Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____ 
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.,  
HON. MIGUEL LUIS R. VILLAFUERTE, HON. TSUYOSHI ANTHONY G. 
HORIBATA AND HON. NICOLAS ENCISO VIII 
EXPLANATORY NOTE 
MSMEs are the backbone of the national economy but remain vulnerable to external 
shocks, such as financial crises, disasters, and forced changes in the business 
environment—like the COVID-19 pandemic response.1 This bill recognizes the 
important role of Micro, Small and Medium Enterprises (MSMEs) in developing the 
Philippine economy. It also acknowledges the financial barriers being faced by the 
MSMEs in truly achieving sustainable growth. A study conducted by the Asian 
Development Bank Institute found that an average of 73.1% of MSMEs were forced to 
close their business a few weeks after the COVID-19 outbreak and the lockdown 
measures implemented. In line with the foregoing, this bill aims to provide a micro-
financing program tagged as “Pondo sa Pagbabago at Pag-asenso” to MSMEs. 
MSMEs help reduce poverty by creating jobs for the country’s growing labor force, 
thus stimulating economic development in rural and far-flung areas. They also serve 
as valuable partners to large enterprises as suppliers and providers of support 
services. Hence, a vibrant MSME sector is thus an indication of a thriving and growing 
economy.  
In 1991, the Philippine Congress enacted into law Republic Act No. 6977, further 
amended by Republic Act No 8289 in 1997, what is more commonly known as the 
“Magna Carta for Micro, Small and Medium Enterprises”. Additionally, Republic Act 
No. 10644, also known as the “Go Negosyo Act”, sought to push the development of 
small businesses through the establishment of “Negosyo Centers” around the country. 
These landmark legislations are geared towards the development of the Filipino 
entrepreneurial spirit. With over 99% of establishments in the Philippines being 
MSMEs by 2015, the Magna Carta provided a business environment conducive for 
their growth in the country. MSMEs have contributed over 60% of the total jobs 
generated by all types of business establishments. 
1 Shinozaki, S. and L. N. Rao. 2021. COVID-19 Impact on Micro, Small, and Medium-Sized Enterprises under 
the Lockdown: Evidence from a Rapid Survey in the Philippines. ADBI Working Paper 1216. Tokyo: Asian 
Development 
Bank 
Institute. 
https://www.adb.org/publications/covid-19-impact-msme-under-lockdown-
evidence-rapidsurvey-philippines. Accessed July 20, 2022.  
July 22, 2022
4:34 pm
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The proposed bill aims to provide an accessible microfinancing program for the 
MSMEs in the country in order to enable these businesses to move forward. The 
beneficiaries of the “P3 Fund” shall be micro enterprises and entrepreneurs, including 
market vendors, agribusinessmen and members of cooperatives, industry 
associations and cooperators. This will also allow a better alternative for startups and 
small enterprises to get capital for their business, at a lower interest rate. 
The approval of this bill is earnestly sought. 
LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR. 
 MIGUEL LUIS R. VILLAFUERTE 
TSUYOSHI ANTHONY G. HORIBATA 
NICOLAS ENCISO VIII 


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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____ 
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.,  
HON. MIGUEL LUIS R. VILLAFUERTE, HON. TSUYOSHI ANTHONY G. 
HORIBATA AND HON. NICOLAS ENCISO VIII 
AN ACT  
PROMOTING ENTREPRENEURSHIP BY ESTABLISHING A SOCIALIZED 
MICROFINANCING PROGRAM FOR MICRO ENTERPRISES THROUGH THE 
PONDO SA PAGBABAGO AT PAG-ASENSO PROGRAM, AND 
APPROPRIATING FUNDS THEREFOR 
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”. 
SECTION 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. 
SECTION 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 or 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 and 
medium enterprise (MSME) sector, particularly the micro enterprises. 
 
