Pawnshop Business - MORP

TABLE OF CONTENTS
PART ONE ORGANIZATION, MANAGEMENT AND ADMINISTRATION
Sections/Subsections
A. SCOPE OF AUTHORITY
4101P Basic Law Governing Pawnshops
4101P.1 Scope of Authority of Pawnshops
4101P.2 Form of Organization
4101P.3 Organizational requirements
4101P.4 Requirement to Register with BSP
4101P.5 Pawnshop Regulations Briefing and Anti-Money Laundering Act Seminar
4101P.6 Processing and Annual Fees
4102P Definition of Terms
4103P 4105P (Reserved)
B. CAPITALIZATION
4106P Capital of Pawnshops
4107P Prudential Capital Ratio
4107P.1 Capital Build Up Program
C. to F. (RESERVED)
G. PROPRIETOR/PARTNERS/DIRECTORS, OFFICERS AND EMPLOYEES
4141P- Safeguarding of Pawnshop Assets
4142P Definitions, Qualifications and Duties and Responsibilities of
Proprietor/Partners/Directors/Officers
4142P.1 Definitions
4142P.2 General Qualifications of a proprietor, partner, director, president and manager or
officer-in-charge of head office or branch
4142P.3 Corporate Governance
4143P Disqualification of Directors and Officers
4143P.1 Persons disqualified from becoming directors
4143P.2 Persons disqualified to become officers
4143P.3 Disqualification Procedures
4143P.4 Effect of possession of disqualifications
4143P.5 Reserved
4143P.6 Watchlisting
4143P.7 Applicability of Section 4143P to the proprietor and managing partner of a pawnshop
(in the case of a sole proprietorship/partnership)
H. BRANCH OFFICES
4151P Establishment of Branch Offices
4151P.1 Definition of Terms
4151P.2 Operations and functions
4151P.3 Basis for Establishment
4151P.4 Documentary requirements
4151P.6 Date of opening for business
4151P.7 Pawnshop branches without business permit and AO considered operating illegally
4152P - 4155P (Reserved)
I. BUSINESS DAYS AND HOURS
4156P Business Days and Hours
J. RECORDS AND REPORTS
4161P Records
4161P.1 Uniform System of Accounts
4161P.2 Philippine Financial Reporting Standards/Philippine Accounting Standards
Page No.
BSP
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4161P.3 Accounting for Pawnshops Premises; Other Fixed Assets

4161P.4 Retention of Records
4162P Reports
4162P.1 Categories of and signatories to reports
4162P.2 Manner of filing
4162P.3 Definition Relevant to Reports to BSP
4163P Report on crimes/losses
4164P Audited Financial Statements (AFS)
K. INTERNAL CONTROL
4171P Internal Control System
4171P.1 - Proper accounting records
4171P.2 - Number control
4171P.3 - Safekeeping of Records and Insurance of Premises
4171P.4 Miscellaneous
4172P Separation of Pawnshop Business from Other Business
4173P- 4180P (Reserved)
L. MISCELLANEOUS PROVISIONS
4181P Registered/Business Name
4181P.1 - Change of Registered/Business Name
4181P.2 - Use of Registered/Business Name in Pawn Tickets and Other Forms
4182P Transfer/Relocation of Business
4182P.1 Documentary requirements for transfer within the same city/municipality
4182P.2 Documentary requirements for transfer outside the city/municipality
4183P Closure of Pawnshops
4183P.1 - Voluntary Closure
4184P Transfer of Ownership
4184P.1 - Requirements for Transfer of Ownership
4185P Processing Fee for Replacement of AOR/AO
4190P Duties and Responsibilities of Pawnshops and their Directors/Officers in Cases of
Outsourcing of Pawnshop Functions
4199P General Provisions on Sanctions
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PART TWO BORROWING OPERATIONS

A. to J. (RESERVED)
K. OTHER BORROWINGS
4285P SEC Registration of Borrowing
4286P Borrowing Constituting Quasi-Banking Functions
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PART THREE LOANS AND INVESTMENTS

A. LOANS IN GENERAL
4301P Grant of Loans
4301P.1 - General guidelines
4301P.2 - Pawnshop Prohibitions
4301P.3 - Know Your Pawner
4302P Loan Limit
4303P Interest and Surcharges
4303P.1 - Rate of interest in the absence of stipulation
4303P.2 Other Charges
4303P.3 - Posting of Interest Rate and Other Charges
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4304P (Reserved)
4305P Past Due Accounts; Renewal
4305P.1 Right of pawner to redeem pawn within 90 days from maturity
4306P Interest Accrual on Past Due Loans
B. LOAN COLATERAL/SECURITY
4321P Acceptable Security and Safekeeping of Pawns
4322P Redemption of Pawns
4323P Pawn Ticket
4323P.1 Stipulations in Pawn Ticket
4324P Notices to the Pawner and to the Public
4324P.1 Poster
4325P Public Auction of Pawns
4325P.1 - Auction of pawned items covered by a single pawn ticket
C. to J. (Reserved)
K. MISCELLANEOUS
4399 General Provisions on Sanctions
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PART FOUR RESERVED

PART FIVE RESERVED
PART SIX MISCELLANEOUS
A. (Reserved)
B. Sundry Provisions
4651P Visitatorial Powers of the Bangko Sentral
4651P.1- Refusal to Permit Examination
4657P - Batas Pambansa Blg. 344 An Act to Enhance the Mobility Of Disabled Persons by
Requiring Certain Buildings, Institutions, Establishments and Public Utilities to Install
Facilities and Other Devices
4691P - Anti-Money Laundering Regulations
4691P.1 - Required Seminar/Training
4691P.2 - Anti-Money Laundering Program
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P A R T
ORGANIZATION, MANAGEMENT AND

ADMINISTRATION
A. SCOPE OF AUTHORITY
Section 4101P Basic Law Governing Pawnshops. P.D. No.
114, known as the Pawnshop Regulation Act, regulates the
establishment and operation of pawnshops.
4101P.1 Scope of Authority of Pawnshops. A duly
organized and licensed pawnshop has, in general, the power to
engage in the business of lending money on the security of
personal property within the framework and limitations of PD No.
114 and the following regulations, subject to the regulatory and
supervisory powers of the Bangko Sentral ng Pilipinas (BSP).
4101P.2 Form of Organization. A pawnshop may be
established as a single proprietorship, a partnership or a
corporation.
Only Filipino citizens may establish and own a pawnshop
organized as a single proprietorship. A pawnshop established
as a single proprietorship by non-Filipino owner prior to January
29, 1973 may continue as such during the lifetime of the
registered owner.
If a pawnshop is organized as a partnership, at least
seventy percent (70%) of its capital shall be owned by Filipino
citizens.
Pawnshops established as partnerships prior to
January 29, 1973, with non-Filipino partners whose aggregate
holdings amount to more than thirty percent (30%) of the capital
may retain the percentage of their aggregate holdings as of
January 29, 1973, and said percentage shall not be increased,
but may be reduced, and once reduced shall not be increased
thereafter beyond thirty percent (30%) of the capital stock of
such pawnshop.
In the case of a pawnshop organized as a corporation, at
least seventy percent (70%) of the voting stock therein 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.
Pawnshops registered as corporations with foreign equity
participation in excess of thirty percent (30%) of the voting stock,
or members entitled to vote, of the pawnshop may retain the
percentage of foreign equity as of January 29, 1973, and said
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percentage shall not be increased, but may 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 such pawnshop.
The percentage of foreign-owned voting stock in a
pawnshop corporation shall be determined by the citizenship of
its individual stockholders. If the voting stock in a pawnshop
corporation is held by another corporation, the percentage of
foreign ownership in that pawnshop shall be computed on the
basis of the foreign citizenship of the individuals owning voting
stock in, or members entitled to vote of, the stockholder
corporation.
4101P.3 Organizational requirements. Any person or
entity desiring to establish a pawnshop shall register with the
Department of Trade and Industry (DTI), in the case of a single
proprietorship; or with the Securities and Exchange Commission
(SEC), in the case of a partnership/corporation.
Pawnshops with foreign equity participation shall also
register with the Board of Investments.
After registering with the DTI or with the SEC, the single
proprietorship or the partnership/corporation, as the case may
be, shall secure a business license from the city or municipality
where the pawnshop is to be established and operated, in
accordance with the requirements of the pertinent ordinance in
that city or municipality.
4101P.4 Requirement to Register with BSP. Pursuant
to Section 6 of P.D. 114, which requires pawnbrokers to register
with the BSP before commencing actual business operations,
every pawnshop shall submit to the BSP an Information Sheet
on the entity (using BSP-prescribed form) duly accomplished by
the proprietor/managing partner/president under oath that shall
be the basis for the issuance by the BSP of an
Acknowledgement of Registration (AOR). The Information
Sheet shall be accompanied by the following documents:
a.
A Certificate of Registration (COR) of business name from

the DTI, in case of a sole proprietorship;
b.
Articles of Partnership/Incorporation and by-laws duly

registered with the SEC, in the case of a partnership or a
corporation which Articles shall indicate that the primary
purpose of the partnership/ corporation is to engage in the
business of a pawnshop or a pawnbroker;
c.
City/municipal license/business license/ mayors permit for
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the current period;
d.
Personal data sheet (using BSP-prescribed form for

pawnshops) with passport size picture duly accomplished
by the proprietor or partners or directors, president and
manager or officer-in-charge of the head office; and
e.
Such other documents that may be required by the BSP

that are enumerated in a list attached to the Information
Sheet.
No application for registration shall be accepted from a

person or entity other than the proprietor, partner, or
incorporator of a pawnshop unless the person or entity applying
on behalf of the proprietor, partner or incorporator submits a
duly executed and notarized special power of attorney
authorizing the person or entity to act on behalf of the proprietor,
partner, or incorporator. In the case of a corporate applicant, a
certified true copy of the board resolution authorizing the person
or entity shall likewise be submitted.
A pawnshop shall commence actual operations within six
(6) months from the date of issuance of the AOR. Failure to
commence actual operations within the aforementioned six (6)
months period shall render the BSP AOR as automatically
cancelled.
The pawnshop shall notify the BSP in writing of the start of
operations within five (5) business days from the actual start of
operations.
Any pawnshop that is found operating that does not have a
current business permit issued by the city or municipality where
it is located and an AOR issued by the BSP is considered
operating illegally. Such pawnshop shall be reported to the
Office of the Mayor of the concerned city or municipality, for
appropriate action, without prejudice to whatever legal action the
BSP may pursue under Section 18 of PD No. 114 and other
applicable laws against the pawnshop, its proprietor, partners,
incorporators, stockholders, directors, president and officers of
the pawnshop.
4101P.5 Pawnshop Regulations Briefing and AntiMoney Laundering Act Seminar. As a prerequisite for the
issuance by the BSP of the AOR, the proprietor, partner,
director, president as well as manager or officer-in-charge of the
head office and branch shall have attended the: (a) briefing on
pawnshop regulations conducted by the BSP or any accredited
service provider; and (b) seminar on the anti-money laundering
act as prescribed in subsection 4691p.1.
4101P.6 Processing and Annual Fees. Every pawnshop

