
SECTION 35. Grant of authority to fhe 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 conditions 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 Acts and regulation s 
issued by the BSP in pursuance thereto. 
SECTION 36. Penalties - A fine of most less than five thousand pesos 
(P5,OOO.OO) and not more than thirty thousand pesos (P30,OOO.OO) 
or imprisonment for 
not less than thirty days and not more than one 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 liabilities 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 provision 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) newspaper of general circulation.