Short answer. Both, in a set order. Article 2123 provides that pawnshops and similar establishments making loans secured by pledges are governed first by the special laws and regulations concerning them, and only subsidiarily by the Civil Code's provisions on pledge. The special rules apply first; the Code fills the gaps.
What the law says
the special laws and regulations concerning them shall be observed, and subsidiarily, the provisions of this Title
Civil Code, Article 2123 — Pawnshops. Read the full provision →
A pawn transaction is a pledge
When you pawn something, you are entering a pledge: you hand over a thing — usually jewellery or a gadget — as security for a small loan, and you redeem it by repaying the loan with interest within a period. Everything in the Civil Code's Title on pledge is therefore, in principle, relevant to a pawn transaction. But pawnshops are also a regulated industry, run as a business of making pledge-secured loans to the public, and they are subject to their own body of special laws and regulations. Article 2123 tells us how those two sources of rules fit together when they both bear on the same pawn.
Special laws come first
The article gives the special rules priority. It provides that as regards pawnshops and other establishments engaged in making loans secured by pledges, the special laws and regulations concerning them shall be observed, and subsidiarily, the provisions of this Title. So the first place to look is the specific legislation and regulation governing pawnshops — the rules that address how such businesses operate, the terms they may impose, and the protections owed to the pawner. Those are what shall be observed. Where the special framework speaks to a question, its answer governs, precisely because it was written for this particular kind of pledge-based lending rather than for pledges in general.
The Civil Code applies subsidiarily
The Civil Code does not drop away, though; it applies subsidiarily. That means the Title on pledge fills in wherever the special laws and regulations are silent. A pawn is still a pledge at bottom, so the general principles — the pledgee's duty to care for the thing, the requirements for selling it, the return of any surplus — remain available to supply what the special rules do not cover. The relationship is one of hierarchy, not conflict: special law first, general Code behind it. Neither source is ignored; they are read in order, so that the specialised regulation leads and the Civil Code supports it from behind.
What this means in practice
The practical consequence is that anyone with a pawnshop question should start with the special pawnshop rules and turn to the Civil Code only for what those rules leave unanswered. A term or practice that would be fine under the general law of pledge may still be wrong if the special regulation forbids it, because the special regulation controls. Conversely, on a point the pawnshop rules do not address, the Civil Code's pledge provisions supply the answer. So identify first whether the special framework covers the issue; if it does, follow it, and if it does not, the Code's Title on pledge is what governs subsidiarily.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Roberto C. Sicam, et al. vs. Lullu V. Jorge, et al, G.R. No. 159617, August 8, 2007 — read the decision on LawPhil →
- Pilipinas Loan Company, Inc. vs. Hon. Securites and Exchange Commission, et al, G.R. No. 104720, April 4, 2001 — read the decision on LawPhil →