head office shall pay a one-time processing fee of P1,000.00 for
the initial registration, and P500.00 annual fee upon approval of
application for registration. Thereafter, the annual fee shall be
paid not later than 31 March of every year.
Transitory Provisions. a. The annual fee shall commence for
the year 2010. It shall be collected from all pawnshop head
offices registered as of 31 December 2009. The deadline for
payment of the annual fee for 2010 is 31 March 2010.
b. Pawnshop head offices and branches that have paid the
registration fee/renewal of registration fee of P3,000.00 pursuant
to subsection 4101P.6 of BSP Circular No. 656 which took effect
on 25 June 2009, shall be considered to have paid the annual
fee for six (6) years starting 2010.
Section 4102P Definition of Terms
a.
Pawnshop shall refer to a person or entity engaged in the

business of lending money on personal property that is
physically delivered to the pawnshop premises as loan
collateral. The term shall be synonymous and may be
used
interchangeably,
with
pawnbroker
or
pawnbrokerage.
b.
Pawner shall refer to the borrower of a pawnshop.
c.
Pawnee shall refer to the pawnshop or pawnbroker.
d.
Pawn is the personal property delivered by the pawner to

the pawnee as security for a loan.
e.
Pawn ticket is the pawnbrokers receipt for a pawn and

shall not be considered as an official receipt for amounts
collected.
f.
Property shall include only such personal property which

can be physically delivered to the control and possession
of the pawnee.
g.
Voting stock is that portion of the authorized capital which

is subscribed and entitled to vote.
h.
Vital records shall consist of the Loans Extended/ Paid

Registers, General Ledger/Journal, that may be in
electronic form, covering the current and at least the
preceding five (5) years of operation, unused accountable
forms and permanent records, e.g., articles of
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incorporation/co-partnership, by-laws, stock certificates,
etc.
i.
Bulky pawns shall refer to household appliances, office

machines and the like, which occupy considerable amount
of space i.e., measuring at least 1.5 x 1.5 x 0.5 feet.
j.
Premises shall refer to the area where the pawnshop

conducts its business and maintains office. It includes
office or storage spaces maintained and/or used by the
pawnshop which are adjacent to the pawnshops location.
Sections 4103P 4105P (Reserved)

B. CAPITALIZATION
Section 4106P Capital of Pawnshops. Every pawnshop shall
have a minimum paid-in capital of P100,000.
A pawnshops paid-in capital may be in the form of:
a.
Cash;
b.
Tangible properties, including real estate and

improvements thereon; and
c.
A combination of cash and tangible properties.
Tangible properties shall be limited to those that are

necessary for the conduct of the pawnshop business. They may
be valued at fair value which is the amount for which an asset
could be exchanged between knowledgeable, willing parties in
an arms length transaction. The fair value of land and buildings
is usually determined from market-based evidence by appraisal
that is normally undertaken by professionally qualified
appraisers.
The value of the tangible properties contributed as capital
shall not exceed twenty-five percent (25%) of said paid-capital
and surplus/accumulated surplus. For pawnshops existing as at
29 January 1973 whose value of properties exceed the
prescribed ratio, such percentage may be retained or reduced
but shall not be increased thereafter. Should the ratio, on the
other hand, fall below the prescribed level, it may be increased
but not beyond twenty-five percent (25%).
Section 4107P Prudential Capital Ratio. The minimum capital
ratio of a pawnshop, expressed as a percentage of total capital
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to pledge loans, shall not be less than fifty percent (50%),
provided that total pledge loans shall not exceed P3,000,000.00.
If and when the pledge loans exceed P3,000,000.00, additional
capital of 30% of pledge loans in excess of P3,000,000.00 shall
be required.
For this purpose, the term total capital shall be defined as
total assets minus: (a) total liabilities; (b) deferred tax assets, (c)
unbooked valuation reserves; and (d) other capital adjustments
as may be required by the BSP. Any appraisal surplus or
appreciation credit as a result of appreciation or an increase in
book value of the assets of the pawnshop shall be excluded.
4107P.1 Capital Build Up Program. Any pawnshop that
fails to comply with the prudential capital requirement shall
submit within thirty (30) days from date of notice from the BSP, a
Letter of Undertaking to implement a capital build-up program
for a period not to exceed one (1) year from date of undertaking.
C to F (RESERVED)
(Sections 4108P to 4140P)
G. PROPRIETOR/PARTNERS/DIRECTORS, OFFICERS AND
EMPLOYEES
Section 4141P Safeguarding of Pawnshop Assets. In order
to safeguard pawnshops assets (pawned items) and mitigate
the risk of loss arising from malfeasance or fraudulent practices
of their employees, pawnshops shall adopt any of the following
measures:
a.
Bonding of accountable officers/ employees with

reputable insurance/surety companies accredited by the
insurance commissioner; or
b.
Equivalent self-insurance mechanism acceptable to BSP.
Section 4142P Definitions, Qualifications and Duties and

Responsibilities of Proprietor/Partners/Directors/Officers.
For purposes of this Section the following shall be the definition
and qualifications, responsibilities and duties of proprietor/
partners/incorporators/ directors/officers.
4142P.1 Definitions
a.
Proprietor is the person named in the Certificate of

Registration issued by the DTI and in the city/municipal
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license and mayors permit as the owner of the business.
b.
Partners are the persons named in the articles of

partnership.
c.
Incorporators are those mentioned as such in the articles

of incorporation as originally forming and composing the
corporation and who are signatories thereof.
d.
Directors Directors shall include:

1.
directors who are named as such in the articles of

incorporation;
2.
directors duly elected in subsequent meetings of the

pawnshops stockholders; and
3.
those elected to fill vacancies in the board of

directors.
The number of members of the board of directors,

pursuant to Section 10 of Batas Pambansa No. 68, shall
be at least five (5), and a maximum of fifteen (15)
directors.
e.
Officers are those persons whose duties as such are

defined in the by-laws (for corporations) or those who are
generally known to be the officers of the pawnshop either
thru announcement, representation, publication or any
kind of communication made by the pawnshop. The term
officer shall include, but not limited to, the following: the
proprietor, managing partner, president, and manager or
officer-in-charge of head office or branch.
4142P.2 General Qualifications of a proprietor, partner,

director, president, and manager or officer-in-charge of
head office or branch.
Any person can be a proprietor,
partner, director, president, manager or officer-in-charge of a
pawnshops head office or branch, provided he/she:
a.
Must have undergone a briefing on pawnshop regulations

conducted by the BSP or any accredited service provider;
b.
Must have undergone a briefing on the Anti-Money

Laundering Law (AMLA) as prescribed by Subsection
4691P.1;
c.
Must not be included in the BSP Watchlist; and
d.
Must not possess any derogatory information from the
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National Bureau of Investigation (NBI).
The NBI
clearance shall be submitted pursuant to Subsections
4101P.4 and 4151P.4.
The NBI clearance shall also be required for any newly
elected/appointed director, president, manager or officer-incharge and newly accepted partner or director of an existing
pawnshop.
4142P.3 Corporate Governance. A corporate pawnshop
with total resources of at least P50 million shall comply with the
Securities and Exchange Commission requirements on
corporate governance, and as proof of compliance, the said
corporate pawnshop shall submit to the BSP a notarized
certification to that effect.
Section 4143P Disqualification of Directors and Officers.
The following regulations shall govern the disqualification of
pawnshop directors/trustees and officers.
4143P.1 Persons disqualified from becoming directors.
Without prejudice to specific provisions of law prescribing
disqualifications for directors/trustees, the following are
disqualified from becoming directors of pawnshops:
a.
Permanently disqualified
Directors/trustees/officers/employees permanently disqualified

by the Monetary Board from holding a director position:
(1) Persons who have been convicted by final judgment of a
court for offenses involving dishonesty or breach of trust
such as, but not limited to, estafa, embezzlement,
extortion, forgery, malversation, swindling, theft, robbery,
falsification, bribery, violation of B.P. Blg. 22, violation of
anti-graft and corrupt practices act and prohibited acts
and transactions under section 7 of R.A. No. 6713 (code
of conduct and ethical standards for public officials and
employees);
(2) Persons who have been convicted by final judgment of a
court sentencing them to serve a maximum term of
imprisonment of more than six years;
(3) Persons who have been convicted by final judgment of
the court for violation of banking laws, rules and
regulations;
(4) Persons who have been judicially declared insolvent,
spendthrift or incapacitated to contract;
(5) Directors, officers or employees of closed banks/quasibanks/trust entities who were found to be culpable for
such institutions closure as determined by the Monetary
Board;
(6) Directors and officers of banks, quasi-banks, trust entities
found by the Monetary Board as administratively liable for
violation of banking or other relevant laws, rules and
regulations where a penalty of removal from office is
imposed, and which finding of the monetary board has
become final and executory; or
or any person found by the Monetary Board to be unfit for
the position of director or officer because they were found
administratively liable by another government agency for
regulations or any offense/violation involving dishonesty
or breach of trust, and which finding of said government
agency has become final and executory.
b.
Temporarily disqualified
Directors/officers/employees disqualified by the Monetary

