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4172P – Separation of Pawnshop Business from Other Business. 33. 4173P – 4180P ..... either by personal service or through registered mail with registry return ...

TABLE OF CONTENTS PART I – 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 – Anti-Money Laundering Seminar/Training 4101P.6 – BSP Processing and Registration Fees 4101P.7 – Renewal of BSP Registration of Pawnshop Head Office and Branches 4101P.8 – Documentary Requirements to Renew BSP Registration 4102P – Definition of terms 4103P – 4105P (Reserved) B. CAPITALIZATION 4106P – Capital of pawnshops 4106P.1- Sanctions 4107P – Prudential Capital Ratio 4107P.1 – Sanctions 4108P – 4110P (Reserved) C. to F. (RESERVED) 4111P – 4140P (Reserved) G. PROPRIETOR, PARTNERS, DIRECTORS, OFFICERS AND EMPLOYEES 4141P- Bonding of Officers and Employees 4141P.1 – Sanctions 4142P – Definitions, Qualifications and Responsibilities and Duties of Proprietor/ Partners/Directors/Officers 4142P.1 – Definitions 4142P.2 – General Qualifications of a proprietor/partner/incorporator/director/officer 4142P.3 – Qualifications of a Director 4143P – Disqualification of Directors and Officers 4143P.1 – Persons disqualified from becoming directors 4143P.2 – Persons disqualified from becoming 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/managing partner 4144 – 4150P (Reserved) H. BRANCH OFFICES 4151P – Establishment of Branch Offices 4151P.1 – Definition of Branch Office 4151P.2 – Operations and functions 4151P.3 – Basis of Establishment 4151P.4 – Documentary Requirements 4151P.5 – Processing and Registration Fees 4151P.6 – Renewal of BSP Registration 4151P.7 – Date of Opening for Business 4151P.8 – Pawnshop branches operating illegally 4152P – 4155P (Reserved) I. BUSINESS DAYS AND HOURS 4156P – Business Days and Hours 4157P – 4160P (Reserved)

Page No. BSP 1 1 1 2 2 4 4 4 5 6 7 7 7 8

8 9 9 9 10 10 10 11 13 13 16 17 19 19 19 19 20 20 21 21 21 21 22

J. RECORDS AND REPORTS 4161P – Records 4161P.1 – Uniform System of Accounts 4161P.2 - Philippine Financial Reporting Standards/Philippine Accounting Standards 4161P.3 - Accounting for Pawnshops Premises; Other Fixed Assets 4161P.4 - Retention of Records 4162P – Reports 4162P.1 - Categories and signatories of reports 4162P.2 - Manner of filing 4162P.3 – Sanctions 4163P – Report on Crimes and Losses 4164P – Audited Financial Statements/Annual Report of Pawnshops 4164P.1 - Financial audit 4164P.2 - Disclosure of external auditor’s adverse findings to the Bangko Sentral 4164P.3 – Sanction 4165P – General Information Sheet 4166P – 4170P (Reserved) K. INTERNAL CONTROL 4171P – Internal Control System 4171P.1 - Proper accounting records 4171P.2 - Number control 4171P.3 - Safekeeping of Pawns and 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 Signage, Pawn Tickets and Other Forms 4181P.3 – Sanctions 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 4183P.2 - Delisting of Pawnshops/Involuntary Closure 4183P.3 - Other grounds for delisting 4184P – Transfer of Ownership 4184P.1 - Requirements for Transfer of Ownership 4184P.2 – Processing and Registration Fees 4185P – Processing Fee for Replacement of AOR/AO 4186P – 4189P (Reserved) 4190P – Duties and Responsibilities of Pawnshops and their Directors/Officers in Cases of Outsourcing of Pawnshop Functions 4191P – 4198P (Reserved) 4199P – General Provision on Sanctions

22 23 23 25 25 25 25 26 26 30 30 30 32 31 31 32 32 32 32 33 33 34 34 35 36 36 37 37 38 38 38 39 40 40 41 41 41 41

PART II – BORROWING OPERATIONS A. TO J. (RESERVED) 4201P – 4284P (Reserved) K. OTHER BORROWINGS 4285P – SEC Registration of Borrowing 4286P – Borrowing Constituting Quasi-Banking Functions 4287P – 4298P (Reserved) 4299P – General Provision on Sanctions

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PART III –LOANS AND INVESTMENTS A. LOANS IN GENERAL 4301P – Grant of Loans 4301P.1 - General guidelines 4301P.2 - Prohibitions 4301P.3 - Know your pawner 4301P.4 – Sanctions 4302P – Loan Limit 4302P.1 – Sanctions 4303P – Interest and Other Charges 4303P.1 - Rate of interest in the absence of stipulation 4303P.2 – Other Charges 4303P.3 - Posting of Interest Rate and Other Charges 4303P.4 – Sanctions 4304P – Reserved 4305P – Past Due Accounts; Renewal 4305P.1 – Right of pawner to redeem pawn within 90 days from maturity 4305P.2 - Sanctions 4306P – Interest Accrual on Past Due Loans 4307P – 4320P (Reserved) B. LOAN COLLATERAL/SECURITY 4321P – Kinds of Security 4322P – Redemption of Pawns 4322P.1 Sanctions 4323P – Pawn Ticket 4323P.1 Additional Regulations on Pawn Ticket 4323P.2 Sanctions 4324P – Reminder to Pawner; Notice to the Public

4324P.1 – Poster 4324P.2 – Sanctions 4325P – Public Auction of Pawns 4325P.1 - Auction of pawned items covered by a single pawn ticket 4326P – 4335P (Reserved) C. TO J. (RESERVED) 4336P – 4395P (Reserved) K. MISCELLANEOUS 4396P – 4398P (Reserved) 4399P – General Provision on Sanctions

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PART IV – RESERVED 4401P – 4499P (Reserved) PART V - RESERVED 4501P – 4599P (Reserved) PART VI – MISCELLANEOUS A. (RESERVED) 4601P – 4650P (Reserved) B. SUNDRY PROVISIONS 4651P – Visitatorial Powers of the Bangko Sentral

1 1

4651P.1- Refusal to Permit Examination 4651P.2 – Sanctions 4652P – 4656P (Reserved)

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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 4658P – 4690 (Reserved) 4691P - Anti-Money Laundering Regulations 4691P.1 - Required Seminar/Training 4691P.2 - Anti-Money Laundering Program 4691P.3 – 4691P.8 (Reserved) 4691P.9 - Sanctions and penalties 4692P – 4698P (Reserved) 4699P – Administrative Sanctions

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3 3 4 4 4

SCHEDULE OF APPENDICES Appendix No.

Title

Appendix P-1

Chart of Accounts and Description of Loan Register of Pawnshops

Appendix P-2

List of Reports Required from Pawnshops

Appendix P-2-a

Reporting Guidelines on Crimes/Losses

Appendix P-3

Guidelines on Prescribed Signatory Authorization

Appendix P-3-a

Format of Resolution for Signatories of Category A-1 Reports

Appendix P-3-b

Format of Resolution for Signatories of Category A-2 Reports

Appendix P-3-c

Format of Resolution for Signatories of Categories A-3 and B Reports

Appendix P-4

Standard Pawn Ticket

Appendix P-4-a

Format of Statement of Understanding on Pawnshop Transaction

Appendix P-4-b

Standard Additional Stipulations in Pawn Tickets

Appendix P-4-c

Stipulations Not Allowed in Standard Pawn Tickets

Appendix P-5

Anti-Money Laundering Regulations

Appendix P-5-a

Format of Certification of Compliance with Anti- Money Laundering Regulations

Appendix P-5-b

AMLC Resolution No. 292 : Rules on Submission of Covered Transaction Reports and Suspicious Transaction Reports by Covered Institutions

Appendix P-6

Revised Implementing Rules and Regulations of R.A. No. 9160, as Amended by R. A. 9194

Appendix P-7

Format of Poster on “Know-Your-Pawner” Policy

Appendix P-8

Format of Poster on Abstract of “Sections 13 and 14 of PD 114”

Reports

Signatories

and

1

P A R T

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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 P.D. 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 nonFilipino 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.

2 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 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:

3 a. A Certificate of Registration (COR) of business name from the DTI, in case of a sole proprietorship; b. Articles of Partnership/Incorporation and bylaws 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/ mayor’s permit for the current period; d. Personal data sheet (using BSP-prescribed form) with passport size picture duly accomplished by the proprietor or partners or incorporators, directors, officers and individual stockholders owning 10% or more of voting stock; 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.

