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THIRTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
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First Regular Session 
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Introduced by Senator Miriam Defensor Santiago 
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EXPLANATORY NOTE 
The Constitution, Article 2, Section 5 provides: 
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The promotion of the general welfare is essential for the enjoyment 
by all peopleiof the blessings of democracy. 
Pawnshops drovide an additional source of credit especially for small borrowers left 
unserved by banking and other financial institutions in the country 
P.D. No. 1 14, 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 thelgrowing complexities of the pawnshop business. 
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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 ofthe publia. 
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DEFE 
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SORSA 


THIRTEENTH CO GRESS OF THE REPUBLIC 
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OF THE PH LIPPINES 
1 
First Regular Sessio 
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 SENATE^ 
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S.B. No. 
3. Pledger - 
pawnbroker as secur 
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Introduced by Senator Miriam Defensor Santiago 
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means the person who delivers personal property into the possession of a 
ty for a loan unless such person discloses that the person is or was acting for 
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AN ACT 
REGULATING PAWNSHOP ESTABLISHMENTS AND OPERATIONS 
Be it enacted by the Senate and the House of Representatives in Congress assembled. 
SECTION 1~ Short Title. - This Act shall be known as the “Pawnbroking Regulation 
Act.” 
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SECTION 3. Registration and licensing--(a) No person or entity shall engage in 
business as a pawnkroker, act as a pawnbroker, or advertise, transact, or solicit business as a 


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SECTION 4) Requirement of registration with the Bangko Sentral ng Pilipinus - Any 
individual, corporation or association duly registered and licensed to engage in the pawnshop 
business shall file &I 
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 datd of effectivity of the same, register with the BSP. For this purpose, the BSP 
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shall furnish pawnshops, upon request, with necessary copies of the prescribed information sheet. 
SECTION 5i Capital. - The minimum paid-in capital of any pawnshop which may be 
established after the effectivity of this Act shall be Fifteen Million Pesos (Pl5,000,000.00); 
provided, however, tfiat 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 Monetsuy Board. 
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SECTION 6. Crtrzenship Requrrement. Upon the effectivit). of this Act, only Filipino 
citizens may establish and own a pawnshop organized in the form of a single proprietorship; 
provided, however, t at in the case of a partnership, at least seventy percent (70%) of its capital 
shall be owned by F’lipino 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. 
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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. 


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SECTION 7. 
the license fee, if 
experience, and 
fairly, and'efficiently 
Issuance of license. - Upon the filing of the apilication and the payment of 
the commission shall find the financial standing, competence, business 
cha'acter of the applicant are such that the business will be operated honestly, 
and that the convenience and needs of the public exist for the operation of 
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deliver a license to the applicant, which license shall authorize the applicant to engage in the 
business of pawnbrdking. Such license shall remain in effect until it is surrendered, revoked, or 
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suspended. 
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SECTION 11. 
days notice to the 
and upon reasonable 
issued under this Act 
SECTION Si 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 
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Suspension or revocation of license. - The commission shall, upon ten (10) 
licensee stating the contemplated action and in general the grounds therefor, 
opportunity to be heard, suspend or revoke, by, written order, any license 
if it shall find that: 
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hold a public hearing if the department considers the hearing necessaq 
SECTION 9' Nan-transferability. - The license shall not be transferable or assignable. 
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More than one (1) plice of business may be maintained under the same license. 
(b) the licensee has violated any provision of this Act or any rule made by the 
commission; or 


(c) any fact 
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SECTION 1 , 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 bor ower 
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or condition exists which, if it had existed at the time of the original 
-For the purpose of discoLering violations of this Act 
necessary for the enforcement of this ;Act, the commission may 
person that it suspects to be operating without a license and in 
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and securing infor 
investigate any 
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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 m y  loan recorded 
therein. The books and records of the licensee shall be kept so that the pawnbroking business 
transacted may be jeadily separated and distinguished from any other business in which the 
licensee may be engaged. 
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(b) If a pawdbroker, in the conduct of the business, purchases an article from a seller, the 
purchase shall be ev/denced by a bill of sale properly signed by the seller. All bills of sale must be 
in duplicate and inust recite the following separate items: 
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(1) Date of bill sale. 
(2) Amount of consideration. 
(3) Name of pawnbroker. 
(4) Description of each article sold. 
(5) dignature of seller. 
(6) Address of seller. 
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(c) I I a pawnbroker, in the conduct of the business, purchases an article from a 
seller on the coiiditi n of selling the property back at a stipulated price, the transaction shall be 
evidenced by a hill 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: 
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copy shall be delivered 
SECTION lk. Amount of loan. - Pawnshops may grant such  amount of loans as may be 
agreed upon betwee the parties; provided, that the amount of loan sdall, in no case, be less than 
thirty percent (30%) of the appraised value of the security offered forthe loan unless the pawner 
manifests in writing he desire to borrow a lesser amount. 
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SECTION 1 I . Rutes of interest. - (a) No pawnshop shall directly or indirectly stipulate, 
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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. 
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(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 &e principal or interest. If such excessive or unauthorized charges have been 
paid by the pledger, +e pledger may recover the same, including the principal, if paid, in a civil 
action against the pawnbroker. 
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(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 (115) of the principal amount of the 
loan per month or ahy fractional part of a month for servicing the pledge that may include 
investigation of the the, storing, providing security, appraisal, handling, making daily reports to 
local enforcement of-, 
and for other expenses and costs associated1with servicing the pledge. 
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to the seller by the pawnbroker at the time of sale. The heading on all bills 