Board from holding a director/trustee position for a
specific/indefinite period of time. Included are:
(1) Persons who refuse to fully disclose the extent of their
business interest or any material information to the
appropriate supervising and examining department when
required pursuant to a provision of law or of a circular,
memorandum, rule or regulation of the BSP. This
disqualification shall be in effect as long as the refusal
persists;
(2) Directors who have been absent or who have not
participated for whatever reasons in more than 50% of all
meetings, both regular and special, of the board of
directors during their incumbency or any 12 month period
during said incumbency. This disqualification applies only
for purposes of the immediately succeeding election;
(3) Persons who are delinquent in the payment of their
obligations as defined hereunder:
a.
Delinquency in the payment of obligations means

that an obligation of a person with the institution
where he/ she is a director/trustee or officer, or at
least two (2) obligations with other FIs under
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different credit lines or loan contracts, are past due
pursuant to Sections X306, 4308Q, 4306S and
4305P.
b.
Obligations shall include all borrowings from any FI

obtained by:
i.
A director/trustee or officer for his own account

or as representative or agent of others or where
he/she acts as guarantor endorser or surety for
loans from such FIs;
ii.
The spouse or child under the parental authority

of the director/trustee or officer;
iii. Any person whose borrowings or loan proceeds

were credited to the account of, or used for the
benefit of a director/trustee or officer;
iv. A partnership of which a director or officer, or
his/her spouse is the managing partner or a
general partner owning a controlling interest in
the partnership; and
v.
A corporation, association or firm wholly-owned

or majority of the capital of which is owned by
any or a group of persons mentioned in the
foregoing items (i), (ii), and (iv);
This disqualification shall be in effect as long as the

delinquency persists.
(4) Persons who have been convicted by a court for offenses
involving dishonesty or breach of trust such as, but not
limited to, estafa, embezzlement, extortion, forgery,
malversation, swindling, theft, robbery, falsification,
bribery, violation of B.P. Blg. 22, violation of anti-graft and
corrupt practices act and prohibited acts and transactions
under section 7 of R.A. No. 6713 (code of conduct and
ethical standards for public officials and employees),
violation of banking laws, rules and regulations or those
sentenced to serve a maximum term of imprisonment of
more than six years but whose conviction has not yet
become final and executory;
(5) Directors/trustees and officers of closed institutions under
the supervisory and regulatory authority of the BSP
pending their clearance by the Monetary Board;
(6) Directors/trustees
disqualified
for
failure
to
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observe/discharge their duties and responsibilities
prescribed
under
existing
regulations.
This
disqualification applies until the lapse of the specific
period of disqualification or upon approval by the
Monetary Board or the appropriate department of the SES
of such directors/trustees election/ reelection;
(7) Persons dismissed/terminated from employment in the
institutions under the supervision of the BSP. This
disqualification shall be in effect until they have cleared
themselves of involvement in the alleged irregularity or
upon clearance, on their request, from the Monetary
Board after showing good and justifiable reasons;
(8) Those under preventive suspension;
(9) Persons with derogatory records as certified by, or on the
official files of, the judiciary, National Bureau of
Investigation, Philippine National Police, quasi-judicial
bodies, other government agencies, international police,
monetary authorities and similar agencies or authorities of
foreign countries for irregularities or violations of any law,
rules and regulations that would adversely affect the
integrity of the director/officer or the ability to effectively
discharge his duties. This disqualification applies until
they have cleared themselves of the alleged
irregularities/violations or after a lapse of five (5) years
from the time the complaint, which was the basis of the
derogatory record, was initiated;
(10) Directors and officers of banks, quasi-banks and trust
entities found by the Monetary Board as administratively
liable for violation of banking or other relevant laws, rules
and regulations where a penalty of removal from office is
imposed, and which finding of the Monetary Board is
pending appeal before the appellate court, unless
execution or enforcement thereof is restrained by the
court;
(11) Directors and officers of banks, quasi-banks and trust
entities or any person found by the Monetary Board to be
unfit for the position of director or officer because they
were found administratively liable by another government
agency for violation of banking or other relevant laws,
rules and regulations, or any offense/violation involving
dishonesty or breach of trust, and which finding of said
government agency is pending appeal before the
appellate court, unless execution or enforcement thereof
is restrained by the court; or
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found by the Monetary Board as administratively liable for
regulations where a penalty of suspension from office or
fine is imposed, regardless whether the finding of the
Monetary Board is final and executory or pending appeal
before the appellate court, unless execution or
enforcement thereof is restrained by the court. The
disqualification shall be in effect during the period of
suspension or so long as the fine is not fully paid.
4143P.2 Persons disqualified to become officers
a.
The disqualification for directors mentioned in Subsection

4143P.1 shall likewise apply to officers, except those
stated in Item b(2);
b.
Except as may be authorized by the Monetary Board or

the Governor, the spouse or a relative within the second
degree of consanguinity or affinity of any person holding
the position of chairman, president, executive vicepresident or any position of equivalent rank, general
manager, treasurer, chief cashier or chief accountant is
disqualified from holding or being elected or appointed to
any of said positions in the same pawnshop and the
spouse or relative within the second degree of
consanguinity or affinity of any person holding the position
of manager, cashier or accountant of a branch or office of
a pawnshop is disqualified from holding or being
appointed to any of said positions in the same branch or
office.
4143P.3 Disqualification Procedures

a.
The board of directors/trustees and management of every

institution shall be responsible for determining the
existence of the ground for disqualification of the
institutions directors/officer or employee and for reporting
the same to the BSP. While the concerned institution may
conduct its own investigation and impose appropriate
sanction/s as are allowable, this shall be without prejudice
to the authority of the Monetary Board to disqualify a
director/trustee/ officer/employee from being elected/
appointed as director/trustee/ officer in any FI under the
supervision of the BSP. Grounds for disqualification
made known to the institution shall be reported to the
appropriate department of the SES of the BSP within 72
hours from knowledge thereof.
b.
On the basis of knowledge and evidence on the existence
13
of any of the grounds for disqualification mentioned in
Subsections 4143P.1 and 4143P.2, the director/trustee or
officer concerned shall be notified in writing either by
personal service or through registered mail with registry
return receipt card at his/her last known address by the
appropriate department of the SES of the existence of the
ground for his/her disqualification and shall be allowed to
submit within 15 calendar days from receipt of such notice
an explanation on why he/she should not be disqualified
and included in the watchlisted file, together with the
evidence in support of his/ her position. The head of said
department may allow an extension on meritorious
ground.
c.
Upon receipt of the reply/explanation of the

director/trustee/officer
concerned,
the
appropriate
department of SES shall proceed to evaluate the case.
The director/trustee/officer concerned shall be afforded to
defend/clear himself/herself.
d.
If no reply has been received from the director/

trustee/officer concerned upon the expiration of the period
prescribed under item b above, said failure to reply shall
be deemed a waiver and the appropriate department of
the SES shall proceed to evaluate the case based on
available records/evidence.
e.
If the grounds for disqualification is delinquency in the

payment of obligation, the concerned director/trustee or
officer shall be given a period of 30 calendar days within
which to settle said obligation or, restore it to current
status or, to explain why he/she should not be disqualified
and included in the watchlisted file, before the evaluation
on his disqualification and watchlisting is elevated to the
Monetary Board.
f.
For directors/trustees/officers of closed banks, the

concerned department of the SES shall make appropriate
recommendation to the Monetary Board clearing said
directors/trustees/officers when there is no pending case/
complaint or evidence against them. When there is
evidence that a director/trustee/officer has committed
irregularity, the appropriate department of SES shall make
recommendation to the Monetary Board that his/her case
be referred to the OSI for further investigation and that
he/she be included in the master list of temporarily
disqualified persons until the final resolution of his/her
case.
Directors/trustee/officer
with
pending
cases/complaints shall also be included in said master list
of temporarily disqualified persons upon approval by the
14
Monetary Board until the final resolution of their cases, If
the director/trustee/officer is cleared from involvement in
any irregularity, the appropriate SES department shall
recommend to the Monetary Board his/her delisting. On
the other hand, if the director/trustee/officer concerned is
found to be responsible for the closure of the institution,
the concerned department of the SES shall recommend to
the Monetary Board his/her delisting from the disqualified
persons and his/her inclusion in the master list of
permanently disqualified persons.
g.
h.
If the disqualification is based on dismissal from

employment for cause, the appropriate department of the
SES shall, as much as practicable, endeavor to establish
the specific acts or omissions constituting the offense of
the ultimate facts which resulted in the dismissal to be
able to determine if the disqualification of the
director/trustee/ officer concerned is warranted or not. The
evaluation of the case shall be made for the purpose of
determining if disqualification would be appropriate and
not for the purpose of passing judgment on the findings
and decision of the entity concerned. The appropriate
department of the SES may decide to recommend to the
Monetary Board a penalty lower than disqualification (e.g.,
reprimand, suspension, etc.) if, in its judgment the act
committed or omitted by the director/trustee/officer
concerned does not warrant disqualification.
All other cases of disqualification, whether permanent or
temporary shall be elevated to the Monetary Board for
approval and shall be subject to the procedures provided
in items a, b, c and d above.
i.
Upon approval by the Monetary Board, the concerned

directors/trustees/officer shall be informed by the
appropriate department of the SES in writing either by
personal service or through registered mail with registry
return receipt card, at his/her last known address of
his/her disqualification from being elected/appointed as
director/trustee/officer in any FI under the supervision of
BSP and/or of his/her inclusion in the master list of
watchlisted persons so disqualified.
j.
The board of directors/trustees of the concerned

institution shall be immediately informed of cases of
disqualification approved by the Monetary Board and shall
be directed to act thereon not later than the following
board meeting. Within seventy-two (72) hours thereafter,
the corporate secretary shall report to the Governor of the
BSP through the appropriate department of the SES the
action taken by the board on the director/trustee/officer
15
involved.
k.
Persons who are elected or appointed as director/trustee

or officer in any of the BSP-supervised institutions for the
first time but are subject to any of the grounds for
disqualification provided for under Subsecs. 4143P.1 and
4143P.2 shall be afforded the procedural due process
prescribed above.
Whenever a director/trustee/officer is cleared in the process

mentioned under item c above or, when the ground for
disqualification ceases to exist, he/she would be eligible to
become director/trustees or officer of any bank, QB, trust entity
or any institution under the supervision of the BSP only upon
prior approval by the Monetary Board. It shall be the
responsibility of the appropriate department of the SES to
elevate to the Monetary Board the lifting of the disqualification of
the concerned director/trustee/officer and his/her delisting from
the masterlist or watchlisted persons.
4143P.4 Effect of possession of disqualifications.
Directors/trustees/officers elected or appointed possessing any
of the disqualifications as enumerated herein, shall vacate their
respective positions immediately.
4143P.5 (Reserved)
4143P.6 Watchlisting. To provide the BSP with a central
information file to be used as reference in passing upon and
reviewing the qualifications of persons elected or appointed as
directors/trustees or officers of an institution under the
supervisory and regulatory powers of the BSP, the SES shall
maintain a watchlist of disqualified directors/ trustees/officers
under the following procedures:
a.
Watchlist categories. Watchlisting shall be categorized as

follows:
(1) Disqualification File A (Permanent) Directors/
trustees/officers/employees permanently disqualified by
the
Monetary
Board
from
holding
a
director/trustee/officer position.
(2) Disqualification File B (Temporary) Directors/
trustees/officers/employees temporarily disqualified by
the
Monetary
Board
from
holding
a
director/trustee/officer position.
b. Inclusion of directors/trustees/officers/employees in the