4 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. §4101P.5 Anti-Money Laundering Seminar/ Training. As a prerequisite for the issuance by the BSP of the AOR, the officer(s) as well as the personnel directly involved in pawnshop operations shall submit proof that he/they have attended a seminar on the Anti-Money Laundering Act as prescribed in Subsection 4691P.1. §4101P.6 BSP Processing and Registration Fees. A non-refundable processing fee in the amount of P1,000.00 shall be collected from a person or entity applying to register a pawnshop upon completion of the documentary requirements in Subsection 4101P.4. In addition to the processing fee, P3,000.00 shall be collected every pawnshop unit as registration fee which shall be valid for a period of 3 years. §4101P.7 Renewal of BSP Registration of Pawnshop Head Office and Branches. The registration with BSP of a pawnshop head office and each of its branches, if any, shall be valid for a period of three (3) years from the date of issuance of the Acknowledgement of Registration (AOR) of a pawnshop head office and Authority to Operate (AO) of a pawnshop branch. Every pawnshop shall renew its AOR and/or AO after three (3) years on the anniversary month when it was originally registered and a renewal fee of P3,000.00 shall be collected for each pawnshop office. A pawnshop that renews its AOR and/or AO after the prescribed period of renewal shall pay, in addition to the P3,000.00 renewal fee, a fine of P500.00 for each pawnshop office.

5 A pawnshop that fails to renew its AOR and/or AO within six (6) months after the anniversary month shall render the AOR and/or AO automatically cancelled as provided in Subsection 4183P.3. Pawnshops established prior to the effectivity of these rules shall renew the BSP AOR of its head office and/or AO of branches not later than date shown in the following schedule: Number of Offices First 25 offices 26th to 50th offices 51st to 75th offices 76th to 100th offices 101st onward

Deadline for Renewal 31 March 2010 30 June 2010 30 September 2010 31 December 2010 30 June 2011

Pawnshops with over 100 offices may spread the renewal of their AOR and/or AO as may be arranged with the BSP. Renewal(s) made after the above deadlines or after the dates arranged with the BSP shall be subject to a fine of P500.00 for each pawnshop office. Subsequent renewals shall be made after three (3) years based on the anniversary month of the renewal in the preceding paragraph. §4101P.8 Documentary requirements to renew BSP registration. A pawnshop shall submit an Application for the renewal of its AOR and/or AO which Application shall be accompanied by the following documents: a. City/municipal license/business license/ mayor’s permit for the current period; b. Unexpired registration of business name with DTI, in the case of a sole proprietorship; c. Updated Personal data sheet (using BSPprescribed form) with passport size picture duly accomplished by the proprietor or partners or incorporators, directors, officers, individual stockholders owning 10% or more of voting stock and branch managers or officers-in-charge, as may be applicable; and d. Such other documents that may be required by the BSP that are enumerated in a list attached to the Application for Renewal of AOR/AO.

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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 pawnbroker.

refer

to

the

pawnshop

or

d. Pawn is the personal property delivered by the pawner to the pawnee as security for a loan, e. Pawn ticket is the pawnbroker’s 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 incorporation/copartnership, 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 pawnshop’s location.

Sections 4103P – 4105P (Reserved)

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B. CAPITALIZATION Section 4106P Capital of Pawnshops. Every pawnshop shall have a minimum paid-in capital of P100,000. A pawnshop’s 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 arm’s 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%). §4106P.1 Sanctions. The following sanctions shall be imposed on pawnshops that fail to comply with the minimum paid-in capital: a. Suspension of branching privilege; or b. Cancellation of BSP AOR as a pawnshop.

Section 4107P Prudential Capital Ratio. The minimum capital ratio of a pawnshop, expressed as a percentage of total capital 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.

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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 Sanctions. 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 buildup program for a period not to exceed one (1) year from date of undertaking. The following sanctions shall be imposed on any pawnshop that fails to submit a Letter of Undertaking or implement the Letter of Undertaking: a. Suspension of branching privileges; or b. Revocation of BSP Registration as a pawnshop.

Sections 4108P – 4110P (Reserved)

C. to F. (RESERVED) Sections 4111P – 4140P (Reserved)

G. PROPRIETOR/PARTNERS/DIRECTORS, OFFICERS AND EMPLOYEES Section 4141P Bonding of Officers and Employees. Accountable officers and employees of pawnshops, especially those who have access to pawned articles, shall be required to post bonds with reputable insurance/surety companies accredited by the Insurance Commissioner.

9 §4141P.1 Sanctions. A pawnshop that fails to post bonds for its accountable officers and employees shall be subject to the following sanctions: a. Warning for the first three (3) offense, whether incurred at the main office or branch, if the pawnshop has any; b. For succeeding offenses, fine of P500.00 per day of non-compliance per officer/employee, from the time the pawnshop was informed of the violation until such time that the pawnshop shall have secured a bond.

Section 4142P Definitions, Qualifications and Responsibilities and Duties of Proprietor/Partners/ Incorporators/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 license and mayor’s 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 pawnshop’s 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.

10 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. §4142P.2 General Qualifications of a proprietor, partner, incorporator, director, officer including branch manager or officer-in-charge. Any person can be a proprietor, partner, incorporator, director, officer, branch manager or officer-in-charge of a pawnshop 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 of directors and officers; and d. Must not possess any derogatory information from the National Bureau of Investigation (NBI) and the Barangay where the person resides and where the pawnshop conducts business. The NBI clearance and Barangay clearance shall be submitted pursuant to Subsections 4101P.4 and 4151P.4. Proprietors, partners, stockholders, directors, officers including branch managers or officers-in-charge of pawnshops established prior to (indicate the date of effectivity of these rules) shall submit the NBI and Barangay clearances when the pawnshops apply for the renewal of their BSP AOR and/or AO as prescribed in Subsection 4101P.8. §4142P.3 Qualifications of a director. In addition to the requirements of Subsection 4142P.2 a, c and d above, a director must have attended a special seminar on corporate governance conducted by a service provider accredited by the SEC or BSP.

Section 4143P Disqualification of Directors and Officers. The following regulations shall govern the disqualification of pawnshop directors and officers.

11 §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 the court for offenses involving dishonesty or breach of trust such as estafa, embezzlement, extortion, forgery, malversation, swindling and theft; (2) Persons who have been convicted by final judgment of the court for violation of banking laws and/or relevant laws of other financial institutions (FIs) under the supervisory and regulatory authority of the BSP; (3) Persons who have been judicially declared insolvent, spendthrift or incapacitated to contract; or (4) Directors/trustees, officers of closed institutions under the supervisory and regulatory authority of the BSP who were responsible for such institutions’ closure as determined by the Monetary Board. 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 to the appropriate department of the SES when required pursuant to a provision of law or a circular, memorandum or 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. The disqualification applies for purposes of the succeeding election; (3) Persons who are delinquent in the payment of their obligations as defined hereunder:

12 (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 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 convicted for offenses involving dishonesty, breach of trust or violation of banking laws and/or relevant laws of other FIs under the supervision of the BSP 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 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;

13 (7) Persons dismissed from employment for cause. 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, or after the lapse of five (5) years from the time they were officially advised by the appropriate department of the SES of their disqualification; (8) Those under preventive suspension; and (9) Persons with derogatory records with the NBI, court, police Interpol and monetary authority (central bank) of other countries (for foreign directors/trustees and officers) involving violation of any law, rule or regulation of the Government or any of its instrumentalities adversely affecting the integrity and/or ability to discharge the duties of a director or officer. This disqualification applies until they have cleared themselves of involvement in the alleged irregularity. (As amended by Circular No. 584 dated 28 September 2007) §4143P.2 Persons disqualified from becoming 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 vice-president 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

14 a. The board of directors and management of every pawnshop shall be responsible for determining the existence of the ground for disqualification of the pawnshop’s directors/officer or employee and for reporting the same to the BSP. While the concerned pawnshop 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 pawnshop director/ 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 of any of the grounds for disqualification mentioned in Subsections 4143P.1 and 4143P.2, the director 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/officer concerned, the appropriate department of SES shall proceed to evaluate the case. The director/officer concerned shall be afforded to defend/clear himself/herself. d. If no reply has been received from the director/ 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 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.

15 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 Office of Special Investigation (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 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. 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/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/officer concerned does not warrant disqualification. h. 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.

16 i. Upon approval by the Monetary Board, the concerned directors/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/officer 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. l. 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. (As amended by Circular No. 584 dated 28 September 2007) §4143P.4 Effect of possession of disqualifications. Directors/officers elected or appointed possessing any of the disqualifications as enumerated herein, shall vacate their respective positions immediately. §4143P.5 (Reserved)

17 §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. categorized as follows:

Watchlisting

shall

be

(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 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.

18 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. e. Delisting. All delistings shall be approved by the 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 disqualification;

lapse

of

the

specific

period

of

(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. (As amended by CL-2007-001 dated 04 January 2007 and CL-2006-046 dated 21 December 2006)

19 §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 as prescribed in Subsection 4183P.2.

