Short answer. Yes. As the creditor holding a pledged item, a pawnshop must care for it with the diligence of a good father of a family, and it is liable for its loss or deterioration. In exchange, the pawnshop can be reimbursed for reasonable expenses spent preserving the item.
What the law says
The creditor shall take care of the thing pledged with the diligence of a good father of a family; he has a right to the reimbursement of the expenses made for its preservation, and is liable for its loss or deterioration, in conformity with the provisions of this Code.
Civil Code, Article 2099 — Pledgee's Duty of Care. Read the full provision →
The pawnshop is the "creditor" in this relationship
A pawn transaction is legally a pledge, and Article 2099 speaks in terms of the creditor — the party holding the pawned item as security for what it lent. A pawnshop that accepts your item and gives you a loan against it is standing in that creditor role, and the duties this article places on the creditor apply to it. The item itself does not stop being yours; the pawnshop simply holds it while the loan is outstanding.
The standard of care the law sets
The article requires that the creditor "shall take care of the thing pledged with the diligence of a good father of a family." This is a standard of ordinary, prudent care — not an absolute guarantee that nothing will ever happen to the item, but a genuine duty to store, handle, and safeguard it the way a careful person would look after something valuable in their keeping. A pawnshop that stores items carelessly, or exposes them to obvious risks, falls short of what this article requires.
What happens if the item is lost or deteriorates
The article does not stop at describing the standard of care — it also states the consequence for falling short of it: the creditor "is liable for its loss or deterioration, in conformity with the provisions of this Code." So if your pawned item is lost, damaged, or has deteriorated while in the pawnshop's custody, the pawnshop can be held liable for that outcome, because the same article that imposes the duty of care also imposes responsibility when that duty is not met.
The pawnshop's corresponding right
The article balances this duty with a right of its own: the creditor "has a right to the reimbursement of the expenses made for its preservation." If the pawnshop reasonably spends money keeping the item in good condition — proper storage, for example — it is entitled to be paid back for that expense. This right exists alongside, not instead of, the pawnshop's underlying duty to actually take that care in the first place.
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 →
- China Banking Corp. vs. Court of Appeals, et al, G.R. No. 117604, March 26, 1997 — read the decision on LawPhil →