watchlist.
Upon recommendation by the appropriate
16
department of the SES, the inclusion of directors/trustees/
officers/employees in watchlist disqualification files A and
B on the basis of decisions, actions or reports of courts,
institutions under the supervisory and regulatory powers of
the BSP, NBI or other administrative agencies shall first be
approved by the Monetary Board.
c. Notification of directors/trustee/officers/employees. Upon
approval by the Monetary Board, the concerned
director/trustee/employee shall be informed through
registered mail, with registry return receipt card, at his last
known address of his inclusion in the masterlist of
watchlisted persons disqualified to be a director/trustee/
officer in any institution under the supervisory and
regulatory powers of the BSP.
d. Confidentiality. Watchlisting shall be for internal use only
and may not be accessed or queried upon by outside
parties including such institutions under the supervisory
and regulatory powers of the BSP, except with the authority
of the person concerned and with the approval of the
Deputy Governor, SES, the Governor, of the Monetary
Board.
The BSP will disclose information on its watchlist files only
upon submission of a duly accomplished and notarized
authorization from the concerned person and approval of
such request by the Deputy Governor, SES or the
Governor or the Monetary Board. The prescribed
authorization form to be submitted to the concerned
department of the SES is in Appendix Q-45.
Pawnshops can gain access to information in the said
watchlist for the sole purpose of screening their applicants
for hiring and/or confirming their elected directors/trustees
and appointed officers. Pawnshops must obtain the said
authorization on an individual basis.
All delistings shall be approved by the
e. Delisting.
Monetary Board upon recommendation of the appropriate
department of the SES except in cases of persons known
to be dead where delisting shall be automatic upon proof of
death and need not be elevated to the Monetary Board.
Delisting may be approved by the Monetary Board in the
following cases:
(1) Watchlist Disqualification File B (Temporary)
a.
After the lapse of the specific period of

disqualification;
17
b.
When the conviction by the court for crimes

involving dishonesty, breach of trust and/or
violation of banking laws becomes final and
executor,
in
which
case
the
director/trustee/officer/employee is relisted to
watchlist Disqualification File A (Permanent);
or
c.
Upon favorable decision or clearance by the

appropriate body, i.e., court, NBI, institutions
under the supervisory and regulatory powers of
the BSP, or such other agency/body where the
concerned individual had derogatory record.
Directors/trustees/officers/employees delisted from the

Watchlist Disqualification File B other than those
upgraded to watchlist Disqualification File A shall be
eligible for re-employment with any institution under the
supervisory and regulatory powers of the BSP.
4143P.7 Applicability of Section 4143P to the
proprietor and managing partner of a pawnshop (in the case
of a sole proprietorship/partnership).
The foregoing
disqualification and watchlisting provisions of this Section shall
apply, where practicable, to the managing proprietor or
managing partner of a pawnshop that is a sole proprietorship or
partnership, in which case, the BSP shall initiate the
disqualification
proceedings
against
the
managing
proprietor/managing partner. For purposes of this subsection, a
managing proprietor or managing partner shall refer to a person
directly involved in the operation of a pawnshop business.
In case the disqualification shall cause the dissolution of the
proprietorship or partnership, the AOR and AO, if any, shall be
cancelled and the pawnshop shall be removed from the BSP
List of Registered Pawnshops.
H. BRANCH OFFICES
Section 4151P Establishment of Branch Offices. In line with
Section 6 of P.D. No. 114 which requires pawnshops to register
with the BSP before commencing actual business operations, no
pawnshop shall open, maintain or operate a branch office
without first applying for and obtaining from the BSP, through
18
the appropriate supervising and examining department, an
Authority to Operate (AO) such branch which shall be processed
in accordance with the following guidelines. A new pawnshop
applying for an AOR that has complied with the minimum paid-in
capital of P100,000.00 may open one (1) branch if it so desires,
subject to compliance with the applicable
branching
requirements.
4151P.1 Definition of Terms. As used in these rules, the
term branch office refers to any place of business outside the
head or main office of a pawnshop where pawnshop operations
and transactions are conducted under the control and
supervision of the head or main office.
4151P.2 Operations and functions. The operations and
transactions of a branch office shall likewise be subject to the
provisions of P.D. No. 114 governing the operations and
transactions of a head or main office, as well as by other
pertinent laws, BSP rules and regulations.
The primary purpose of branching is to provide additional
source of credit to small borrowers not served by banks and
other financial institutions.
4151P.3 Basis for Establishment. Branch offices shall
be allowed on the basis of the head offices ability to conduct
operations in accordance with PD 114 and BSP rules and
regulations. The BSP department concerned shall not process
an application for branching of a pawnshop if any of the
following conditions:
a.
has an approved but unopened branch;
b.
has unpaid annual fee or penalty assessed by the BSP;
c.
has not complied with the required prudential capital ratio

as prescribed in Section 4107P; or
d.
has not submitted any of the periodic reports listed in

Appendix P-2.
4151P.4 Documentary requirements. A pawnshop that

intends to open a branch office shall submit to the BSP an
Application (using a BSP-prescribed form) duly accomplished
and signed by the proprietor/managing partner/ president under
oath that shall be the basis for the issuance by the BSP an
Authority to Operate (AO). The following documents shall be
submitted together with every application for a branch office:
19
a.
Duly notarized certification from the head office as to its

compliance with the minimum amount of capital under
Sections 4106P and 4107P;
b.
Certified true copy of the board resolution authorizing the

establishment of the branch (in case of corporation);
c.
City/municipal license/business license/ mayors permit

from the city or municipality where the pawnshop branch
is to be established;
d.
Personal data sheet (using BSP-prescribed form for

pawnshops) with passport size picture duly accomplished
by the proposed branch manager or officer-in-charge; and
e.
Such other documents that may be required by the BSP

for the evaluation of the branch application as enumerated
in a list attached to the Application form.
4151P.5 Processing and Annual Fees. Every branch of

a pawnshop shall pay a one-time processing fee of P1,000.00,
and P500.00 annual fee upon approval of application for
registration. Thereafter, the annual fee shall be paid not later
than 31 March of every year.
Transitory Provisions. a. The annual fee shall commence
for the year 2010. It shall be collected from all pawnshop
branches registered as of 31 December 2009. The deadline for
payment of the annual fee for 2010 is 31 March 2010.
b. Pawnshop branches that have paid the registration
fee/renewal of registration fee of P3,000.00 pursuant to
subsections 4101P.6 of BSP Circular No. 656 which took effect
on 25 June 2009, shall be considered to have paid the annual
fee for six (6) years starting 2010.
4151P.6 Date of opening for business. The pawnshop
branch shall commence actual operations within six (6) months
from the date of issuance of the AO. Failure to commence
actual operations within the aforementioned six (6) months
period shall render the BSP AO as automatically cancelled.
The pawnshop head office shall notify the BSP in writing of
the start of operations of the branch within five (5) business days
from the actual start of the operations of the branch.
4151P.7 Pawnshop branches without business permit
and AO considered operating illegally.
Any pawnshop
branch that is found operating that does not have a current
business permit issued by the city or municipality where it is
20
located and an AO issued by the BSP is considered operating
illegally. Such pawnshop shall be reported to the Office of the
Mayor of the concerned city or municipality, for appropriate
action, without prejudice to whatever legal action the BSP may
pursue under Section 18 of PD No. 114 and other applicable
laws against the pawnshop, its proprietor, partners,
stockholders, directors and president or officer of equivalent
rank.
Sections 4152P to 4155P (Reserved)
I. BUSINESS DAYS AND HOURS
Section 4156P Business Days and Hours. Pawnshops,
including their branches, shall transact business at a minimum
of five (5) days a week, for a minimum of six (6) hours a day to
be selected by them. They may, at their discretion, remain open
beyond the aforesaid requirement as they deem it necessary.
The business hours and business days shall be printed on
the face of the pawn ticket and shall be posted together with the
original BSP AOR/AO conspicuously at all times within the
premises of the pawnshop, preferably at the window or door that
is clearly visible to the pawning public.
Pawnshops shall only transact business in the pawnshops
registered place of business or premises of the head office and
branches, if any.
During business days and hours, the pawnshop head office
and every branch shall have at least one (1) personnel,
(manager or officer-in-charge, if any), that has attended the
briefing on pawnshop regulations and AMLA seminar mentioned
in Subsection 4101P.5.
J. RECORDS AND REPORTS
Section 4161P Records. The accounting period of pawnshops
shall be on a calendar year basis.
The accounting records of pawnshops shall consist of
records of original entry and books of final entry.
The records of original entry shall consist of pawn tickets,
21
official receipts, vouchers and other supporting documents. The
books of final entry shall consist of the general ledger,
subsidiary ledgers and registers of loans extended and loans
paid.
Pawnshops may use any form of loans extended and loans
paid registers as long as they contain spaces and columns for
information enumerated in Section 11 of P.D. No. 114.
A pawnshop that uses a computerized system may record
its loan transactions in individual loan extended vouchers which
shall contain the same information necessary to comply with
Section 11 of PD No. 114 in lieu of the loan extended and loans
paid registers. Such pawnshops shall periodically compile or
bind the loan extended vouchers and shall be made available for
BSP examination upon request.
The Description of Loan Registers of Pawnshops provided
in Appendix P-1 shall be followed.
4161P.1 Uniform System of Accounts. Pawnshops shall
strictly adopt/implement the Uniform System of Accounts
prescribed for pawnshops in the recording of daily transactions
including reportorial requirements.
The Uniform Chart of Accounts for Pawnshops is provided
in Appendix P-1.
4161P.2 Philippine Financial Reporting Standards/
Philippine Accounting Standards. Statement of policy. It is
the policy of the BSP to promote fairness, transparency and
accuracy in financial reporting. It is in this light that the BSP
aims to adopt all Philippine Financial Reporting Standards
(PFRS) and Philippine Accounting Standards (PAS) issued by
the Accounting Standards Council (ASC) to the greatest extent
possible.
Pawnshop shall adopt the PFRS and PAS which are in
accordance with generally acceptable accounting principles in
recording transactions and in the preparation of financial
statements and reports to BSP. However, in cases where there
are differences between BSP regulations and PFRS/PAS as
when more than one (1) option are allowed or certain minimum
limits are prescribed by the PFRS/PAS, the option or limit
prescribed by BSP regulations shall be adopted by all
banks/financial institutions.
For purposes hereof, the PFRS/PAS shall refer to
issuances of the Accounting Standards Council and approved
by the Professional Regulation Commission (PRC).
22
Accounting treatment for prudential reporting.

