Handout on the Pawnshop Regulation Act (Presidential Decree No.

114)
What is the policy of PD 114? (Sec. 2) Regulate establishment of pawnshops Prevent and mitigate practices prejudicial to public interest Lay down requirements and standards What is a pawnshop? (Sec. 3) A pawnshop is a person or entity engaged in the business of lending money on personal property delivered as security for loans. A pawnshop may be established as a single proprietorship, a partnership or a corporation. How do you register a pawnshop? (Sec. 5-6) 1) If a single proprietorship, get certificate of registration from Department of Trade & Industry. 2) If a partnership or corporation, submit articles of partnership or articles of incorporation to the Securities and Exchange Commission. 3) Get a business license from the city or municipality where pawnshop is located. 4)Submit information sheet and requirements to Bangko Sentral ng Pilipinas. 5) BSP will issue an Acknowledgment of Registration (AOR). i How much capital is required? (Sec. 7) The minimum paid-in capital is P100,000. The prudential capital ratio or the ratio of total capital to pledge loans is 50% provided total pledge loans not exceed P 3 million. ii If total pledge loans exceed P 3 million, additional capital of 30% of pledge loans in excess of P 3 million is required. What is the citizenship requirement? (Sec. 8) In a single proprietorship, only Filipino citizen In partnership, 70% of capital must be owned by Filipinos

In a corporation, 70% of voting capital stock is

owned by Filipinos or if non-stock corporation, 70% of members are Filipinos

What is a pawn? (Sec. 3) A pawn is personal property delivered by the pawner to the pawnee as security for a loan. How do you pawn something? 1)Deliver personal property to pawnshop. 2)Pawnshop appraises the item. 3) Parties agree to the loan amount. 4)Pawnshop gives pawn ticket and money. 5)Pay debt with interest and redeem pawn. How much can be loaned? (Sec. 9) The amount of loan is agreed by the parties. Amount not less than 30% of appraised value of security unless pawner manifests in writing desire to borrow lesser amount. What are the charges? (Sec. 10) Interest rates - no ceiling but not iniquitous, unconscionable, or contrary to morals iii Service charges - P5.00 maximum It is unlawful for a pawnshop to divide the pawn to collect greater interest and to require additional charge as insurance premium. What is a pawn ticket? (Sec. 12) A pawn ticket is the receipt for a pawn. It states amount of loan, date of pawning, rate of interest, name and residence of pawner. How do you redeem a pawn? (Sec. 13) Pay the debt with interest within 90 days from the date of maturity of the loan. How should pawnee notify pawner? (Sec. 14) On or before expiry of redemption period Pawnshop shall notify pawner in writing Notice shall state date, hour and place of sale Mode is by text/SMS, email, fax, or mail iv

What if a pawn is not redeemed? (Sec. 14) If pawner fails to redeem, pawnbroker may sell or dispose of article received in pawn.

How is a pawn sold or disposed? (Sec. 15) The disposition must be by public auction in his place of business or other public place After notice to pawner and publication of sale What is the notice requirement? (Sec. 15) Published notice in two daily newspapers During week preceding the date of sale Notice contains name of pawnshop, owner, address, hour and date of auction sale In remote area, post notice in public places How soon can a pawnshop close or transfer its place of business? (Sec. 16) No pawnbroker shall close or transfer his place of business within three months Following maturity of any loan or pledge Before any pawn is sold or disposed May transfer place of business within city or municipality upon published notice What is the BSP authorized to do? (Sec. 17) Issue rules and regulations Require from pawnshops reports Exercise visitorial powers Impose administrative sanctions What are other duties of pawnshops? Safeguard pawnshop assets v Exert ordinary diligence vi Be Insured against fire vii What are the penalties? (Sec. 18) Fine: P100 to P1,000 Imprisonment: 30 days to 1 year

Sec. 4101P4, Manual of Regulation for Non-Bank Financial Institutions, P Regulations (Regulations Governing Pawnshops) (MORP) ii Sec. 4107P, MORP iii Sec. 4303P, MORP iv Sec. 4324P, MORP v Sec. 4141P, MORP vi Sec. 4301P.1, MORP vii Sec. 4171P, 4321P, MORP