NINETEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
iBffup of thr fs'1. i r
•22 AUG 31 All :12
SENATE
S. No. 1247
RliCEIVtD B\:
Introduced by Senator MARK A. VILLAR
AN ACT
PROVIDING A SOCIALIZED MICROFINANCING PROGRAM FOR MICRO 
ENTERPRISES THEREBY PROMOTING ENTREPRENEURSHIP
EXPLANATORY NOTE
The Rondo sa Pagbabago at Pag-asenso (P3) Act is a landmark micro loan 
program which provided alternative source of financing to Micro, Small and Medium 
Enterprises (MSMEs) nationwide.
The P3 program, through the Department of Trade and Industry, aimed to 
eliminate the 5-6 money-lending scheme, the term used for loan sought from 
informal lenders. 5-6 money-lenders typically charges way higher rates and monitor 
payments more frequently than formal financing and credit programs. Yet, small 
businesses still choose to borrow from informal lenders. This dilemma can be 
attributed to the high collateral requirement plus the voluminous and rigorous 
documentary requirements of formal lenders such as banks and micro finance 
institutions.
At present, despite the government taking several steps to increase people's 
reliance on formal credit, the need to institutionalize a program that will provide 
micro enterprises a cheaper and convenient source of financing is wanting. Thus, 
this bill proposing to institutionalize the P3 Program of the Small Business (SB) Corp.
1^
MARK A. VILLAR


NINETEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
of t!)r i eta 17)
•22 AUG 31 All :12
SENA
S. No.
1^47
RECEIVED BV;
Introduced by Senator MARK A. VILLAR
AN ACT
PROVIDING A SOCIALIZED MICROFINANCING PROGRAM FOR MICRO 
ENTERPRISES THEREBY PROMOTING ENTREPRENEURSHIP
Be it enacted by the Senate and House of Representatives of the Philippines 
in Congress assembled:
Section 1. Short Title. — This Act shall be known as the "Pondo sa Pagbabago 
at Pag-asenso Act" or the "P3 Act."
Sec. 2. Declaration of Policy. — It is the declared policy of the State to foster 
national development, promote inclusive growth, and reduce poverty by promoting 
the growth of micro enterprises that facilitate local job creation, production and 
trade in the country. Towards this end, the State shall develop policies, plans and 
programs, and initiate means to encourage entrepreneurial activities, and to ease 
the constraints and challenges to micro enterprises, particularly on access to 
financing.
Sec. 3. Objectives. — The objectives of this Act are:
a) To provide an affordable, accessible, and simple micro financing 
program for the country's micro enterprises, especially those in the 
poorest populations;
b) To provide a better alternative to informal lenders of the so called 
"5-6" money lending system availed of by micro enterprises;
c) To bring down the interest rate at which micro finance is made 
available to micro enterprises; and


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d) To boost the development of entrepreneurship and the micro, small
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and medium enterprise (MSME) sector, particularly the micro
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enterprises.
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Sec. 4. Creation of the Pondo sa Pagbabago at Pag asenso (P3) Fund. -
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There is hereby created the Pondo sa Pagbabago at Pag asenso Fund, hereinafter
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referred to as the "P3 Fund", which shall be lent out to qualified micro enterprises
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under such terms and conditions that will meet the purpose of this Act.
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The beneficiaries of the P3 Fund shall be the micro enterprises, as defined
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under Republic Act No. 6977, as amended, otherwise known as the "Magna Carta for
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Micro, Small and Medium Enterprises (MSMEs)".
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The fund shall be primarily accessible through accredited partner financial
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Institutions (PFIs) such as rural banks, thrift banks, development banks, cooperative
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with license to lend, non-stock savings and loan associations, microfinance non-
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government organizations, or lending companies.
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For efficient implementation and operation, cooperatives except cooperative
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banks and insurance cooperatives shall be under the sole supervision and
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examination of the Cooperative Development Authority (CDA); all other financial
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entities, corporations and financial intermediaries, such as 
non-government
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organizations, financing companies, non-stock savings and loan associations,
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microfinance non-government organizations, and lending investors shall be under
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the Securities and Exchange Commission (SEC); banks shall be under the Bangko
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Sentra! ng Pilipinas (BSP); and insurance companies shall be under the Insurance
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Commission (IC).
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Cooperative banks shall be under the supervision and examination of the CDA
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and BSP; while insurance cooperatives shall be under the supervision and
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examination of the CDA and Insurance Commissions (IC).
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Sec. 5. Lead Implementing Agency. - The Small Business Corporation (SB
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Corp.), the financing arm of the Department of Trade and Industry (DTI), shall be
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the lead implementing agency for the P3 Fund. The SB Corp. shall handle all the
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fund delivery to micro enterprises through the following modes:
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a. Direct lending; and


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b. Lending through accredited PFIs.
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With the goal to achieve greater outreach to all provinces and barangays of
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the country, financial technology enabled systems and processes can be utilized in
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the implementation of the P3 program.
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To support annual administrative and operating expenses of the SB Corp., an
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amount of not more than five percent (5%) of the total loans disbursed can be used
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by the Corporation.
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Sec. 6. Features of the P3 Fund. - The P3 Fund shall have the following
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features:
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a. The loanable amount for individual loans shall be set and regularly
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reviewed by the Micro, Small and Medium Enterprise Development
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(MSMED) Council;
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b. The allowable interest rate, which includes service fee and other
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charges, 
shall not exceed twelve percent (12%) per annum.
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Reasonable and actual cost of collection may be allowed upon proper
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justification;
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c. The interest earning shall accrue to the P3 Fund;
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d. There shall be no collateral requirement from the P3 Fund loan
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beneficiaries; and
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e. The lenders shall have a collection mechanism, whereby payments are
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made on a daily, weekly, or monthly basis, or depending on the
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livelihood project income cycle. It shall be the duty of the lender to
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collect the loan principal and the interest payment from the borrower.
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Sec. 7. Policy Oversight Function. - The MSMED Council shall monitor the
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utilization and disbursements of the P3 Fund. It shall submit to the President of the
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Philippines and to Congress, through the Congressional Oversight Committee on
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Micro, Small and Medium Enterprise Development Council (COC MSMES), a yearly
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report on the status of the P3 Fund.
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Sec. ^.Appropriations. — The initial amount from the implementation of this
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Act shall be charged against the current year's appropriations of the Small Business
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Corporation.


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Thereafter, such amount necessary shall be included in the annual General
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Appropriations Act.
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Sec. 9. Implementing Rules and Regulations. — Within sixty (60) days from
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the approval of this Act, the DTI shall formulate and promulgate the necessary rules
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and regulations to implement the provisions of this Act.
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Sec. 10. Separability Clause. — If any part or section of this Act is declared
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unconstitutional, such declaration shall not affect in any manner other parts or
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sections hereof.
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Sec. 11. Repealing Clause. — Section 22 of Republic Act No. 8367 is hereby
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repealed. All laws decrees, proclamations, issuances that are contrary to or
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inconsistent with the provisions of this Act are hereby amended, repealed or
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modified accordingly.
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Sec. 16. Effectivity. — This Act shall take effect fifteen (15) days after its
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publication in the Official Gazette or in a newspaper of general circulation.
Approved,