For
prudential reporting, financial institutions shall adopt in all
respect the PFRS and PAS except as follows:
a.
In preparing consolidated financial statements, only

investments in financial allied subsidiaries except
insurance subsidiaries shall be consolidated on a line-byline basis; while insurance and non financial allied
subsidiaries shall be accounted for using the equity
method.
Financial/non-financial
allied/non-allied
associates shall be accounted for using equity method in
accordance with the provisions of PAS 28 Investments in
Associates.
b.
For purposes of preparing separate financial state-ments,

financial/non-financial
allied/non-allied
subsidiaries/
associates, shall also be accounted for using the equity
method; and
c.
Financial institutions shall be required to meet the BSP

recommended valuation reserves.
Notwithstanding the exceptions in Items a, b and c, the

audited annual financial statements required to be submitted to
the BSP in accordance with Appendix P-2 shall in all respect be
PFRS/PAS compliant: Provided, That financial institutions shall
submit to the BSP adjusting entries reconciling the balances in
the financial statements for prudential reporting with that in the
audited annual financial statements.
4161P.3 - Accounting for Pawnshops Premises; Other
Fixed Assets. Pawnshop premises, furniture, fixture and
equipment shall be accounted for using the cost model under
PAS 16 Property, Plant and Equipment.
4161P.4 Retention of Records. Pawnshop records,
ledgers, books and documents (including those in electronic
media): (a) shall not be destroyed or disposed of for at least five
(5) years; (b) shall have back-up hard and/or soft copy to allow
reconstruction of records in case of loss or destruction due to
fire and other fortuitous events; and (c) shall be made available
for BSP examination upon request.
A pawnshop that does not have records, ledgers, registers,
books or documents or that refuses to permit access to its
records, ledgers, registers, books or documents to an authorized
BSP officer/examiner may be considered as refusal to permit an
examination.
23
Section 4162P Reports. Pawnshops shall submit to the
appropriate SED of the BSP the reports listed in Appendix P-2 in
the forms as may be prescribed by the Deputy Governor, SES,
BSP.
Any change in, or amendment to, the articles of
incorporation/co-partnership, by-laws or material documents
required to be submitted to the BSP shall be reported by
submitting copies of the amended articles of incorporation, bylaws or material document to the appropriate supervision and
examination department of the BSP within fifteen (15) days
following such change.
4162P.1 Categories of and signatories to reports.
Reports required to be submitted to the BSP are classified into
Categories A-1, A-2, A-3 and B reports as indicated in the list of
reports required to be submitted to the BSP in Appendix P-2.
Appendix P-3 prescribes the signatories for each report
category and the requirements on signatory authorization.
Reports submitted in computer media shall be subject to the
same requirements.
A report submitted to the BSP under the signature of an
officer who is not authorized in accordance with the
requirements in this Subsection shall be considered as not
having submitted.
4162P.2 Manner of filing. The submission of the reports
shall be effected by filing them personally with the appropriate
supervising and examining department of the BSP or with the
BSP Regional Offices/Units, or by sending them by registered
mail or special delivery through private couriers, unless
otherwise specified in the circular or memorandum of the BSP.
4162P.3 Definition Relevant to Reports to BSP.
Definition of terms. For purposes of these rules, the
following definitions shall apply:
1.
Report shall refer to any report or statement required

of a pawnshop to be submitted to the BSP
periodically or within a specified period.
2.
Faulty report shall refer to an inaccurate/ improperly

accomplished report.
3.
Willful delay or default in the submission of reports

shall refer to the failure of a pawnshop to submit a
report on time. Failure to submit a report on time due
24
to fortuitous events, such as fire and other natural
calamities and public disorders, including strike or
lockout affecting a pawnshop as defined in the Labor
Code or a national emergency affecting operations of
pawnshops, shall not be considered as willful delay.
4.
False Statement shall refer to any untruthful data or

information or falsehoods made in a report to the BSP
or its authorized agents, with intent to deceive or
mislead. Any false statement which tends to favor the
pawnshop submitting the report shall be prima facie
evidence of intent to deceive or mislead.
5.
Repeated violation shall mean the commission of the

same offense for at least two (2) times.
6.
Persistent violation shall mean the commission of the

same offense for at least three (3) times.
7.
Offense shall refer to submission of faulty report,

willful delay in submission of reports, or making of
false statements in reports.
8.
Continuing offenses/violations are acts, omissions or

transactions entered into, in violations of laws, BSP
rules and regulations, MB directives, and orders of
the Governor which persist from the time the
particular acts were committed or omitted or the
transactions were entered into until the same were
corrected/rectified
by
subsequent
acts
or
transactions. They shall be penalized on a per
calendar day basis from the time the acts were
committed/omitted or the transactions were effected
up to the time they were corrected/rectified.
9.
Transactional offenses/violations are acts, omissions

or transactions entered into in violation of laws, BSP
rules and regulations, MB directives, and orders of
the Governor which cannot be corrected/ rectified by
subsequent acts or transactions. They shall be
meted with one-time monetary penalty on a per
transaction basis.
10.
Continuing penalty refers to the monetary penalty

imposed on continuing offenses/violations on a per
calendar day basis reckoned from the time the
offense/violation occurred or was committed until the
same was corrected/rectified.
11.
Transactional penalty refers to a one-time penalty
25
imposed on transactional offense/violation.
Section 4163P - Report on crimes/losses. Pawnshops shall
submit a report on crimes and losses in accordance with
Appendix P-2 together with the following:
a.
Notarized list of lost pawned articles, indicating the pawn

ticket number, name of the pawner, date loan granted, brief
description of pawn, and amount of loan;
b.
Police report on the investigation of the fire/robbery

incident;
c.
Proof of notification in writing to all concerned pawners

about the incident; and
d.
Plan of settlement of pawners claim for lost pawned items,

if any.
Should a crime or loss result in a deficiency in the minimum

capital and/or prudential capital required under Sections 4106P
and 4107P, the pawnshop shall submit a capital build up
program in accordance with Section 4107P.1.
Section 4164P Audited Financial Statements (AFS).
Pawnshops shall submit a copy of the AFS, as duly received by
the BIR, to the BSP not later than 30 June following the
reference calendar year. This requirement will apply only to
pawnshops whose total assets is at least P50.0 million as of
reference year.
K. INTERNAL CONTROL
Section 4171P Internal Control System.
The following
provisions are the minimum internal control standards for
pawnshops to help promote effective control system.
4171P.1 Proper accounting records
a.
All pawnshops shall maintain proper and adequate

accounting records which include reconciliation of due
to/from head office/branches, if the pawnshop has several
offices.
b.
Records should be kept up-to-date and shall contain

sufficient detail so that an audit trail is established.
26
4171P.2 Number control. The following are the forms,

instruments and accounts that shall be number-controlled:
a.
b.
c.
Pawn tickets;
Official receipts; and
Expense vouchers.
4171P.3 Safekeeping of Records and Insurance of

Premises. Vital records for the current year must be kept inside
the safe or vault when not in use. Vital records are pawn ticket
duplicates, loan paid and loan extended registers or loan paid
and extended vouchers. Other pawnshop records/ documents
may be placed in filing cabinets/shelves outside the vault or safe
but within the pawnshop premises.
For this purpose, a pawnshops vault, i.e., its walls, ceiling
and floor shall be made of steel-reinforced concrete or such
other equally safe materials/ specifications. Vault doors shall be
made of steel or other drill and torch-resistant materials.
Safes should be sufficiently heavy or be securely anchored
to the floor of the premises.
Vital records kept in electronic media including back-up
copies thereof shall be kept in safes or vaults designed to
protect them from damage due to fire or other fortuitous events.
The pawnshop premises and furniture, fixtures and
equipment of pawnshops must be insured against fire.
4171P.4 Miscellaneous. Every pawnshop shall adopt
minimum internal control measures to safeguard the assets of
the pawnshop. Such measures may include but is not limited to,
dual control, check and balance and internal audit.
No
employee shall be permitted to process a transaction affecting
his own account.
Section 4172P Separation of Pawnshop Business from
Other Business. A pawnshop that is at the same time engaged
in another business not directly related to the business of a
pawnshop, shall keep such business distinct and separate from
the pawnshop operation.
Allowable corollary business activities of pawnshops shall
include acting as foreign exchange dealer/money changer
and/or as remittance agent, acting as bills payment agent for
utility companies and other entities and such other activities as
may be allowed by the BSP.
27
A pawnshop must secure the necessary business permit
from the city or municipality for the corollary business.
A
pawnshop that will engage in the business of a foreign
exchange dealer/money changer or act as a remittance agent
shall register with the BSP before engaging in such business
pursuant to Circular No. 471 dated 24January 2005.
The pawnshop should be able to show in its financial
statements the appropriate accounts as well as the income or
loss pertaining to the corollary business.
L. MISCELLANEOUS PROVISIONS
Section 4181P Registered/Business Name. The registered
name of a pawnshop shall refer to the name appearing in the
Certificate of Registration (COR) of business name from the
DTI, in the case of a sole proprietorship, or in the Articles of
Partnership/ Incorporation and By-Laws duly registered with the
SEC, in the case of a partnership or corporation. In any case,
the registered name shall include the word pawnshop to reflect
the nature of business it is engaged in.
Conversely, no person or entity shall advertise, use signage
or hold itself out as being engaged in the business of a
pawnshop or use in its business name the words pawnshop,
pawnbrokerage, or words of similar import, or transact in any
manner the business of a pawnshop without having first
complied with the provisions of P.D. 114 and these regulations.
A pawnshop that shall use/uses a name that is different
from its registered name with DTI or SEC shall cause to have
such name to also appear parenthetically under its registered
name in the certificate of registration with DTI or articles of
partnership/incorporation and by-laws with SEC, as well as in
the business permit issued by the city or municipality.
4181P.1 Change of Registered/Business Name. A
pawnshop shall not change its registered/business name
without submitting the following documents to the appropriate
supervising and examining department:
a.
Certificate of Registration from DTI or SEC, as the case

may be, indicating the new business/ registered name;
b.
Mayors/municipal license/permit; and
28
c.
Original BSP Acknowledgement of Registration of Head

Office (AOR) and/or Authority to Operate (AO) issued
under the old name.
A new BSP AOR and/or AO shall be issued indicating the

new registered/business name of the pawnshop.
4181P.2 Use of Registered/Business Name in Signage,
Pawn Tickets and Other Forms. The following regulations
shall be observed with respect to the use of the
business/registered name in the signage, pawn ticket and other
forms of a pawnshop:
a.
As a general rule, the registered name appearing in the