Sections 4144P – 4150P (Reserved)

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 the appropriate supervising and examining department, an Authority to Operate (AO) such branch which shall be processed in accordance with the following guidelines. §4151P.1 Definition of Branch Office. 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.

20

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 office’s 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 an unpaid penalty assessed by the BSP; c. has not complied with the required prudential capital ratio as prescribed in Section 4107P; d. has not complied with the required renewal of BSP AOR and/or AO as prescribed in § 4101P.7; and e. 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 BSPprescribed 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: 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. Information on branch location, facilities (such as vault) and insurance coverage thereon; d. City/municipal license/business license/mayor’s permit from the city or municipality where the pawnshop branch is to be established; e. Personal data sheet (using BSP-prescribed form) with passport size picture duly accomplished by the proposed branch manager or officer-in-charge; and

21 f. 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 Registration Fees. A non-refundable processing fee of P = 1,000.00 shall be collected from a person or entity applying to establish a pawnshop branch upon completion of the documentary requirements in Subsection 4151P.4. In addition to the processing fee, P3,000.00 shall be collected from such person or entity as registration fee which is valid for a period of 3 years. §4151P.6 Renewal of BSP Registration. Every branch of a pawnshop shall be subject to the provisions of Subsection 4101P.7 on renewal of BSP Registration. §4151P.7 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.8 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 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 – 4155P (Reserved)

22

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. Failure to display the original copy of the AOR/AO and the business days and hours shall subject the pawnshop to the following administrative sanctions: a. Warning for the first three (3) offences of the pawnshop main office and/or its branches, if there is any; b. Penalty of P300.00 each for the succeeding three (3) offenses; and c. Cancellation of the AOR or AO, for a subsequent offense. Once the AOR of the main office is cancelled, the Authority to Operate (AO) of the branch(es) is/are likewise cancelled. Pawnshops shall only transact business in the pawnshops’ registered place of business or premises of the head office and branches, if any. Transacting business outside the pawnshops’ registered place of business or premises shall be a ground for cancellation of pawnshop’s AOR or AO, as the case may be.

Sections 4157P – 4160P (Reserved)

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.

23 The records of original entry shall consist of pawn tickets, 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 the following information enumerated in Section 11 of P.D. No. 114, as well as the data required by the BSP: (a) name of the pawner; (b) amount of principal loan; (c) pawn ticket number; (d) signature of the pawner,. 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.

24 Pawnshops 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). 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 statements, 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.

25 §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”. (Circular No. 494 dated 20 September 2005) §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 backup 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 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, the penalty for which shall be the revocation/cancellation of the pawnshop’s BSP registration under Subsection 4651P.2.

Section 4162P Reports. Pawnshops shall submit to the appropriate department 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, by-laws or material document to the appropriate supervision and examination department of the BSP within fifteen (15) days following such change. §4162P.1 Categories and signatories of 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.

26 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 Sanctions a. 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 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.

27 (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 imposed on transactional offense/violation. b. Fine for submission of faulty report. Any pawnshop which submits a faulty report shall pay to the BSP a fine of P30 per calendar day which shall accrue beginning on the sixth business day from the day the written notice of faulty report is received by the pawnshop concerned until a correct report is submitted. c. Fine for willful delay in submission of reports. Pawnshops incurring willful delay in the submission of required reports shall pay a fine in accordance with the following schedule: I. For Categories A-1, A-2 and A-3 reportsPer calendar day of P 90 default until the report is filed II. For Category B reportsPer calendar day of P30 default until the report is filed

28 Delay or default shall start to run on the day following the last day required for the submission of reports. However, should the last day of filing fall on a nonworking day in the locality where the reporting pawnshop is situated, delay or default shall start to run on the day following the next working day. The due date/deadline for submission of reports to BSP as prescribed under Sec. 4162P governing the frequency and deadlines indicated in Appendix P-2 shall be automatically moved to the next business day whenever a half-day suspension of business operations in government offices is declared due to an emergency such as typhoon, floods, etc. For the purpose of establishing delay or default, the date of acknowledgment by the appropriate supervising and examining department of the BSP or the BSP Regional Offices/Units appearing on the copies of such reports filed or submitted or the date of mailing postmarked on the envelope or the date of registry or special delivery receipt, as the case may be, shall be considered as the date of filing. Delayed schedules or attachments and amendments shall be considered late reporting subject to the above penalties. d. Fine for making false statements. Any pawnshop which makes a false statement in any of its reports to the BSP or its authorized agents shall pay to the BSP a fine in accordance with the following schedule: (1) For the first and second offense, a fine payable on the business day following the receipt of BSP adviceP300.00 and P60.00 for every calendar day of delay in payment until the fine is fully paid. (2) For repeat violationsP600.00 and P120.00 for every calendar day of delay in payment until the fine is fully paid. (3) For persistent violationsSuspension, after due hearing, of the pawnshop's directors/officers/proprietor/managing partner Any false statement made in a previous report which was not immediately known but was discovered only in later reports shall constitute only one (1) violation. The penalty shall operate on the sixth working day counted from receipt of notice of submission of a false statement from the BSP or its authorized agents until a correct statement is submitted.

29 e. Manner of collection and payment of fines. A pawnshop shall be billed by the appropriate supervising and examining department of the BSP. The pawnshop shall thereupon remit the amount of the fine to the BSP through the appropriate supervising and examining department. Late payment of monetary penalty shall be subject to an additional charge of six percent (6%) per annum to be computed from the time said penalty becomes due and payable up to the time of actual payment. The penalty shall become due and payable fifteen (15) calendar days from receipt of the Statement of Account from BSP. Failure of a pawnshop to effect the settlement of the full amount of the fine within a period of fifteen (15) days from receipt of the bill shall subject it to other administrative sanctions and/or to the penal provisions of P.D. No. 114. f. Appeal to the Monetary Board. A one-time appeal or request for reconsideration on the monetary penalty approved by the Governor/MB to be imposed on the pawnshop, its directors and/or officers, in the case of a corporation; its partners, in the case of a partnership; its proprietor/owner, in the case of a sole-proprietorship, shall be allowed. The appeal shall be filed with the appropriate department of the Supervision and Examination Sector of the BSP within fifteen (15) calendar days from receipt of the Statement of Account/billing letter. The appropriate department of SES shall evaluate the appeal or request for reconsideration of the entity/individual and make recommendations thereon within thirty (30) calendar days from receipt thereof. The appeal or request for reconsideration of the monetary penalty approved by the Governor/MB shall be elevated to the MB for resolution/decision. The running of the monetary penalty period in case of continuing penalty and/or the period for computing additional charge shall be interrupted from the time the appeal or request for reconsideration was received by the appropriate department of the SES up to the time that the notice of the MB decision was received by the entity/individual concerned. The imposition of the foregoing penalties shall be without prejudice to imposition of the other sanctions pursuant to Section 17 and 18 of P.D. No. 114.

30 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 fire/robbery incident;

investigation

of

the

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.

Section 4164P Audited Financial Statements/Annual Report of Pawnshops. The following rules shall govern the submission of audited financial statements (annual reports) by pawnshops. §4164P.1 Financial audit. Every pawnshop shall cause an annual financial audit and a report of such audit shall be made and submitted to the appropriate supervising and examining department of the BSP not later than 30 June following the reference calendar year. The financial audit of a pawnshop with total consolidated assets of at least P = 50 million shall be conducted by an external auditor who is in the list of accredited external auditors of the Securities and Exchange Commission or the Office of the Insurance Commissioner (OIC) or in the list of BSP-selected external auditors. The proprietor, partners or the board of directors, in a regular or special meeting, (in the case of a corporation), shall consider and act on the financial audit report. A copy of the action/s taken on the report by the proprietor/partner, while in the case of a corporation, its board resolution which shall show, among other things, the names of the directors who are present and absent, shall be included in the financial audit report to be submitted to the BSP every 30 June.

31 The proprietor, partner or board of directors shall also consider and act on the Letter of Comments (LOC) submitted by the external auditor. A copy of the LOC together with the action/s taken on the findings and recommendations by the proprietor/ partners, while in case of corporation, its board resolution which shall show the names of the directors present and absent shall be made available to the BSP upon request. §4164P.2 Disclosure of external auditor’s adverse findings to the Bangko Sentral a. Findings to be disclosed. Pawnshops shall require their external auditors to report to the BSP any matter adversely affecting the condition or soundness of the pawnshop, such as, but not limited to: (1) Any serious irregularity, including those involving fraud or dishonesty, that may jeopardize the interest of the public; (2) Losses incurred which substantially reduce the capital funds of the pawnshop; (3) Capital deficiency as prescribed in Sections 4106P and 4107P; and (4) Inability of the auditor to confirm the physical presence of pawned items. The disclosure of information by the external auditor to the BSP shall not be a ground for civil, criminal or disciplinary proceedings against the former. Pawnshop management shall be present during discussions or at least be informed of the adverse findings in order to preserve the concerns of the supervisory authority and external auditors regarding the confidentiality of information. §4164P.3 Sanction. An auditing firm or external auditor who fails to report to the BSP any matter adversely affecting the condition or soundness of the pawnshop shall be referred to the SEC, OIC or to the appropriate supervising department of the BSP, as the case may be, for appropriate action. Section 4165P General Information Sheet. Pawnshops organized as a corporation shall submit to the Supervisory Data Center of the BSP a copy of the general information sheet duly stamped received by the SEC five (5) days from submission to SEC.

