Republic of the Philippines 
House of Representatives 
Quezon City 
EIGHTEENTH CONGRESS 
Third Regular Session 
House Bill No. _____________ 
Introduced by REPRESENTATIVE ERIC L. OLIVAREZ 
EXPLANATORY NOTE 
During several occasions in the past years, President Rodrigo Roa 
Duterte expressed his view that borrowing money from 5-6 loan sharks 
further aggravates poverty among the poor.1 This is because 5-6 is an 
informal lending practice that imposes usurious interest rates to its 
borrowers.   Although this informal lending practice come at a high interest 
rate, many still avail of this method because this provides a more 
expeditious way of borrowing money.  Additionally, the high collateral 
requirements of formal lenders have become a hindrance for micro, small 
and medium enterprises (MSMEs) which lead to utilization of the services 
of informal lenders.  However, the usurious interest rates tend to become 
burdensome to entrepreneurs which affect their growth and development 
especially micro enterprises.  
Considering the circumstances stated in the preceding paragraph, 
this Bill seeks to institutionalize the the Pondo sa Pagbabago at Pag-
asenso (P3) fund in order to provide an affordable, accessible and simple 
micro-financing program, encourage micro enterprises, and avoid, if not 
totally halt,  borrowing from informal lenders. Through the passage of this 
Bill, micro enterprises will be able to effectively sustain their businesses 
and become more self-sufficient.  
1 https://politics.com.ph/duterte-campaigns-vs-5-6-lending-scheme-anew/ 
August 5, 2021
6:42 pm
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In order to address the financing difficulties of micro enterprises, the 
passage of this Bill is earnestly sought.   
ERIC OLIVAREZ 


Republic of the Philippines 
House of Representatives 
Quezon City 
EIGHTEENTH CONGRESS 
Third Regular Session 
House Bill No. _____________ 
Introduced by REPRESENTATIVE ERIC L. OLIVAREZ 
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“AN ACT PROVIDING A SOCIALIZED MICROFINANCING 
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PROGRAM FOR MICRO ENTERPRISES THEREBY  
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PROMOTING ENTREPENEURSHIP” 
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Be it enacted in the Senate and the House of Representatives of the Republic of the 
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Philippines in Congress assembled: 
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SECTION 1. Short Title. – This Act shall be known as the “Pondo sa 
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Pagbabago at Pag-asenso Act” or the “P3” Act”.  
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SECTION 2. Declaration of Policy. – It is hereby the declared 
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policy of the State to strengthen and promote the advancement and self-
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sufficiency of micro, small, and medium enterprises (MSMEs) in order to 
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contribute greatly to the national development. Towards this end, the 
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State shall initiate programs that will assist MSMEs in financing their 
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respective enterprises in order to sustain the demands and constraints of 
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their respective businesses.  
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SECTION 3. Objectives. – The following are the objectives of the 
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P3 Act:  
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a. To provide an affordable, accessible, and simple micro-
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financing program for the country’s micro-enterprises, 
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especially those in the poorest populations;  
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b. To provide a better alternative to the informal lenders usually 
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availed of by micro enterprises; and 
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c. To provide a reasonable interest rate at which micro-finance 
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is made available to micro enterprises.  
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SECTION 4. Creation of the Pondo sa Pagbabago at Pag-
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asesnso (P3); Micro Enterprises as Beneficiares. – There is hereby 
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created the Pondo sa Pagbabago at Pag-asenso, hereinafter referred to 
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as the “P3 Fund” which shall be a fund specifically for the purpose of 
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lending out to qualified micro enterprises under such terms and 
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conditions that shall be formulated under this Act.  
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The beneficiaries of the P3 Fund shall be micro enterprises, as 
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defined under Republic Act No. 6977, as amended, or otherwise known 
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as the “Magna Carta for Micro, Small, and Medium Enterprises (MSMEs)”. 
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The fund shall be primarily accessible through the accredited 
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partner financial institutions (PFIs) such as rural banks, thrift banks, 
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development banks, cooperatives with license to lend, micro-financing 
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institutions (MFIs), or lending companies duly licensed by the Bangko 
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Sentral ng Pilipinas, Cooperative Development Authority (CDA), or the 
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Securities and Exchange Commission (SEC). 
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SECTION 5.  Lead Implementing Agency. –  The Small Business 
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Corporation (SB Corp.) which is the financing arm of the Department of 
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Trade and Industry shall be the lead implementing agency for the P3 
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Fund. It shall handle the fund delivery to micro-enterprises through the 
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following modes:  
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a. Direct lending;  
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b. Lending through accredited PFIs  
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To fund the administrative and operating expenses of the SB Corp., 
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an amount not exceeding five percent (5%) of the total loans disbursed 
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shall be provided annually to the SB Corp. to be sourced out from an 
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additional annual allocation.  
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SECTION 6. Features of the P3 Fund. – The P3 Fund shall have 
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the following features:  
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a. The maximum interest rate to be imposed on the loan availed of by 
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the P3 Fund beneficiaries shall be two and a half percent (2.5%) per 
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month.  Provided, that after three (3) years from the effectivity of this 
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Act, a higher ceiling may be allowed up to three percent (3%) per 
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month, subject to the review of the Micro, Small and Medium 
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Enterprise (MSMED) Council;  
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b. The interest earnings shall accrue to the P3 Fund;  
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c. No collateral requirement from the P3 Fund loan beneficiaries shall 
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be required; and  
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d. The loanable amount for individual loans shall be set and regularly 
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reviewed by the MSMED Council. 
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SECTION 7. Policy Oversight Function. – The MSMED Council 
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shall monitor both the utilization and disbursements of the P3 Fund. It shall 
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submit to the President of the Philippines and to Congress, through the 
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Congressional Oversight Committee on Micro, Small and Medium 
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Enterprise Development (COC-MSMED), a yearly report on the status of 
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the P3 Fund.  
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SECTION 8.  Appropriations. –  The amount necessary to carry 
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out the provisions of this Act shall be charged against the appropriations 
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released for the purpose under the General Appropriations Act for the SB 
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Corp. Thereafter, such sums as may be necessary for the continued 
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implementation of this Act shall be included in the annual General 
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Appropriations Act.  
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SECTION 9. Implementing Rules and Regulations. – Within sixty 
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(60) days from the approval of this Act, the Department of Trade and 
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Industry shall formulate and promulgate the necessary rules and 
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regulations to implement the provisions of this Act. The implementing 
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rules and regulations issued pursuant to this Section shall take effect thirty 
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(30) days after its publication in at least two (2) newspapers of general 
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circulation.  
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SECTION 10. Separability Clause. – If any provision of this Act is 
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declared invalid or unconstitutional, the other provisions not affected 
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thereby shall remain valid and subsisting.  
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SECTION 11. Repealing Clause. – All acts, executive orders, 
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memorandum circulars/guidelines and other issuances or parts thereof, 
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which are inconsistent with this Act, are hereby repealed or modified 
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accordingly.  
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SECTION 12. Effectivity. – This Act shall take effect fifteen (15) 
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days after its publication in the Official Gazette or in two (2) newspapers 
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of general circulation 
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APPROVED. 
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