Certificate of Registration from the DTI or SEC, as the
case may be, shall be used consistently in the
pawnshops signage and in all documents including pawn
tickets, official receipts, stationery and other similar
documents of the pawnshop.
b.
A pawnshop that uses or will use a name that is different

from its registered name as mentioned in Section 4181P
above or that uses or will use a name already registered
and being used by another pawnshop shall indicate
parenthetically under such name, the registered name of
the pawnshop with the DTI or SEC, as the case may be,
with the words owned and operated by before the
registered name in the pawnshops s pawn tickets, official
receipts, stationery and other similar documents.
c.
A pawnshop that is a subsidiary or affiliate of another

pawnshop shall likewise indicate such relationship in the
pawn tickets, official receipts, stationery and other similar
documents.
A subsidiary is a corporation more than fifty percent (50%)
of the voting stock of which is owned by another
corporation; while an affiliate is a corporation less than
fifty (50%) of the voting stock of which is owned by
another corporation.
d.
The exact address of the pawnshop shall be indicated

consistently in all pawnshop documents (e.g., pawn
tickets, official receipts, stationery and other similar
documents) and in the business permit issued by the city
or municipality.
29
Section 4182P Transfer/Relocation of Business.
The
following shall govern the transfer/relocation of pawnshops.
No pawnshop shall transfer or relocate its place of business
within three (3) months following the maturity of any loan or
pledge, or before any pawn shall have been sold or disposed of
as provided under existing regulations. A notice of transfer shall
be submitted to the appropriate supervising and examining
department within ten (10) days before the effectivity of such
transfer.
A pawnshop may transfer its place of business from one
location to another within the territorial limits of the city or
municipality upon compliance with the following requirements:
a.
Notice of transfer shall be published in English and in

Filipino or in the local dialect in two (2) daily newspapers
of general circulation in the city or municipality where the
pawnshop is closing business, and posted in English and
Filipino or in the local dialect for one (1) month after date
of publication in a conspicuous place in the premises to
be vacated and to be transferred to;
b.
The notice shall be published for at least three (3)

consecutive days, the last day of which shall be five (5)
days before the actual transfer; and
c.
Notice shall contain the following information:

(1)
(2)
(3)
Date of transfer;
Address of the premises to be vacated; and
Address of the premises to which pawnshop intends
to transfer.
In remote areas where newspapers are not available, the

publication requirement shall be complied with by posting
notices at the city hall or municipal building of the city or
municipality where the pawnshop has its place of business.
4182P.1 Documentary requirements for transfer within
the same city/municipality. The following documents shall be
filed with the appropriate supervising and examining department
of the BSP in connection with transfer of location within the
same city or municipality:
a.
A certification signed by the proprietor/ managing

partner/president informing the appropriate supervising
and examining department of the BSP of the intended
transfer and that the requirements prescribed under
Section 4182P have been complied with;
30
b.
Copy of notice of transfer duly acknowledged by the DTI

and by the licensing authority of the locality where the
pawnshop is operating;
c.
Sample copy of the pawn ticket bearing the new address;
d.
Sketch of pawnshops new location;
e.
Original BSP AOR and/or AO issued to the pawnshop, or

an affidavit in case of loss;
f.
Board Resolution authorizing the transfer of the pawnshop

(in case of corporations)
4182P.2 Documentary requirements for transfer

outside the city/municipality. A pawnshop that intends to
transfer/relocate its business outside the city or municipality
where it is located shall comply with the following:
a.
requirements on closure of business under Section

4183P; and
b.
requirements for the establishment and registration of a

pawnshop branch under Subsection 4151P, where
applicable.
Section 4183P Closure of Pawnshops. The following rules

shall govern the closure of pawnshops:
4183P.1 Voluntary Closure. Voluntary closure of a
pawnshop may be effected only after three (3) months following
the maturity of any loan or pledge, or before any pawn shall
have been sold or disposed of and after it has complied with the
following requirements:
(1) Submission of the following documentary requirement
within thirty calendar (30) days after the provision of
Subsection 4183P.1:
a. Notarized statement stating that:
i. The pawnshops books of accounts, reports, records
and documents shall be preserved for at least five (5)
years from date of last entry;
ii. All unused accountable forms have been destroyed to
prevent their unauthorized use;
iii. Proprietor/Partners/President of the pawn-shop shall
be held liable for present or future claims arising from
its pawnbroking transactions; and
iv. All outstanding pawns have been redeemed/ sold at
31
public auction, or
accordance with law.
otherwise
disposed
of,
in
b. Copy of the pawnshops application for retirement of

business approved by the licensing authority of the city or
municipality where the pawnshop operated.
c. Original BSP AOR and/or AO issued to the pawnshop.
(2)
Remittance of penalties or BSP assessments on the

pawnshop, if any, such as for non-submission/ delayed
submission of required reports.
Section 4184P Transfer of Ownership. No Pawnshop

proprietor/partners/stockholders shall transfer owner-ship over
the pawnshop business without securing prior BSP approval.
4184P.1 Requirements for Transfer of Ownership. The
owner(s) shall file the following documents ten (10) days before
transferring the ownership of the pawnshop:
(1) Notarized statement by owner/managing
president or its equivalent rank stating that:
partner/
a. The pawnshops books of accounts, records and

documents shall be preserved for five (5) years from date
of last entries before the transfer of ownership;
b. All unused accountable forms such as official receipts and
pawn tickets have been destroyed to prevent their
unauthorized use.
c. The owner/managing partner/president shall be held
accountable for present and future claims arising from
transactions of the pawnshop under the former owner
(new owner may assume this liability, in which case,
he/she shall submit a notarized statement to that effect).
d. All outstanding pawns have been redeemed or sold at
public auction, or otherwise disposed of in accordance
with law; or the owners of outstanding pawns have been
notified by registered mail on the transfer of ownership of
the pawnshop.
(2) Copy of pawnshops notice of retirement of business
acknowledged by the licensing authority where the
pawnshop operated.
(3) Original BSP AOR and/or AO issued to the pawnshop, or
an affidavit in case of loss.
32
(4) Payment of Bangko Sentral assessment on the

pawnshop, if any, such as for non-submission or delayed
submission of required reports.
If the vendee shall continue the operation of the pawnshop,
he shall comply with the provisions of Subsections 4101P.3 and
4142P.2. The vendee shall also submit a copy of the duly
executed contract affecting the transfer of ownership.
4184P.2 Processing and Annual Fees. A pawnshop that
is the subject of change of ownership shall be subject to the
BSP processing and annual fees under Subsection 4101P.6.
Section 4185P Processing Fee for Replacement of
AOR/AO. A non-refundable processing fee of P300.00 shall be
collected from each pawnshop that will request for a
replacement AOR or AO due to: (a) loss of AOR/AO; (b) change
of business/registered name under Sub-section 4181P.1; and
(c) transfer of location or address under Subsection 4182P.1.
Section 4190P Duties and Responsibilities of Pawnshops
and their Directors/Officers in Cases of Outsourcing of
Pawnshop Functions. The rules on outsourcing of banking
functions as shown in Appendix Q-37 shall be adopted in so far
as they are applicable to pawnshops.
Section 4199P General Provisions on Sanctions. Unless
otherwise provided, violations of any provision hereof may
subject a pawnshop, its proprietor, directors, trustees, partners,
president, managers or officers-in-charge, where applicable, to
sanctions which may include the following:
A.
B.
C.
D.
E.
F.
Warning/Reprimand;
Suspension of AOR/AO;
Suspension of branching privilege;
Disqualification of proprietor, partner, director, president,
manager or officer-in-charge;
Monetary penalty not to exceed P1,000.00 per violation,
per office, per day; and
Revocation of AOR/AO
33
The imposition of the above sanctions is without prejudice to
whatever legal action the BSP may pursue under Section 18 of
Presidential Decree No. 114 (Pawnshop Regulations Act), and
other applicable laws against the pawnshop, its proprietor,
partners, incorporators, stockholders, directors, president and
officers.
A pawnshop whose AOR/AO is suspended or revoked shall
be reported to the office of the mayor of the concerned city or
municipality, for appropriate action. It is understood that in case
the AOR of a head office is revoked, the AO of all branches of
said pawnshop are likewise revoked.
Any pawnshop that is found operating as a foreign
exchange dealer/money changer and/or remittance agent that
does not have a COR issued by the BSP for such activity is
considered operating such activities illegally and shall be
reported to the office of the mayor in accordance with the rules
above.
P A R T
II
BORROWING OPERATIONS
A. J. (RESERVED)
K. OTHER BORROWINGS
Section 4285P
SEC Registration of Borrowing.
Borrowing by any pawnshop through the issuance of any
instrument shall be subject to the registration provisions
of Section 8 of the Securities Regulation Code (SRC) and
the applicable implementing rules and regulations of the
Securities and Exchange Commission. While borrowing
from 19 individuals or less is exempt from the registration
requirement under Sec. 10 of the SRC, Rule 10-1 of the
SEC implementing rules and regulations still requires
SEC to be notified of the issuance of the debt instrument.
Section 4286P
Borrowing Constituting QuasiBanking Functions. Borrowing from twenty (20) or more
lenders for the purpose of relending or purchase of
receivables or other obligations constitutes quasibanking. A pawnshop cannot engage in quasi-banking
unless it meets the pre-qualification requirements under
the Manual of Regulations for Non-Bank Financial
Institutions (MORNBFI) - Quasi-Banks and obtains
authority or a separate license to engage in quasibanking from the BSP.
P A R T
III
LOANS AND INVESTMENTS

A. LOANS IN GENERAL
Section 4301P
Grant of Loans.
The following
regulations shall be observed in the grant of loans by
pawnshops.
4301P.1 General guidelines. A pawnshop shall
extend a loan only if such is secured by personal property
that could be physically delivered to the control and
possession of the pawnshop.
Before accepting articles as pawn, the pawnshop
must ascertain whether the pawner is the true owner of
the article offered as pawn. In the conduct of business, a
pawnshop shall be guided by the standard of diligence
that is expected of a good father of a family, ensuring
always that there is no ground to suspect that the article/s
offered as pawn was an object of robbery or theft.
4301P.2 Pawnshop Prohibitions.
Pawnshop
owners/managers/officers/directors/employees shall not:
a. Use pawned articles for themselves or allowing
employees to use said articles for any purpose without
the express consent or authority of the pawner unless
continued use is necessary to preserve the pawn;
b. Grant loans to minors or incompetent persons; or
c. Re-pledge/re-pawn the pawned article.
4301P.3 Know Your Pawner. Pawnshops who
transact with any pawner for the first time shall require
the pawner to present the original and submit a clear
copy of at least one (1) valid photo-bearing identification
document (ID) issued by an official authority.
The valid ID should indicate the address where the
pawner resides, otherwise, pawner shall be required to
present, together with the valid ID, a barangay
certification or a copy of a billing statement that indicates
the address where the pawner resides.
2
For this purpose, the term official authority shall
refer to any of the following:
(i) Government of the Republic of the Philippines;
(ii) its political subdivisions and instrumentalities;
(iii)
Government-owned
corporations (GOCCs); and
and/or
controlled
(iv) private entities or institutions registered with or

supervised or regulated either by the BSP or the SEC or
the Insurance Commission (IC).
Valid IDs include the following:
Passport, including those

governments
issued by foreign
Drivers License
Professional Regulation Commission (PRC) ID
National Bureau of Investigation (NBI) Clearance
Police Clearance
Postal ID
Voters ID
Barangay Certification
Government Service Insurance System (GSIS) eCard
Social Security System (SSS) Card
Senior Citizen Card
Overseas
Workers
(OWWA) ID
OFW ID
Seamans Book
Alien Certification of
Certificate of Registration
Government Office and GOCC ID, e.g., Armed