SECTION 4. Creation of the Pondo sa Pagbabago at Pag-asenso (P3) Fund. – 
There is hereby created the Pondo sa Pagbabago at Pag-asenso Fund, hereinafter 
referred to as the “P3 Fund”, which shall be lent out to qualified micro enterprises 
under such terms and conditions that will meet the purposes of this Act.  
The beneficiaries of the P3 Fund shall be the micro enterprises, as defined 
under Republic Act No. 6977, as amended, otherwise known as the “Magna Carta for 
Micro, Small and Medium Enterprises (MSMEs)”.  
The fund shall be primarily accessible through accredited partner financial 
institutions (PFIs) such as rural banks, thrift banks, development banks, cooperatives 
with license to lend, non-stock savings and loan associations, microfinance non-
government organizations, or lending companies.  
For efficient implementation and operation, cooperatives except cooperative 
banks and insurance cooperatives shall be under the sole supervision and 
examination of the Cooperative Development Authority (CDA); all other financial 
entities, corporations and financial intermediaries, such as non-government 
organizations, financing companies, nonstock savings and loan associations, 
microfinance non-government organizations, and lending investors shall be under the 
Securities and Exchange Commission (SEC); banks shall be under the Bangko 
Sentral ng Pilipinas (BSP); and insurance companies shall be under the Insurance 
Commission (IC).  
Cooperative banks shall be under the supervision and examination of the CDA 
and BSP; while insurance cooperatives shall be under the supervision and 
examination of the CDA and Insurance Commission (IC). 
 
SECTION 5. Lead Implementing Agency.  –  The Small Business Corporation (SB 
Corp.), the financing arm of the Department of Trade and Industry (DTI), shall be the 
lead implementing agency for the P3 Fund. The SB Corp. shall handle the fund 
delivery to micro enterprises through the following modes: 
a. Direct lending; and  
b. Lending through accredited PFIs.  


 
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With the goal to achieve greater outreach to all provinces and barangays of the 
country, financial technology-enabled systems and processes can be utilized in the 
implementation of the P3 program.  
To support annual administrative and operating expenses of the SB Corp., an 
amount of not more than five percent (5%) of the total loans disbursed can be used by 
the Corporation.  
 
SECTION 6. Features of the P3 Fund.  –  The P3 Fund shall have the following 
features; 
a. The loanable amount for individual loans shall be set and regularly reviewed 
by the Micro, Small and Medium Enterprise Development (MSMED) Council;  
b. The allowable interest rate, which includes service fee and other charges, 
shall not exceed twelve percent (12%) per annum. Reasonable and actual 
cost of collection may be allowed upon proper justification;  
c. The interest earnings shall accrue to the P3 Fund;  
d. There shall be no collateral requirement from the P3 Fund loan beneficiaries; 
and  
e.  The lenders shall have a collection mechanism, whereby payments are made 
on a daily, weekly, or monthly basis, or depending on the livelihood project 
income cycle. It shall be the duty of the lender to collect the loan principal 
and the interest payments from the borrower.  
 
SECTION 7. Policy Oversight Function. – The MSMED Council shall monitor the 
utilization and disbursements of the P3 Fund. It shall submit to the President of the 
Philippines and to Congress, through the Congressional Oversight Committee on 
Micro, Small and Medium Enterprise Development (COC-MSMED), a yearly report on 
the status   of the P3 Fund. 
 
SECTION 8. Appropriations. – The initial amount for the implementation of this Act   
shall be charged against the current year’s appropriations of the Small Business 
Corporation.           
Thereafter, such amount necessary shall be included in the annual General     
Appropriations Act.  
 


 
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SECTION 9. Implementing Rules and Regulations. – Within sixty (60) days from 
the approval of this Act, the DTI shall formulate and promulgate the necessary rules 
and regulations to implement the provisions of this Act.  
 
SECTION 10. Separability Clause. – If any part or section of this Act is declared 
unconstitutional, such declaration shall not affect in any manner other parts or sections 
hereof. 
 
SECTION 11. Repealing Clause. – Section 22 of Republic Act No. 8367 is hereby 
repealed. All laws, decrees, proclamations, issuances, or ordinances that are contrary 
to or inconsistent with the provisions of this Act are hereby amended, repealed or 
modified accordingly.  
 
SECTION 12. Effectivity. – This Act shall take effect fifteen (15) days after its 
publication in the Official Gazette or in a newspaper of general circulation. 
 
Approved,