SECTION 1). 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 reca itulation of such reports, which shall be a matter of public record. The 
commission may imqose a fee of Two Hundred Pesos (P200.00) per day on any annual report that 
is not received by Jube 1. 
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SECTlON 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: 
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(1) the name and address of the pledger, or where the pledgeiis made by a person acting 
as agent or a disclosed principal, the names and addresses of principal and agent; 
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(2) the date pf the transaction; 
(3) the amodnt of the loan; 
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(4) the article 
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or articles pledged; 
(5) the serial number of the loan; 
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(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. 
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SECTION l!% 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. 
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SECTION 20 Pawn 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: 
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(1) the name of the pledger; 
(2) the name of the pawnbroker and the place where the pledge is made; 
(3) the articles or articles pledged; 
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(4) theam 
(5) thedat 
(6) the ser 
(7) thesun 
(8) tbeam 
(9) the am' 
(10) A pa5 
inconsistent with t 
pawnbroker of the 
with him. 
SECTION 
person entitled to I 
presenting the tickc 
t of the loan; 
'the transaction; 
lumber of the loan; 
the interest as provided in this Act; 
t of interest; 
t of charge and principal due at maturity; and 
.oker may insert in such ticket any other terms and conditions not 
chapter. However, nothing appearing on a pawn ticket shall relieve the 
gations to exercise reasonable care in the safekeeping of the article pledged 
Ticket holder. 
The holder of such ticket shall be presumed to be the 
em the pledge, and the pawnbroker shall deliver the pledge to the person 
pon payment of the principal, interest and charge. 
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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 delively of the pledge to the carrier or his agent. 
,SECTION 23. Presentation of ticket before maturity. - Upon presentation of the pawn 
ticket prior to maturik 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 
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a new ticket for the / educed amount. Future interest charges and charge shall be computed on the 
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unpaid principal bal nce. 
SECTION 21. 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 thempawnbroker shall incur no liability for so doing, unless the pawnbroker had 
previously received ritten notice of any adverse claim. The pawnbroker may collect reasonable 
fee for reissuing th6 pawn ticket or affecting the affidavit along with the current lawful charge for 
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notary fee. 
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exercise of reasonable 
pawnbroker. 
SECTION 2k. 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. 
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care. The burden of proof to establish due care shall be upon the 
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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 se'ction, provided that not less than 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 
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as shown on the I 
article within ten ( 
pawnbroker and si 
held for one hundt 
to the pledger. 
SECTION 
dispose of any art 
ibroker's records notifying the person that unless the person redeems the 
days from the date of the mailing, the article becomes the property of the 
ct to sale. The pawnbroker becomes the owne )fall unredeemed pledges 
:ighty (180) days after the maturity of the loan 
Id no notice need he made 
Public auction ofpawned articles. - No pawnbroker shall sell or otherwise 
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 
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business. Said notice: whether published or posted, shall be in English, and either in Filipino or in 
the local dialect, i d  shall contain the name of the pawnshop, its owner, address of the 
establishment, hour, and date of the auction sale, 
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SECTION 30. Lien on pledges. - A pawnbroker has first lien on all pledges for the, 
(1) when thj property that constitutes the pledge is stolen or converted property; or 
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amount of his loan, interest and charges except: 
(2) where a rior lien exists under another statute. 
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SECTION 3 . Delivery ofpledge upon surrender of ticket. -!A pawnbroker shall not be 
required to.deliver a i ledge except upon surrender of the ticket, unless the ticket be impounded or 
its negotiation enjoined by a court. 
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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 


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Act to hold the pledge, or within thirty (30) days after notice of an adverse claim, the pawnbroker 
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(1) 
receive 
of age; or 
(2) 
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may proceed to sell ;he pledge subject of adjudication of the parties’ rights. 
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any pledge or make a purchase from a person under eighteen (1 8) years 
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ve any pledge or make a purchase of property that the pawnbroker believes 
either Filipino or the 
SECTION 35. 
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 the1 provisions of this Act; provided, however, that removal or transfer of a 
pawnbroker’s place df business from one place to another within the territorial limits of the same 
city or municipality hay 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 
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local dialect during the period of its publication in the said local papers. 
Grant of authority to the Bangko Sentralng Pilipinas. - The BSP is hereby 
dialect, for a period df not less than three (3) days, the last day of which shall take place five ( 5 )  
days before the remod, stating in the notice the date of removal, the address of the premises to 
he vacated and of the premises to which the pawnshop will transfer; and that he shall likewise 
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responsible for the 
offense. 
SECTION 3 
Penalties. - A fine of not less than Five Thousand Pesos (P5,OOO.OO) and 
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offense, without prejudice to civil responsibilities arising from the criminal 
unconstitutional, the 
valid and subsisting. 
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remainder of the law or the provision not otherwise affected shall remain 
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. 
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SECTION 39. Effectivity Clause.-This 
Act shall take effect fifteen (15) days afier its 
publication in at lear 
Approved. 
FN: 1609 
two (2) newspapers of general circulation.