Forces of the Philippines (AFP ID), Home
Development Mutual Fund (HDMF ID)
Certification from the National Council for the

Welfare of Disabled Persons (NCWDP)
Department of Social Welfare and Development

(DSWD) Certification
Integrated Bar of the Philippines ID
Welfare
Administration
Registration/Immigrant
Company IDs issued by private entities or

institutions registered with or supervised or
regulated either by the BSP, SEC or IC
The foregoing shall be in addition to the customer

identification requirements under Rule 9.1.c of the
Revised Implementing Rules and Regulations (RIRRS)
of R.A. No. 9160, as amended (Anti-Money Laundering
Act), which requires pawnshop to obtain the following
minimum information/documents from pawners:
(1) Name;
(2) Present address;
(3) Permanent address;
(4) Date and place of birth;
(5) Nationality;
(6) Nature of work and name of employer or nature of
self-employment/business;
(7) Contact numbers; and
(8) Specimen signature.
A copy of the ID, barangay certificate and/or billing
statement shall be kept by pawnshops for convenience of
the pawner who continues to transact with the pawnshop
but said documents should be updated at least every
three (3) years.
Pawnshops shall post excerpts of the above
requirements conspicuously in its principal place of
business and branches. The poster (shown as Appendix
7) shall not be smaller than 8.5 x 11 inches.
Every pawnshop shall maintain records containing all
the information required under this Subsection and
Section 11 of Presidential Decree No. 114 for each of
their clients.
Section 4302P Loan Limit. Pawnshops may grant such
amount of loans as may be agreed upon between the
parties. The amount of loan shall in no case be less than
thirty percent (30%) of the appraised value of the security
offered, unless the pawner manifests in writing that he is
applying for a lesser amount. Pawnshops shall not
under-appraise the security offered for the loan to
circumvent the restriction prescribed by this Section.
Section 4303P Interest and Surcharges. The rate of
interest including surcharges on any loan or forbearance
4
of money extended by a pawnshop shall not be subject to
any ceiling. However, pursuant to a decision of the
Supreme Court (case of Medel, et al vs Court of Appeals,
GR No. 131622 dated 27 November 1998) the interest
rate shall not be iniquitous, unconscionable, or contrary to
morals, if not against the law as may be determined by
the Court.
No pawnshop shall collect interest on loans in
advance for a period longer than the original term agreed
upon as indicated in the pawn ticket.
4303P.1 Rate of interest in the absence of
stipulation. The rate of interest for a loan or forbearance
of money in the absence of an expressed contract as to
such rate of interest, shall be twelve percent (12%) per
annum.
4303P.2 Other Charges. In addition to interest,
pawnshops may impose a maximum service charge of
five pesos (P5.00), but in no case to exceed one percent
(1%) of the principal loan. No other charges, such as but
not limited to insurance premium for the safekeeping and
conservation of the pawned item, shall be collected.
4303P.3 Posting of Interest Rate and Other
Charges. Pawnshops shall post conspicuously in its
principal place of business and branches the interest rate
in percent, specifying therein if such interest rate is
yearly, monthly or daily, as well as the other charges, if
any, to be charged by the pawnshop. The poster shall
not be smaller than 8.5 x 11 inches.
Section 4304P (Reserved)
Section 4305P Past Due Accounts; Renewal. A loan
may be renewed for such amount and period as may be
agreed upon between the pawnshop and the pawner,
subject to the same conditions provided in this Part for
new loans.
No loan shall be renewed or its maturity date extended
unless a new pawn ticket as defined in Section 4102 shall
be issued indicating the new term of the loan agreed
upon by the pawnshop and the pawner.
4305P.1 Right of pawner to redeem pawn within
90 days from maturity. A pawner who fails to pay or
renew his loan with a pawnshop on the date it falls due
5
shall have ninety (90) days from the date of maturity of
the loan within which to redeem the pawn by paying the
principal amount of the loan plus the amount of interest
that shall have accrued thereon. The amount of interest
due and payable after the maturity date of the loan shall
be computed upon redemption based on the sum of the
principal loan and interest earned as of the date of
maturity. The procedures to be followed in case the
pawner fails to redeem his pawn are prescribed in Sec.
4324P.
If the maturity date of the loan or expiry date of
redemption period falls on the pawnshops non-business
day, a regular holiday or a special non-working holiday in
the locality, then the maturity date of the loan or expiry
date of redemption period shall be on the next business
day.
If the pawnshop is closed on the maturity date of the
loan or expiry of the redemption period, with or without
prior notice to the pawner, then the maturity date of the
loan or expiry of redemption period shall be on the next
business day and the pawnshop shall not charge
additional interest or surcharge to the pawner.
If the pawnshop is closed due to a robbery, then the
maturity date of the pledge or expiry of redemption period
shall be on the next business day when the pawnshop
opens for business and the pawnshop shall not charge
additional interest or surcharge to the pawners.
Section 4306P Interest Accrual on Past Due Loans.
Interest income on past due loans arising from discount
amortization (and not from the contractual interest of the
account) shall be accrued as provided in PAS 39.
(Circular No. 494 dated 20 September 2005).
B. LOAN COLLATERAL/SECURITY
Section 4321P Acceptable Security and Safekeeping
of Pawns. Only personal property that is capable of
being physically delivered to the control and possession
of the pawnshop shall be accepted as security for loans.
Certain specified chattels, such as guns, knives, or
similar weapons, whose reception in pawn is expressly
6
prohibited by other laws, decrees, or regulations, shall not
be accepted by pawnshops as security for loans.
Except for bulky pawns, pawns shall be placed in a
tamper-proof sealed plastic envelop or bag which must
be kept inside the safe or concrete vault. Bulky pawns
may be placed outside the safe or vault but within the
pawnshop premises. All pawns, except those which are
kept inside the vault or safe, must be insured against fire.
Pawnshop owners shall be liable for any pawned item
lost or destroyed arising out of their negligence, fault,
delay in delivery or willful violation of the loan agreement.
Section 4322P Redemption of Pawns. A pawnshop
shall not release any pawn without first requiring the
pawner to present and surrender the corresponding pawn
ticket. If the pawn ticket was lost and could not be
presented or surrendered, the pawnshop shall require the
owner-pawner to execute and submit an affidavit of loss
and shall ascertain the identity of the pawner, to ensure
that the pawned item is released only to the ownerpawner.
The pawnshop shall return the pawn in the same
condition when they were first pawned by pawner, upon
full settlement of the loan.
Section 4323P Pawn Ticket. Pawnshops shall at the
time of the loan, deliver to each pawner a pawn ticket
which shall contain the following:
a. The business/registered name, address, telephone
number, tax identification number, business days and
hours, of the pawnshop. The business name indicated in
the pawn ticket shall be in accordance with the provision
of Section 4181P.2;
b. Name of pawner;
c. Pawners residential address;
d. Pawners contact number;
e. Date the loan was granted;
f. Amount of the principal loan and net proceeds;
g. Interest rate in percent, indicating if daily, monthly
or annually;
h. Interest in absolute amount;
7
i.
Service charge in amount;
j.
Penalty interest in percent, if any;
k. Appraised value of pawn;

l.
Period of maturity;
m. Description of the pawn;

n. Expiry date of the redemption period;
o. Signature
representative;
of
the
pawnshops
authorized
p. Signature or thumbmark of the pawner; and

q. ID presented.
No other document or instrument shall be used/issued
by a pawnshop for any loan granted by it to a
pawner/borrower.
4323P.1 Stipulations in Pawn Ticket. The contents
of the standard pawn ticket, prescribed for pawnshops
pursuant to the requirements of P.D. No. 114, and the
Standard Terms and Conditions thereof, are in
Appendices P-4 (FRONT) and P-4a (BACK).
Additional stipulations/ information enumerated under
Appendix P-4b, which pawnshops may wish to
incorporate in their pawn tickets, may be included without
prior approval from the BSP.
The font size for the stipulations at the back of the
pawn ticket shall not be smaller than Arial Narrow 8.
Additional stipulations which may be included at the back
of the pawn ticket shall also be printed in the prescribed
font size.
Pawn ticket shall not be smaller than 8 inches x 5
inches. The size of the pawn ticket may have to be larger
to accommodate additional stipulations that should also
be printed not smaller than Arial Narrow 8.
Pawn tickets shall at least be in duplicate. The first
copy shall contain the word Original which shall be
given to the pawner when the loan is granted and
surrendered upon redemption of pawn, while the second
copy shall be marked Duplicate which shall remain on
file with the pawnshop.
Pawn tickets shall be serially numbered.
8
Pawnshops may choose the color or quality of the
paper used as pawn ticket.
Transitory Provision. A pawnshop may use pawn
tickets bearing a rubber-stamp of its registered and trade
name on the pawn ticket until 30 June 2011. Starting 1
July 2011, all pawnshops shall only use pre-printed pawn
tickets in accordance with these rules.
Section 4324P Notices to the Pawner and to the
Public. a. On or before the expiration of the ninety (90)
day grace period, a pawnshop shall notify a pawner in
writing that the pawn shall be sold, or otherwise be
disposed of, in the event the pawner fails to redeem the
pawn within the ninety (90)-day grace period, specifying
in the same notification the date, hour, and place where
the sale shall take place.
The notice shall be sent through the mode of
notification agreed upon by the pawner and the
pawnshop as indicated at the back of the pawn ticket at
the time the loan was granted which may be through
text/SMS message, electronic mail, fax or by mail to the
residential address.
If sent through text/SMS, the
pawnshop shall obtain a report from the appropriate
Telecommunications Company (TELCO) indicating that a
text/SMS message was sent to the mobile phone number
given by the pawner. The report of the TELCO shall be
made available to BSP upon request.
In case no specific mode of notification is agreed upon
and indicated at the back of the pawn ticket, the mode of
notification shall be by ordinary mail. Pawnshops shall
exert reasonable effort to notify the pawner and put on
record if it is unable to do so. Pawnshops shall maintain
proof of the notice to pawner.
b. If upon the expiration of the ninety (90)-day grace
period, the pawner fails to redeem his pawn, the
pawnshop may sell or dispose of the pawn only after it
has published a notice of public auction of unredeemed
articles held as security for loans in at least two (2)
newspapers circulated in the city or municipality where
the pawnshop has its place of business, six (6) days prior
to the date set for the public auction.
The notice shall be in English, and in either Filipino or
the local dialect and shall contain the following:
9
a. Name and address of the owner of the pawnshop;
and
b. Date, hour and place of the auction sale.
In remote areas where newspapers are neither
published nor circulated, the publication requirement shall
be complied with by posting notices at the city hall or
municipal building of the city or municipality and in two (2)
other conspicuous public places where the pawnshop has
its place of business.
4324P.1 Poster.
Pawnshops shall post
conspicuously at the principal place of business and
branches an abstract (Appendix P-8) which shall not be
smaller than 8.5 x 11 inches.
Section 4325P
Public Auction of Pawns.
No
pawnshop shall sell or otherwise dispose of any article or
thing received as security for a loan except by public
auction at any of the following places:
a. Pawnshops place of business; or
b. Any public place within the territorial limits of the
municipality or city where the pawnshop conducts its
business.
The auction shall be conducted under the control and
direction of a duly licensed auctioneer. In cities and
municipalities where there is no duly licensed auctioneer,
the public auction may be conducted by a notary public of
the city or province where the pawnshop has its place of
business.
The Auction Sheet/Book containing entries of
auctioned pawned articles duly signed by the auctioneer
or notary public under oath shall be maintained by the
pawnshop.
4325P.1 Auction of pawned items covered by a
single pawn ticket. If one pawn ticket covers two or
more pledged articles, and only one of the articles was
sold during the auction, the pawnshop shall allocate the
loan value for each article based on their appraised
value.
C. J. (RESERVED)
10
K. MISCELLANEOUS
Section 4399P General Provisions on Sanctions.
Unless otherwise provided, violations of any provision
hereof may subject a pawnshop, its proprietor, directors,
trustees, partners, president, managers or officers-incharge, where applicable, to sanctions which may include
the following:
a.
b.
c.
d.
e.
f.
Warning/reprimand;
Suspension of AOR/AO;
Suspension of branching privilege;
Disqualification of proprietor, partner, director,
president, manager or officer-in-charge;
Monetary penalty not to exceed P1,000.00 per
violation, per office, per day; and
Revocation of AOR/AO
The imposition of the above sanctions is without