32 Sections 4166P - 4170P (Reserved)

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. §4171P.2 Number control. The following are the forms, instruments and accounts that shall be number-controlled: (1) Pawn tickets; (2) Official receipts; and (3) Expense vouchers. §4171P.3 Safekeeping of Pawns and Records and Insurance of Premises. Except for bulky pawns, all pawns shall be placed inside a tamper-proof sealed envelope or plastic bag and must be kept inside the safe or concrete vault. Bulky pawns may be placed outside the safe or vault but within the pawnshop premises. Vital records for the current year must be kept inside the safe or vault when not in use. Other pawnshop records/documents may be placed in filing cabinets/ shelves outside the vault or safe but within the pawnshop premises.

33 For this purpose, a pawnshop’s 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. The door shall be equipped with a combination lock and the body shall consist of steel with an ultimate tensile strength of 50,000 pounds per square inch or its equivalent in the metric system. Vital records kept in electronic media including backup 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, furniture, fixtures and equipment and all pawns of the pawnshops, except those which are kept inside a fireproof vault, 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. 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 24 January 2005.

34 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.

Sections 4173P – 4180P (Reserved)

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 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 bylaws 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. Mayor’s/municipal license/permit; and c. Original BSP Acknowledgement of Registration of Head Office (AOR) and/or Authority to Operate (AO) issued under the old name.

35

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 of DTI or SEC, as the case may be, shall be used consistently in the pawnshop’s signage and in all documents including pawn tickets, official receipts, stationery, etc. 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 the 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 pawnshop’s signage, pawn tickets, official receipts, stationery, etc. c. A pawnshop that is a subsidiary or affiliate of another pawnshop shall likewise indicate such relationship in the signage, pawn tickets, official receipts, stationery, etc. 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, etc.) and in the business permit issued by the city or municipality. e. All pawnshops using a signage prior to the effectivity of this regulation, which signage does not conform to the provisions of this Subsection shall be given 90 days from effectivity date to replace said signage.

36 §4181P.3 Sanctions. A pawnshop that fails to comply with the foregoing provisions shall be subject to the following administrative sanctions as may be determined by the Monetary Board: a. Reprimand or warning on the proprietor, managing partner, directors or officers, as the case may be, for not more than two (2) offenses; b. Suspension of operations of the pawnshop for a certain period; c. Suspension of managing proprietor, managing partner, directors or officers for a certain period; d. Fine of P500.00 at a single instance; and e. Such other sanction/s as the Monetary Board may deem warranted.

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) Date of transfer;

37 (2) Address of the premises to be vacated; and (3) 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; 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 pawnshop’s 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: (1) requirements on closure of business under Section 4183P; and (2) requirements for the establishment and registration of a new pawnshop or branch under Subsections 4101P.4 and 4151P.4, respectively, where applicable.

38 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 pawnshop’s 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 pawnshop shall be held liable for present or future claims arising from its pawnbroking transactions; and (iv) All outstanding pawns have been redeemed/ sold at public auction, or otherwise disposed of, in accordance with law. b. Copy of the pawnshop’s 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. §4183P.2 Closure.

Delisting of Pawnshops/Involuntary

A pawnshop that fails to submit the required financial reports for three (3) consecutive years, starting from the 2009 financial reports, shall be considered to have ceased operations and shall be delisted from the BSP List of Registered Pawnshops starting 2012. It may be reinstated in the BSP Registry, if within 30 business days from the date of BSP notification, it: a) submits the 3-year required reports; and b) pays a fine of P100,000.00 for delayed reporting.

39

If no action/advice is received from the pawnshop after the lapse of the 30-day deadline, the BSP Registration shall be automatically cancelled and the city or municipality shall be informed of the delisted pawnshops operating within their area of jurisdiction, for appropriate action. The appropriate supervising and examining department of the BSP shall not register any new pawnshop whose owner(s), partner(s) or stockholder(s) owned a pawnshop that has been delisted from the Registry for non-submission of the financial reports, unless the fine of P100,000 shall have been paid. For this purpose, the term partner(s) and stockholder(s) shall refer to those partner(s) or stockholder(s) who have controlling ownership/interest and management of the pawnshop. If said owner(s), partner(s) or stockholder(s) shall use another person to establish a new pawnshop, such pawnshop shall also be delisted from the Registry. §4183P.3 Other grounds for delisting. Aside from failure to submit financial reports, pawnshops may also be delisted from the BSP List of Registered Pawnshops in the following cases: a. Failure to comply with the minimum capital as prescribed in Sections 4106P and 4107P; b. Failure to post in conspicuous place the BSP AOR and/or AO as prescribed in Section 4156; c. Failure to start operations within six (6) months from date of issuance of the BSP AOR and/or AO as prescribed in Subsections 4101P.4 and 4151P.7; d. Failure to renew the BSP AOR and/or AO as prescribed in Subsection 4101P.7; e. Disqualification of managing proprietor/managing partner as provided in Subsection 4143P.7; f. Refusal to permit BSP examination as prescribed in Subsection 4651P.2; g. Cancellation of registration by the SEC, in case of corporations and partnerships; h. Cancellation of DTI registration of business/ trade name for failure to renew registration after the expiry of the five-year period, in case of sole proprietorship;

40 i. Cancellation of business license/permit by the city or municipality; and j. Conducting pawnbrokering activities outside the pawnshop premises. Pawnshops that cease to operate but fail to comply with the closure requirements under Subsection 4183P.1 shall still be subject to the reportorial requirements and the imposition of penalty for delayed/non-submission of reports. The city or municipality shall be informed of the delisted pawnshops operating within their area of jurisdiction, for appropriate action.

Section 4184P Transfer of Ownership. No pawnshop proprietor/partners/stockholders shall transfer ownership 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 partner/ president or its equivalent rank stating that: a. The pawnshop’s 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 pawnshop’s notice of retirement of business acknowledged by the licensing authority where the pawnshop operated.

41 (3) Original BSP AOR and/or AO issued to the pawnshop, or an affidavit in case of loss. (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 Registration Fees. A pawnshop that is the subject of change of ownership shall be subject to the BSP processing and registration 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 Subsection 4181P.1; and (c) transfer of location or address under Subsection 4182P.

Sections 4186P – 4189P (Reserved)

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.

Sections 4191P – 4198P (Reserved)

Section 4199P General Provision on Sanctions The imposition of administrative sanctions pursuant to Section 17 of PD No. 114 for violation of the provisions of this Part shall be without prejudice to any action that may be taken under Section 18 of P.D. No. 114.

1

P A R T

II

BORROWING OPERATIONS A. – J. (RESERVED) Sections 4201P – 4284P (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.

Sections 4287P – 4298P (Reserved)

Section 4299P General Provision on Sanctions. Any violation of the provisions of this Part may be a ground for the revocation of the AOR that shall require the winding down of the pawnshop business and shall be subject to the applicable sanctions under Section 36 and 37 of R.A. No. 7653 (New Central Bank Act) and/or R.A. No. 8799 (Securities Regulation Code).

1

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 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 in his possession to another pawnshop or lending entity. §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



Driver’s License



Professional Regulation Commission (PRC) ID



National Bureau of Investigation (NBI) Clearance



Police Clearance



Postal ID



Voter’s ID



Barangay Certification



Government Service Insurance System (GSIS) eCard



Social Security System (SSS) Card



Senior Citizen Card



Overseas Workers (OWWA) ID



OFW ID



Seaman’s 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



Company IDs issued by private entities or institutions registered with or supervised or regulated either by the BSP, SEC or IC

Welfare

Administration

Registration/Immigrant

3

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. §4301P.4 Sanctions. Any pawnshop that violates any of the foregoing provisions as determined by BSP in the spot checking of pawnshops or whenever a complaint brought to the attention of BSP is found to be true, shall be imposed the following sanctions: a. Fine of P500.00 for each of the first three (3) offenses; b. Fine of P1,000.00 for the next three (3) offenses; c. For subsequent violation, cancellation of BSP Acknowledgement of Registration (AOR) or Authority to Operate (AO) issued to the pawnshop head office or branch, as the case may be, and issuance of a letter to the concerned city or municipality advising them of the cancellation of the BSP AOR/AO and recommending the revocation of their business/mayor’s permit(s). It is understood that if the AOR of the HO is cancelled, the AO of the branch/es is/are likewise cancelled; and

4 d. Such other sanctions as the Monetary Board may deem warranted. A pawnshop that fails to post the requirements of §4301P.3 as determined in the spot checking done by BSP shall be imposed the following sanctions: a. Warning for the first three (3) offences; b. Penalty of P300.00 each for the succeeding three (3) offenses; c. Penalty of P750.00 each for the next three (3) offenses; and d. Cancellation of the AOR or AO, for a subsequent offense. Once the AOR of the main office is cancelled, the Authority to Operate (AO) of the branch/es is/are likewise cancelled.

