Here is my function:

<?php
$number1 = intval(readline());
$number2 = intval(readline());
$number3 = intval(readline());
 
echo smallestNumber($number1, $number2, $number3);
 
function smallestNumber($n1, $n2, $n3) {
    if ($n1 < $n2 && $n1 < $n3) {
        $smallestNumber = $n1;
    } elseif ($n2 < $n1 && $n2 < $n3) {
        $smallestNumber = $n2;
    } else {
        $smallestNumber = $n3;
    }
    return $smallestNumber;
}

..and another one:

<?php
$number1 = readline();
$number2 = readline();
$number3 = readline();
 
echo smallestNumber($number1, $number2, $number3);
 
function smallestNumber(int $n1, int $n2, int $n3): int {
    return min($n1, $n2, $n3);
}

and another smart solution without using custom function:

<?php
$num1 = readline();
$num2 = readline();
$num3 = readline();
 
$min = $num3;
 
if ($num1 < $num2 && $num1 < $num3) {
    $min = $num1;
} else if ($num2 < $num1 && $num2 < $num3) {
    $min = $num2;
}
 
echo $min;