Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 114)
The short title of Presidential Decree No. 114 is the "Pawnshop Regulation Act."
The policy of the State is to regulate the establishment of pawnshops, ensure their operation on a sound and stable basis, and prevent practices prejudicial to public interest by laying down minimum requirements and standards for their business operations.
A "pawnshop" refers to a person or entity engaged in the business of lending money on personal property delivered as security for loans and is synonymous with pawnbroker or pawnbrokerage.
A pawnshop may be established as a single proprietorship, partnership, or corporation.
A person or entity must register with the Bureau of Commerce if a sole proprietorship, or with the Securities and Exchange Commission if a corporation or association, and must secure a license from the appropriate city or municipality where it will operate.
Yes, the minimum paid-in capital for new pawnshops is one hundred thousand pesos (P100,000.00). Existing pawnshops at the time must comply within a period prescribed by the Monetary Board, not less than three years.
Only Filipino citizens may own pawnshops organized as sole proprietorships. Partnerships must have at least 70% Filipino ownership of capital, and corporations must have at least 70% Filipino ownership of voting capital stock or members entitled to vote.
The loan amount must be at least 30% of the appraised value of the security offered, unless the borrower requests a lesser amount in writing.
Pawnshops shall not charge a higher rate than allowed by the Usury Law and may impose a maximum service charge of five pesos (P5.00) or one percent (1%) of the principal loan, whichever is lower.
Pawnbrokers must keep a memorandum book recording the description of the pawn, amount loaned, date, interest rate, name, and residence of the pawner, including identification details. Alteration or erasure of entries is prohibited.
The pawn ticket is the receipt issued to the pawner on every loan or pledge. It contains the essential details recorded in the pawnshop’s memorandum book except the description of the pawner.
The pawner may redeem the pawn within ninety (90) days from the date the obligation matures by paying the principal and the interest due.
The pawnbroker may sell or dispose of the article after notifying the pawner on or before the end of the 90-day period, specifying the auction details.
Sale must be through a public auction held at the business location or other public place in the city or municipality, conducted by a licensed auctioneer with proper notice published in newspapers or posted in public places where newspapers are unavailable.
A pawnshop shall not close or move its business within three months after the expiration of the pawn redemption period or before all pawns have been disposed of according to the law. Transfer within the same city or municipality requires publication and posting of notices in English and local languages.
The Central Bank may issue implementing rules, require reports, exercise visitatorial powers, and impose administrative sanctions including fines for violations of the Decree and its regulations.
Violations can result in fines ranging from one hundred pesos (P100) to one thousand pesos (P1,000), imprisonment from thirty days up to one year, or both, at the court's discretion. Responsible officers in corporations or associations may also be penalized.
Yes, existing laws are applicable insofar as they do not conflict with any provision of this Decree.