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. §4302P.1 Sanctions. Any pawnshop that violates the foregoing provisions as determined by BSP in the spot checking of pawnshops or whenever a complaint brought to the attention of BSP is found to be true, shall be imposed the following sanctions: a. Fine of P500.00 for each of the first three (3) offenses; b. Fine of P1,000.00 each for the next three (3) offenses; c. For subsequent violation, cancellation of BSP Acknowledgement of Registration (AOR) or Authority to Operate (AO) issued to the pawnshop head office or branch, as the case may be, and issuance of a letter to the concerned city or municipality advising them of the cancellation of the BSP AOR/AO and recommending the revocation of their business/mayor’s permit(s). It is understood that if the AOR of the HO is cancelled, the AO of the branch/es is/are likewise cancelled; and d. Such other sanctions as the Monetary Board may deem warranted.

5 Section 4303P Interest and Surcharges. The rate of interest including surcharges on any loan or forbearance 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 of more than one (1) year. §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. §4303P.4 Sanctions. Any pawnshop that violates the foregoing provisions as determined by BSP in the spot checking of pawnshops or whenever a complaint brought to the attention of BSP is found to be true, shall be imposed the following sanctions: a. Fine of P500.00 for each of the first three (3) offenses; b. Fine of P1,000.00 for the next three (3) offenses; c. For subsequent violation, cancellation of BSP Acknowledgement of Registration (AOR) or Authority to Operate (AO) issued to the pawnshop head office or branch, as the case may be, and issuance of a letter to the concerned city or municipality advising them of the cancellation of the BSP AOR/AO and recommending the

6 revocation of their business/mayor’s permit(s). It is understood that if the AOR of the HO is cancelled, the AO of the branch/es is/are likewise cancelled; and d. Such other sanctions as the Monetary Board may deem warranted. A pawnshop that fails to post the interest rate and other charges pursuant to Subsection 4303P.3 as determined in the spot checking done by BSP shall be imposed the following sanctions: a. Warning for the first three (3) offenses; b. Penalty of P300.00 each for the succeeding three (3) offenses; c. Penalty of P750.00 for the next three (3) offenses; and d. Cancellation of the AOR or AO, for a subsequent offense. Once the AOR of the main office is cancelled, the Authority to Operate (AO) of the branch(es) is/are likewise cancelled. 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 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.

7 If the maturity date of the loan or expiry date of redemption period falls on the pawnshop’s 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. §4305P.2 Sanctions. Any pawnshop that violates the foregoing provisions as determined by BSP in the spot checking of pawnshops or whenever a complaint brought to the attention of BSP is found to be true, shall be imposed the following sanctions: a. Fine of P500.00 for each of the first three (3) offenses; b. Fine of P1,000.00 each for the next three (3) offenses; c. For subsequent violation, cancellation of BSP Acknowledgement of Registration (AOR) or Authority to Operate (AO) issued to the pawnshop head office or branch, as the case may be, and issuance of a letter to the concerned city or municipality advising them of the cancellation of the BSP AOR/AO and recommending the revocation of their business/mayor’s permit(s). It is understood that if the AOR of the HO is cancelled, the AO of the branch/es is/are likewise cancelled; and d. Such other sanctions as the Monetary Board may deem warranted.

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).

8 Sections 4307P – 4320P (Reserved) B. LOAN COLLATERAL/SECURITY

Section 4321P Kinds of Security. 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 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. 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. §4322P.1 Sanctions. Whenever a pawnshop allows redemption of pawned items without the surrender of the corresponding original pawn ticket/affidavit of loss, the pawnshop shall be imposed the following sanctions: a. Fine of P500.00 for each of the first three (3) offenses; b. Fine of P1,000.00 for each of the next three (3) offenses;

9 c. For subsequent violation, cancellation of BSP Acknowledgement of Registration (AOR) or Authority to Operate (AO) issued to the pawnshop head office or branch, as the case may be, and issuance of a letter to the concerned city or municipality advising them of the cancellation of the BSP AOR/AO and recommending the revocation of their business/mayor’s permit(s). It is understood that if the AOR of the HO is cancelled, the AO of the branch/es is/are likewise cancelled; and d. Such other sanctions as the Monetary Board may deem warranted.

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, 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. Pawner’s residential address; d. Pawner’s telephone/mobile phone number and/or e-mail address, if applicable; e. Preferred mode of notification (telephone, mobile phone, email or mail); f. Description of the pawner (sex, date of birth, nationality, height, weight) g. Date the loan was granted; h. Amount of the principal loan and net proceeds; i. Interest rate in percent, indicating if daily, monthly or annually; j.

Interest in absolute amount;

k. Service charge in amount; l. Penalty interest in percent, if any; m. Appraised value of pawn; n. Period of maturity; o. Description of the pawn; p. Expiry date of the redemption period; q. Signature representative;

of

the

pawnshop’s

authorized

10 r. ID presented; and s. Such other terms and conditions as may be agreed upon between the pawnshop and the pawner. No other document or instrument shall be used/issued by a pawnshop for any loan granted by it to a pawner/borrower. §4323P.1 Additional Regulations on Pawn Ticket. The contents on the face of the standard pawn ticket, prescribed for pawnshops pursuant to the requirements of P.D. No. 114, and the terms and conditions thereof, are in Appendices P-4 and P-4a. Unnecessary data shall be avoided. Additional terms and conditions which pawnshops may wish to incorporate shall be subject to prior approval by the appropriate supervising and examining department of the BSP. Pawn ticket shall not be smaller than 8 x 11”. 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. Pawnshops may choose the color or quality of the paper used as pawn ticket. Standard Additional Stipulations and Stipulations not allowed in pawn tickets are in Appendices P-4-b and P-4-c. §4323P.2 Sanctions. Any pawnshop which violates or fails to comply with the requirements of Subsec. 4323P.1 shall be imposed the following sanctions: a. Fine of P500.00 for each of the first three (3) offenses; b. Fine of P1,000.00 for each of the next three (3) offenses; c. For subsequent violation, cancellation of BSP Acknowledgement of Registration (AOR) or Authority to

11 Operate (AO) issued to the pawnshop head office or branch, as the case may be, and issuance of a letter to the concerned city or municipality advising them of the cancellation of the BSP AOR/AO and recommending the revocation of their business/mayor’s permit(s). It is understood that if the AOR of the HO is cancelled, the AO of the branch/es is/are likewise cancelled; and d. Such other sanctions as the Monetary Board may deem warranted. The owner, partner, manager, or officer-in-charge of the pawnshop responsible for the violation or noncompliance shall be jointly liable with the pawnshop.

Section 4324P Reminder to Pawner; Notice to the Public. At least thirty (30) days before the expiration of the ninety (90)-day grace period allowed in Section 4305P, the pawnshop shall duly notify the pawner in writing that the pawn shall be sold or otherwise disposed of in the event that 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 preferred mode of notification indicated by the pawner in the pawn ticket at the time the loan was granted which may be through text/SMS message, electronic mail, 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. 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: a. Name and address of the owner of the pawnshop; and

12 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 in the principal place of business and branches an abstract of the provision of Section 4324P (Appendix P-7) which shall be not be smaller than 8.5 x 11 inches. §4324P.2 Sanctions. Any pawnshop which violates or fails to comply with the requirements of Subsec. 4324P.1 shall be imposed the following sanctions: a. Fine of P500.00 for each of the first three (3) offenses; b. Fine of P1,000.00 for each of the next three (3) offenses; c. For subsequent violation, cancellation of BSP Acknowledgement of Registration (AOR) or Authority to Operate (AO) issued to the pawnshop head office or branch, as the case may be, and issuance of a letter to the concerned city or municipality advising them of the cancellation of the BSP AOR/AO and recommending the revocation of their business/mayor’s permit(s). It is understood that if the AOR of the HO is cancelled, the AO of the branch/es is/are likewise cancelled; and d. Such other sanctions as the Monetary Board may deem warranted. The owner, partner, manager, or officer-in-charge of the pawnshop responsible for the violation or noncompliance shall be jointly liable with the pawnshop. A pawnshop that fails to post the abstract of Section 4324P as may be determined in the spot checking done by BSP shall be imposed the following sanctions: a. Warning for the first three (3) offenses; b. Penalty of P300.00 each for the succeeding three (3) offenses; c. Penalty of P750 each for the next three (3) offenses; and

13 d. Cancellation of the AOR or AO, for a subsequent offense. Once the AOR of the main office is cancelled, the Authority to Operate (AO) of the branch(es) is/are likewise cancelled.