prejudice to whatever legal action the BSP may pursue
under Section 18 of Presidential Decree No. 114
(Pawnshop Regulations Act), and other applicable laws
against the pawnshop, its proprietor, partners,
incorporators, stockholders, directors, president and
officers.
A pawnshop whose AOR/AO is suspended or revoked
shall be reported to the Office of the Mayor of the
concerned city or municipality, for appropriate action. It is
understood that in case the AOR of a head office is
revoked, the AO of all branches of said pawnshop are
likewise revoked.
Any pawnshop that is found operating as a foreign
exchange dealer/money changer and/or remittance agent
that does not have a COR issued by the BSP for such
activity is considered operating such activities illegally
and shall be reported to the office of the mayor in
accordance with the rules above.
P A R T
IV
P A R T
P A R T
VI
MISCELLANEOUS
A. (RESERVED)
Section 4601P 4650P (Reserved)
B. SUNDRY PROVISIONS
Section 4651P Visitatorial Powers of the Bangko
Sentral. Pursuant to Section 17 of PD No. 114 granting
the BSP visitatorial powers, the head of the appropriate
supervising and examining department of the BSP and
his duly designated representatives are authorized to
conduct an examination, spot-checking, inspection, or
investigation of the books, records, business affairs,
administration, and financial condition of any pawnshop,
whenever said official deems it necessary for the effective
implementation of PD No. 114, and other pertinent rules
and regulations. Said official and his duly designated
representatives may administer oaths to any director,
officer, or employee of the pawnshop.
For purposes of this Section and its Subsections, the
words examination, spot-checking, inspection and
investigation, may be used interchangeably.
If, upon such examination, the official or deputies shall
establish that the pawnshop is violating or is not
complying with the requirements of PD No. 114 and of
the provisions of other pertinent rules and regulations,
said official shall immediately inform the Monetary Board
of his findings and recommendations, and the Monetary
Board shall take appropriate action to stop such violation
or non-compliance, and punish the pawnshop and/or the
persons responsible.
Any business establishment which represents itself as
a pawnshop and/or regularly grants loans against
pawns/collaterals
physically
delivered
to
the
establishment or is suspected to be a pawnshop may be
subject to the visitatorial authority of the BSP to
determine whether the establishment is engaged in the
business of a pawnshop or in pawnbrokering.
Any establishment that is found to be operating as a
pawnshop illegally shall be reported to the office of the
city or municipal mayor where the establishment is
2
located, for appropriate action, without prejudice to
whatever legal action that the BSP may take against the
owners and operators of the establishment.
4651P.1 Refusal to Permit Examination. Refusal
to permit examination shall mean any act or omission
which impedes, delays or obstructs the duly authorized
BSP officer/examiner/employee from conducting an
examination, including the act of refusing to accept or
honor a letter of authority to examine presented by any
officer/examiner/employee of the BSP and the act of
refusing to present pawnshops vital records referred to in
Section 4102 upon request by any officer/
examiner/employee of the BSP.
Sections 4652P - 4656P (Reserved)
Sec. 4657P Batas Pambansa Blg. 344 An Act to
Enhance the Mobility Of Disabled Persons by
Requiring Certain Buildings, Institutions, Establishments and Public Utilities to Install Facilities and
Other Devices. In order to promote the realization of the
rights of disabled persons to participate fully in the social
life and the development of the societies in which they
live and the enjoyment of the opportunities available to
other citizens, no license or permit for the construction,
repair or renovation of public and private buildings for
public use, educational institutions, airports, sports and
recreation centers and complexes, shopping centers or
establishments, public parking places, workplaces, public
utilities, shall be granted or issued unless the owner or
operator thereof shall install and incorporate in such
building, establishment or public utility, such architectural
facilities or structural features as shall reasonably
enhance the mobility of disabled persons such as
sidewalks, ramps, railings and the like. If feasible, all such
existing buildings, institutions, establishments, or public
utilities may be renovated or altered to enable the
disabled persons to have access to them.
Section 4691P Anti-Money Laundering Regulations.
Banks, offshore banking units (OBUs), quasi-banks
(QBs), trust entities, non-stock savings and loan
3
associations (NSSLAs), pawnshops, and all other
institutions, including their subsidiaries and affiliates
supervised and/or regulated by the BSP, otherwise
known as covered institutions shall comply with the
provisions of R.A. No. 9160, as amended, otherwise
known as the Anti-Money Laundering Act of 2001 and
its Implementing Rules and Regulations (IRRs) in
Appendix P-6 and those in Appendix P-5.
4691P.1 Required Seminar/Training. Pawnshop
personnel directly involved in pawnshop operations shall
attend a seminar on the requirements of the anti-money
laundering law, particularly on customer identification,
record keeping and reporting of covered and suspicious
transactions, to be conducted by the Anti-Money
Laundering Council (AMLC) or by any of its recognized
accredited service providers. The provisions of this
subsection shall also apply to officer(s) of the branch(es).
The officer(s) in-charge and the personnel who have
attended the required seminar may echo the said training
to all employees within thirty (30) calendar days from
such attendance or as new employees are hired.
In case of pawnshops belonging to the same group of
related companies, the training/seminars may be
cascaded to other pawnshops within the group, subject to
the following conditions:
1) training officers shall have attended the AMLA
lectures conducted by the AMLC;
2) lecture materials to be used by training officers
should be approved by the AML Examination Group of
the BSP; and
3) training officers shall submit to the BSP, the list,
under oath, of pawnshop personnel who have attended
the lectures.
4691P.2 Anti-Money Laundering Program. Every
pawnshop is required to formulate an anti- money
laundering prevention program as prescribed in Appendix
5.

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TABLE OF CONTENTS

PART ONE ORGANIZATION, MANAGEMENT AND ADMINISTRATION

4161P.3 Accounting for Pawnshops Premises; Other Fixed Assets

PART TWO BORROWING OPERATIONS

PART THREE LOANS AND INVESTMENTS

PART FOUR RESERVED

ORGANIZATION, MANAGEMENT AND

A Certificate of Registration (COR) of business name from

Articles of Partnership/Incorporation and by-laws duly

City/municipal license/business license/ mayors permit for

Personal data sheet (using BSP-prescribed form for

Such other documents that may be required by the BSP

No application for registration shall be accepted from a

4101P.6 Processing and Annual Fees. Every pawnshop

Pawnshop shall refer to a person or entity engaged in the

Pawner shall refer to the borrower of a pawnshop.

Pawnee shall refer to the pawnshop or pawnbroker.

Pawn is the personal property delivered by the pawner to

Pawn ticket is the pawnbrokers receipt for a pawn and

Property shall include only such personal property which

Voting stock is that portion of the authorized capital which

Vital records shall consist of the Loans Extended/ Paid

Bulky pawns shall refer to household appliances, office

Premises shall refer to the area where the pawnshop

Sections 4103P 4105P (Reserved)

Tangible properties, including real estate and

A combination of cash and tangible properties.

Tangible properties shall be limited to those that are

Bonding of accountable officers/ employees with

Equivalent self-insurance mechanism acceptable to BSP.

Section 4142P Definitions, Qualifications and Duties and

Proprietor is the person named in the Certificate of

Partners are the persons named in the articles of

Incorporators are those mentioned as such in the articles

Directors Directors shall include:

directors who are named as such in the articles of

directors duly elected in subsequent meetings of the

those elected to fill vacancies in the board of

The number of members of the board of directors,

Officers are those persons whose duties as such are

4142P.2 General Qualifications of a proprietor, partner,

Must have undergone a briefing on pawnshop regulations

Must have undergone a briefing on the Anti-Money

Must not be included in the BSP Watchlist; and

Must not possess any derogatory information from the

Directors/trustees/officers/employees permanently disqualified

Directors/officers/employees disqualified by the Monetary

Delinquency in the payment of obligations means

Obligations shall include all borrowings from any FI

A director/trustee or officer for his own account

The spouse or child under the parental authority

iii. Any person whose borrowings or loan proceeds

A corporation, association or firm wholly-owned

This disqualification shall be in effect as long as the

The disqualification for directors mentioned in Subsection

Except as may be authorized by the Monetary Board or

4143P.3 Disqualification Procedures

The board of directors/trustees and management of every

On the basis of knowledge and evidence on the existence