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. Pawnshop’s 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.

Sections 4326P – 4335P (Reserved)

C. – J. (RESERVED) Sections 4336P – 4395P (Reserved)

K. MISCELLANEOUS Sections 4396P – 4398P (Reserved)

14

Section 4399P General Provision on Sanctions. Any violation of the provisions of this part shall be subject to Section 18 of P.D. No. 114. The imposition of administrative sanctions pursuant Section 17 of PD No. 114 for violation of the provisions this Part shall be without prejudice to the imposition other administrative sanctions and to the filing of criminal case as provided for in other provisions of law.

to of of a

P A R T IV Sections 4401P – 4499P (Reserved)

PART V Sections 4501P – 4599P (Reserved)  

1

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 pawnshop’s vital records referred to in Section 4102 upon request by any officer/ examiner/employee of the BSP. §4651P.2 Sanctions. Whenever a pawnshop refuses to permit a BSP examination, the BSP officer/examiner/employee shall report the matter to the head of the appropriate supervising and examining department of the BSP, who shall then make a written demand upon the pawnshop concerned for such examination. If the pawnshop continues to refuse said examination without any satisfactory explanation, the said department head shall recommend to the Monetary Board the revocation of the registration of the pawnshop’s AOR or AO, as the case may be. The Office of the Mayor of the concerned city or municipality shall be informed of the revocation to take appropriate action on the pawnshop without prejudice to whatever legal action that the BSP may take against the owners, operators and officers of the pawnshop. An establishment which represents itself as a pawnshop or is suspected to be engaged in the business of a pawnshop or in pawnbrokering that refuses to permit BSP examination shall be subject to whatever legal action that the BSP may take against the owners, operators and officers of the establishment. 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

3 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. Sections 4658P - 4659P (Reserved)

Sections 4658P – 4690P (Reserved)

Section 4691P Anti-Money Laundering Regulations. Banks, offshore banking units (OBUs), quasi-banks (QBs), trust entities, non-stock savings and loan 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.

4 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 and to submit a plan of action to comply with antimoney laundering requirements within thirty (30) business days from opening of a pawnshop. §4691P.3 – 4691P.8 (Reserved) §4691P.9 Sanctions and penalties a. Whenever a covered institution violates the provisions of Section 9 of R.A. No. 9160 of this Section, the officer(s) or other persons responsible for such violation shall be punished by a fine of not less than P50,000 nor more than P200,000 or by imprisonment of not less than two (2) years nor more than ten (10) years, or both, at the discretion of the court pursuant to Section 36 of R.A. No. 7653, otherwise known as “The New Central Bank Act”. b. Without prejudice to the criminal sanctions prescribed above against the culpable persons, the Monetary Board may, at its discretion, impose upon any covered institution, its directors and/or officers for any violation of Section 9 of R.A. No. 9160, the administrative sanctions provided under Section 37 of R.A. No. 7653.

Sections 4692P - 4698P (Reserved)

Section 4699P Administrative Sanctions. The Monetary Board shall impose upon pawnshops, their owners, partners, directors and officers for any violation of the provisions of the rules on pawnshops, P.D. No.

5 114, pertinent laws or any order or instruction of the Monetary Board or its authorized official; or any commission of irregularities in the conduct of its business, the following administrative sanctions: a. For a violation consummated at a single instance and not punishable on a per day basis, a fine of not more than P500.00; or for a violation which is continuing and punishable on a per-day basis, a fine of not more than P600.00 for every day of violation or non-compliance; and/or b. Suspension or, after due hearing, removal of managing proprietor/managing partners/directors or officers. Provided that, in case the removal of managing proprietor/managing partners shall cause the dissolution of the proprietorship or partnership, the pawnshop shall be delisted from the BSP List of Registered Pawnshops as prescribed in Subsection 4183P.2. For purposes of this Section, the phrase any commission of irregularities in the conduct of its business shall include any act or omission described hereunder. 1. Failure to produce pawn upon redemption or in any other case where the pawnshop has the obligation to produce the pawn. 2. Allowing the redemption of pawn without the surrender of the corresponding original pawn ticket/substitute pawn ticket/affidavit of loss. 3. Falsifying pawn tickets. 4. Actual collection of interest in advance and or service charges without reflecting the same on the pawn ticket. 5. Tampering or substitution of pawn. 6. Failure to issue official receipts for amounts collected. 7. Any other act or omission analogous to the aboveenumerated acts and omissions. The imposition of administrative sanctions pursuant to Section 17 of PD No. 114 for violation of the provisions of this Part shall be without prejudice to any action that may be taken under Section 18 of P.D. No. 114.

 

(a) Date of transaction; (b) Number of pawn ticket; (c) Amount of money loaned or principal; (d) Rate of interest to be paid, in percent; (e) Service charge collected; (f) Description of pawn; (g) Appraised value of pawn; (h) Name of pawner; (i) Address of pawner; (j) Description of the pawner, including: (i) Nationality; (ii) Sex; and (iii) General appearance; and (k) Signature or thumbmark of the pawner and the name of the pawner written by and signature of the witness to the thumbmarking. (2) Loans Paid Register – A “Loans Paid Register” shall be maintained in which shall be entered in ink, the principal and interest payment of loans. It shall contain the following minimum data: (a)  (b) (c) (d) (e) (f)

 

Date of payment; Number of pawn ticket; Name of pawner; Principal amount; Amount of interest; and Signature or thumbmark of the pawner and the name of the pawner written by and signature of the witness to the thumbmarking.

A pawnshop that uses a computerized system may record its loan transactions in individual loan extended vouchers which shall contain the same information enumerated above 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.

App. P-2 Page 1 of 2 LIST OF REPORTS REQUIRED FROM PAWNSHOPS (Appendix to Section 4161P.1) Report Category B

Frequency of Reporting Annually

BSP Form No. BSP 7-26-01.1C

Subject of Report General Information Sheet (for corporation)

A-2

BSP 7-26-02C

Statement of Condition (SOC)

-do-

A-3

BSP 7-26-03C

Statement of Income and Expenses

-do-

Unnumbered (no prescribed form)

Audited Financial Statement (AFS) for the previous year ended prepared by an external auditor together with actions taken on the financial audit report

-do-

B

Deadline of Submission 5 days from submission to SEC

January 31

Other Instructions/Requirements To be submitted to SEC within 30 calendar days from the date of annual stockholders’ meeting. To be submitted to Supervisory Data Center. For pawnshops with branches, the SOC shall be submitted on a consolidated basis (i.e. head office plus branches) together with a list of all its branches in the report. Branches are not required to submit individual reports.

-doJune 30 of the following reference calendar year

-doTo be submitted to appropriate supervising and examining department. For pawnshops with assets of P50 million and above, the AFS shall be prepared by independent external auditors that are in the list of accredited external auditors of the Securities and Exchange Commission, Office of the Insurance Commissioner or in the list of BSP-selected external auditors.

App. P-2 Page 2 of 2 Report Category B

BSP Form No. Unnumbered

Subject of Report Report on Crimes/Losses

Frequency of Reporting As crime or incident occurs

A-2

Unnumbered

Report on Suspicious Transactions

As transaction occurs

10th business day from date of transaction/knowledge

A-2

Unnumbered

Report on Covered Transactions

-do-

-do-

B

Unnumbered

Plan of action to comply with Anti-Money Laundering requirements

-

30th business day from opening of the pawnshop. For existing pawnshops, 30 days from issuance of the amended Manual of Regulations for Pawnshops.

To be submitted to the appropriate supervising and examining department (SED)

A-2

Unnumbered

Certification of compliance with existing anti-money laundering regulations

Annually

20th business day after end of reference year

To be submitted to the appropriate supervising and examining department (SED)

A-3

Unnumbered (CL-059 dated 11.28.07 and CL-050 dated 10.04.07)

Report on Borrowings of BSP Personnel

-do-

15 banking days after end of reference quarter

Original – SDC

Deadline of Submission See Appendix P-2a for guidelines on reporting crimes and losses

Other Instructions/Requirements

To be submitted to the AntiMoney Laundering Council -do-

App. P-2-a

REPORTING GUIDELINES ON CRIMES/LOSSES (Annex to Appendix P-2) 1. Pawnshops shall report on the following matters through the appropriate supervising and examining department:

2. The following guidelines shall be observed in the preparation and submission of the report.

a. Crimes whether consummated, frustrated or attempted against pawned articles/property/ facilities (such as robbery,theft, swindling or estafa, forgery and other deceits) and other crimes involving loss/destruction of pawn/property of the pawnshop: Provided, That if no pawned article is involved, the amount involved in each crime is P20,000 or more.

a. The report shall be prepared in two (2) copies and shall be submitted within ten (10) business days from knowledge of the crime or incident, the original to the appropriate supervising department and the duplicate to the BSP Security Coordinator, thru the Director, Security Investigation and Transport Department.

Crimes involving the pawnshop personnel, regardless of whether or not such crimes involve the loss/destruction of pawned articles/property of the pawnshop, even if the amount involved is less than those above specified, shall likewise be reported to the BSP. b. Incidents involving material loss, destruction or damage to the institution's pawned articles/property/facilities, other than arising from a crime: Provided, That if no pawned article is involved, the amount involved per incident is P20,000 or more.

b. Where a thorough investigation and evaluation of facts is necessary to complete the report, an initial report submitted within the ten (10)business day deadline may be accepted: Provided, That a complete report is submitted not later than fifteen (15) business days from termination of investigation. (Sample format of Report on Crimes/ Losses attached)

Deadline: 10 business days from knowledge of crime or incident Submission: Original – ISD I Duplicate - SITD

Name of Pawnshop

Address

REPORT ON CRIMES/LOSSES Name and Location of Office Name of Pawnshop : Address : Nature and Brief Description of the Crime/Incident (State whether crime was consummated, frustrated or attempted)

Person(s)/Property Involved

Date and time of Occurrence Amount Involved Amount and Kind of of Crime/Loss Insurance Coverage Date when crime was Actual : discovered : Estimated : Action Taken Upon Knowledge of Crime/Loss and/or Steps/Measures Taken to Prevent Recurrence of Similar Incident in the Future

Other Relevant Information

Certified Correct:

Signature of Authorized Officer over Printed Name Designation : Date :

App. P-3 Annex P-3-a

FORMAT OF RESOLUTION FOR SIGNATORIES OF CATEGORY A-1 REPORTS Resolution No. _____ Whereas, it is required under Subsection 4162P.1 of the revised BSP Manual of Regulations for Non-Bank Financial Institutions - Pawnshops, that Category A-1 reports be signed by the chief executive officer, or in his absence, by the executive vice-president, and by the comptroller, or in his absence, by the chief accountant, or by officers holding equivalent positions. Whereas, it is also required that aforesaid officers of the institution be authorized under a resolution duly approved by the institution’s Board of Directors; , are Whereas, we, the members of the Board of Directors of (Name of Pawnshop) conscious that, in designating the officials who would sign said Category A-1 reports, we are actually empowering and authorizing said officers to represent and act for or in behalf of the Board of Directors in in general; particular and (Name of Pawnshop) Whereas, this Board has full faith and confidence in the Institution’s Chief Executive Officer, Executive Vice-President, Comptroller, and Chief Accountant, as the case may be, and, therefore, assumes responsibility for all the acts which may be performed by the aforesaid officers under their delegated authority; Now, therefore, we, the members of the Board of Directors, resolve, as it is hereby resolved that: 1.

2. 3.

4.

Mr.

,

Mr.

,

Mr.

,

Mr.

,

President or Executive Vice-President and Comptroller or Chief Accountant

Specimen Signature

Specimen Signature Specimen Signature

Specimen Signature

are hereby authorized to sign Category A-1 reports of

(Name of Pawnshop)

;

Done in the City of __________________, Philippines, this _____ day of _________________, 20__.

Chairman of the Board

Director

Director

Director

Director

Director

Director ATTESTED BY: Corporate Secretary

App. P-3   Annex P-3-b

FORMAT OF RESOLUTION FOR SIGNATORIES OF CATEGORY A-2 REPORTS Resolution No. _____ Whereas, it is required under Subsection 4162P.1 of the revised BSP Manual of Regulations for Non-Bank Financial Institutions - Pawnshops, that Category A-2 reports be signed by the president, executive vice-president, vice-president, or officer holding equivalent position and that such reports of other offices be signed by the respective manager/officer-in-charge; Whereas, it is also required that aforesaid officers of the institution be authorized under a resolution duly approved by the institution’s Board of Directors; , are Whereas, we, the members of the Board of Directors of (Name of Pawnshop) conscious that, in designating the officials who would sign said Category A-2 reports, we are actually empowering and authorizing said officers to represent and act for or in behalf of the Board of Directors in in general; particular and (Name of Pawnshop) Whereas, this Board has full faith and confidence in the Institution’s President (and/or the Executive Vice-President, etc. as the case may be) and, therefore, assumes responsibility for all the acts which may be performed by the aforesaid officers under their delegated authority; Now, therefore, we, the members of the Board of Directors, resolve, as it is hereby resolved that: Name of Officer

Specimen Signature

are hereby authorized to sign Category A-2 reports of

Position Title

(Name of Pawnshop)

Report No.

;

Done in the City of __________________, Philippines, this _____ day of _________________, 20__.

Chairman of the Board

Director

Director

Director

Director

Director

Director

ATTESTED BY:

Corporate Secretary

App. P-3 Annex P-3-c

FORMAT OF RESOLUTION FOR SIGNATORIES OF CATEGORY A-3 and B REPORTS Resolution No. _____ Whereas, it is required under Subsection 4162P.1 of the revised BSP Manual of Regulations for Non-Bank Financial Institutions (Pawnshops), that Category A-3 and B reports be signed by officers or their alternates; Whereas, it is also required that aforesaid officers of the institution be authorized under a resolution duly approved by the institution’s Board of Directors; , are Whereas, we, the members of the Board of Directors of (Name of Pawnshop) conscious that, in designating the officials who would sign said Category A-3 and B reports, we are actually empowering and authorizing said officers to represent and act for or in behalf of the Board of in general; Directors in particular and (Name of Pawnshop) Whereas, this Board has full faith and confidence in the Institution’s Chief Executive Officer, Executive Vice-President, Comptroller, and Chief Accountant, as the case may be, and, therefore, assumes responsibility for all the acts which may be performed by the aforesaid officers under their delegated authority; Now, therefore, we, the members of the Board of Directors, resolve, as it is hereby resolved that: Name of Authorized Signatory/Alternate 1.

Authorized (Alternate)

2.

Authorized (Alternate)

Specimen Signature

Position/Title

are hereby authorized to sign Category A-3 and B reports of

(Name of Pawnshop)

Report No.

;

Done in the City of __________________, Philippines, this _____ day of _________________, 20__.

Chairman of the Board

Director

Director

Director

Director

Director

Director ATTESTED BY:

Corporate Secretary

App. P-4

STANDARD PAWN TICKET (Appendix to Subsection 4323P.1) BUSINESS/REGISTERED NAME Address Taxpayer Identification Number Business Days and Hours Serial No. : 001 Principal Interest in absolute amount 1/ Service Charge in amount Net Proceeds 1/Formula (Principal x Rate x Time)

Original Amount of Loan Date Loan Granted Maturity Date Expiry Date of Redemption Interest Rate in percent : ______ Please check : Per annum

Per month

Per day

Penalty interest in percent, if any Description of the Pawn

Appraised Value

Information on the Pawner Name Sex Complete residential address Date of Birth Telephone/mobile phone No. Nationality E-mail address, if any: Height Preferred Mode of notification: Please check Weight Mail to above address Text/SMS E-Mail ID Presented TERMS AND CONDITIONS OF STANDARD PAWN TICKET 1. The pawner hereby accepts the pawnshop’s appraisal as proper. 2. The pawnshop hereby agrees not to collect advance interest for a period of more than one (1) year. 3. The service charge is equivalent to one percent (1%) of the principal loan, but shall not exceed five pesos (P5.00). No other charges shall be collected. 4. This loan is renewable for such amount and period as may be agreed upon between the pawnshop and the pawner subject to the same requirements for a new loan. 5. Upon maturity of this loan, as indicated above, the pawner still has ninety (90) days from maturity date within which to redeem the pawn by paying the principal loan plus the interest that shall have accrued thereon. 6. The amount of interest due and payable after the maturity date of the loan up to the redemption period shall be computed upon redemption at the rate of interest provided above based on the sum of the principal loan and interest earned as of the date of maturity. Any additional penalty and/or interest shall also be computed in the same manner. 7. The pawnshop shall notify the pawner of any change in its business address/location. 8. The pawner shall advise the pawnshop of any change of address/contact number/e-mail address. 9. The pawnshop shall send a reminder to the pawner in the preferred mode of notification given above, or at the new address/mobile phone number or e-mail address, if such was provided by the pawner before the expiration of the ninety (90) day grace period. The pawnshop shall have the right to sell or dispose of the pawn if the pawner fails to redeem it within the ninety (90) day grace period. 10. This ticket shall be surrendered at maturity date upon payment of the loan. In case of loss or destruction of this ticket, the pawner hereby undertakes to personally present an affidavit to the pawnshop before the redemption period expires. The pawnshop has two (2) days to decide whether to accept (1) the affidavit in place of the original pawn ticket; or (2) to issue a substitute pawn ticket, thereby cancelling the original. 11. The pawner shall not assign, sell or in any other way alienate the pawn securing this loan without prior written consent of the pawnshop. If the pawnshop agrees, the terms and conditions of this contract remain enforceable. 12. In case of pre-payment of this loan by pawner, the interest collected in advance shall accrue in full to the pawnshop. 13. The pawner shall not be entitled to the excess of the public auction sale price over the amount of principal, interest and service fee; neither shall the pawnshop be entitled to recover the deficiency from the pawner.

(Signature or Thumbmark) Pawner

(Signature) Pawnshop’s Authorized Representative

App. P-4-a

FORMAT OF STATEMENT OF UNDERSTANDING ON PAWNSHOP TRANSACTION (Appendix to Subsection 4323P.1) _________________________________ (Business Name of Pawnshop)

STATEMENT OF UNDERSTANDING

I ACKNOWLEDGE THAT I UNDERSTAND AND FULLY AGREE TO THE TERMS AND CONDITIONS OF THIS CONTRACT OF PLEDGE/PAWNSHOP TRANSACTION, AND TO THE FOLLOWING: 1. Agreement as to Interest Rates. The parties are generally free to agree in writing on the interest rates to be imposed in loans secured by pledge/pawned properties. In case of dispute, the regular courts of law have the vested power to determine the reasonableness and legality of interest rates. 2. Degree of Diligence Required of a Pawnshop. In accordance with Republic Act No. 386, as amended, the Civil Code of the Philippines, pawnshops shall take care of the thing pawned by exercising reasonable care and caution that an ordinary prudent person would as to his own property. a. Accountability in case of Fire. The office building/premises and all pawns in the pawnshop, except those which are kept inside a fireproof vault, are insured against fire in accordance with the pertinent regulations of the Bangko Sentral ng Pilipinas (BSP). The amount of indemnity shall be dependent on the insurance policy agreement between the pawnshop and the insurance company. b. Accountability in case of robbery and other fortuitous events. Any claim for restitution by pawners in case of loss, destruction or defect of the pawn due to robbery and other fortuitous event, with or without the fault or negligence of the pawnshop, its officers and directors, are cognizable by the regular courts.

I DECLARE UNDER THE PENALTY OF THE ANTI-FENCING LAW THAT I AM THE OWNER OF THE PROPERTY SUBJECT OF THIS AGREEMENT.

_________________________________ (Signature of Pawner over Printed Name) Date ______________ Notice to Pawner: You are entitled to a copy of this paper which you shall sign.

App P-4-b

STANDARD ADDITIONAL STIPULATIONS IN PAWN TICKETS (Appendix to Subsection 4323P.1) On Face of Pawn Ticket 1. Member:

Chamber of Pawnbrokers of the Philippines

On Reverse Side of Pawn Ticket 1. I hereby authorize M_______________, whose signature appears below, to redeem (or renew*) my pawn covered by this pawn ticket.

___________________ Signature of Representative (Signed in the presence of pawner)

____________________ Signature of Pawner

Received by: _______________________________ Pawner/Authorized Representative (Signed in the presence of pawnshop owner/employee) 2. Pinahihintulutan ko si G______________, na may lagda sa ibaba, para tubusin (o mapanibago*) ang aking sangla na binanggit sa papel na ito.

_______________________ Lagda ng Kinatawan (Nilagdaan sa harap ng nagsangla)

____________________ Lagda ng Nagsangla

Tinatanggap ko ang bagay/mga bagay na binanggit sa papel na ito: _______________________________ Lagda ng Tumanggap 3. Received the article(s) in the same condition when pawned and redeemed. ____________________ Pawner 4. Acknowledgment: I hereby declare that the above-mentioned article(s) are my personal property and are free from liens and encumbrances.

____________________ Pawner *As pawnshop may opt to allow/include in the pawn ticket.

5. Venue of all judicial and administrative cases or proceedings and other legal incidents arising out of or in connection with this contract shall solely and exclusively be brought before appropriate courts, departments, offices or agencies of the government situated in (locality of pawnshop head office). 6. The authorized representative must present valid identification papers. 7. Upon expiration of the redemption period, the pawnshop has the right to open the sealed pawn for purposes of public auction. 8. For purposes of computing the amount of interest for pledge loans paid after maturity date, a fraction of (less than) a month shall be considered as one whole month. 9. Any one of the following: a. In case this loan is not paid on maturity date, the pawner hereby agrees to pay in addition to accrued interest, 2 percent per month of the principal, as liquidated damages. For purposes of computing the amount of liquidated damages, a fraction of a month shall be considered as one (1) full month. b. The pawnshop may at its sole option, allow redemption of pawn after expiration of the 90-day grace period. Provided the pawner shall pay the principal plus interest due at the rate prescribed herein and liquidated damages of 2 percent per month on the principal, counted after grace period. For purposes of computing the amount of liquidated damages, a fraction of a month shall be considered as one (1) full month. c. In case this loan is not paid on maturity date, the pawner hereby agrees to pay in addition to accrued interest, 2 percent per month of the principal, as liquidated damages. For purposes of computing the amount of liquidated damages, a fraction of a month shall be considered as one (1) full month. The pawnshop may, at its sole option, allow redemption of pawn after expiration of the 90-day grace period upon payment by the pawner of the loan principal plus interest due and liquidated damages at the rates and manner of computation herein prescribed. 10. The pawner shall hereby notify the pawnshop of his/her intention to redeem the pawn twenty-four (24) hours prior to actual redemption.

App P-4-c

STIPULATIONS NOT ALLOWED IN STANDARD PAWN TICKETS (Appendix to Subsection 4323P.1) 1. Advertisements such as “highest appraisal in town, dependable, honest”, or other similar terms. 2. Facsimile signature of authorized pawnshop representative. 3. “Terms and conditions accepted and payment received.” 4. “By ordinary or registered mail” in standard Term and Condition No. 9. 5. “Letter of authorization”, as title of third-party redemption/authorization feature. 6. Additional features such as “demand for receipt”, “authorized by the Bangko Sentral ng Pilipinas” and heading of ticket as “pawnshop receipt”.

App. P-7

“Know-Your-Pawner” Policy (Appendix to Subsection 4301P.3) • A pawner who transacts with a pawnshop for the first time shall be required 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 pawner’s residential address, otherwise, he/she is also required to present the original and submit a clear copy of a certification from the barangay where the pawner resides or a billing statement that indicates his/her residential address. • Valid IDs include the following: ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾

Passport Driver’s License Professional Regulation Commission (PRC) ID National Bureau of Investigation (NBI) Clearance Police Clearance Postal ID Voter’s ID Barangay Certification Government Service Insurance System (GSIS) e-Card Social Security System (SSS) Card Senior Citizen Card Overseas Workers Welfare Administration (OWWA) ID OFW ID Seaman’s Book Alien Certification of Registration/Immigrant 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 (IBP) ID Company IDs issued by private entities or institutions registered with or supervised or regulated either by the Bangko Sentral ng Pilipinas, Securities and Exchange Commission or Insurance Commission

• The copy of the ID, barangay certificate or billing statement shall be kept by the pawnshop for convenience of the pawner who continues to transact with the pawnshop but said documents should be updated at least every three (3) years.

App. P-8

ABSTRACT OF “SECTION 13 AND 14 OF PD 114” (PAWNSHOP REGULATION ACT) (Appendix to Subsection 4324P.1) Redemption of Pawn Items • A pawner who fails to pay his obligation has ninety (90) days from maturity date to redeem the pawn by paying the principal and interest.

Disposition of Unredeemed Pawn Items • Unredeemed pawn items shall be sold/disposed of only through public auction. • Pawner shall be notified of the public auction at least thirty (30) days before the expiration of the ninety (90)-day grace period through his/her preferred mode of notification. • The notice to pawner shall contain the date, hour and place where the public auction shall be conducted. • A pawnshop shall publish a notice of public auction in at least two newspapers circulated in the city or municipality where the pawnshop has its place of business six (6) days prior to the date of public auction. In remote areas where newspapers are neither published nor circulated, notice by newspaper publication shall be complied with by posting notices at the city or municipal hall and in two (2) other conspicuous public places where the pawnshop has its place of business. • Pawner may participate in the said public auction.

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