MEMORANDUM OF AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This MEMORANDUM OF AGREEMENT is entered into by and between:

ARMED FORCES AND POLICE GENERAL INSURANCE CORP.

Hereinafter referred to as AFPGEN represented by its President, LTGEN ALAN R.
LUGA AFP(RET) with address at Col. Bonny Serrano Road corner EDSA, Camp
Aguinaldo Quezon City.

and

PROFESSIONAL PAYROLL SPECIALISTS, INC, hereinafter referred to as

PPSI represented by its President and CEO MA CRISTINA R. ROSALES with
address at Unit 1001-1002 City and Land Mega Plaza, ADB Ave. corner Garnet Road,
Ortigas Center, Pasig in accordance to the terms and conditions provided below.

TERMS AND CONDITIONS:

A. SCOPE OF PAYROLL SERVICES Professional Payroll Specialists, Inc.

(PPSI) shall render the following services: processing of regular semi-monthly
and non-regular payroll, such as but not limited to 13 th month pay, Christmas
bonus, performance bonus, cash conversion of unused leave credits and final pay.
The details are as follows:

1. Processing of regular semi-monthly and non-regular payroll shall include:

Process salaries of all employees including mandated government
deductions and all other allowable deductions per your
instructions;

Submission of the processed payroll for AFPGEN review and

approval and upon AFPGEN approval, submission of payroll pay-
out instructions to the AFPGEN Officer in Charge;

Furnish AFPGEN with the accounting entries, payroll breakdown

and
Schedule of outstanding loans and advances, if any, every payroll
period;

Maintain year-to-date total earnings and withholding taxes for each

employee, and;

Perform annualization of income for the year to determine the

amount of withholding tax due all employees as a basis for the
preparation of the Alphalist and issuance of BIR 2316

2. PPSI shall prepare and submit the following reports:

 2.1 Monthly:

To Social Security System (SSS) your remittances of the

following;
a. Employers and Employees contributions for the SSS
premium and Employers contributions for the Employees
Compensation Commission (R-5);
b. Employees monthly amortization for
Salary/Calamity/Stock Investment Loan (ML-1);
c. Employees amortization for Housing Loan (REL-9);
d. SSS monthly collection lists (R-3 USB/media) for
submission to SSS;
e. SSS collection list of loans (ML-2) for submission to the
SSS.
To Philippine Health Insurance Corporation (PHIC)
a. Employers and Employees monthly contribution for
Medicare (ME-5) and PHIC (RF-1) for submission to
PHIC.
To Home Development Fund (HDMF)
a. Employers and Employees contribution to PagIbig Fund
(M-1);
b. Employees monthly amortization for Pag Ibig
multipurpose loan (P2-1)
To Bureau of Internal Revenue (BIR)
a. Your remittances of taxes withheld from salaries (BIR
Form 1601-C)
b. Remittance of Credible Income Taxes Withheld Expanded
(BIR form 1601-E)

2.2 Yearly

BIR form 1604 with the corresponding Alphabetical Listing;

BIR form 2316 summarizing the individual gross earning and
withholding tax, which will be submitted to your company for your
counter signature and distribution to all your employees.

2.3 On Demand

For resignation of any officer and employee, upon notification by

AFPGEN to PPSI, we will prepare annualized salary and prepare
BIR Form 2316.

All reports, forms and rendition of Services stipulated above is contingent on the
complete and accurate information to be provided by AFPGEN and its respective
employees, officers and agents. PPSI assumes no liability for any wrong information or
entry in the forms or reports should there be erroneous information given.

B. PROFESSIONAL FEES EXCLUSIVE OF VALUE ADDED TAX (VAT)

For the Services set forth above, PPSI proposes to bill AFPGEN as follows:

1. Monthly retainers fess in processing regular payroll

(Twice processing)

For the first ten (10) people Php 8,000.00

In excess of ten (10) additional Php 80.00/head

2. Additional billings for the processing of non-regular

payroll such as 13th month pay, performance bonus,
Christmas bonus and others

For the first ten (10) people Php 8,000.00

In excess of ten(10) additional Php 80.00/head

3. Annualization and processing of BIR form 2316

For the first ten (10) people Php 8,000.00

In excess of ten(10) additional Php 80.00/head

4. Manner of billing and collection.

PPSI will bill AFPGEN every 1st week of the current month for the previous
months services.

AFPGEN will pay PPSI within ten (10) days from date of the receipt of the
Statement of Account.

C. ADMINISTRATIVE MATTERS

To ensure the proper rendition of the Services as described above, AFPGEN shall have
the following obligations pursuant to this agreement:

C.1 All instructions to PPSI shall be in writing, either by email with an

acknowledgment receipt from PPSIs duly authorized representative or by hard
copy, duly received by PPSIs authorized representatives;

C.2 Any change in the routine payroll works should be relayed to PPSI in writing at
least seven (7) banking days before payday;

C.3 AFPGEN shall timely supply the following information:

 C.3.a. Complete name of all employees covered (per Department and
location alphabetically arranged);

C.3.b. Breakdown of gross pay (Basic, Transportation, Representation

Allowance, and others);

C.3.c. Personal exemptions and number of qualified dependents, if any;

C.3.d. Employees SSS ID, HDMF, PHIC Numbers and Taxpayers

Identification Number (TIN);

C.3.e. Employees Bank Account numbers;

C.3.f. Companys TIN, PHIC, HDMF and SSS ID numbers;

C.3.g. Outstanding loans (SSS, HDMF, Company loans and other

receivables)

C.3.h. In case any employee has a previous employer for the year
covered, Certificate of Taxes from previous employer should be
immediately submitted to PPSI together with BIR Form 2316;
o C.3.h.1 duration of loan;
o C.3.h.2 monthly amortization

C.3.i. Other payroll policy matters that would affect the Services (ex.
Overtime rates formula; computation of unused leave credits, 13 th month
pay formula for those with less than 1 year of employment and others)
should be immediately submitted to PPSI;

Payroll processing shall start only upon receipt of instructions from AFPGEN
together with the above-mentioned data, if needed, in the formats required in this
agreement.

C.4 AFPGEN shall ensure and warrant that all the information provided to PPSI
pursuant to this Section are complete, accurate and up-to-date. The Services are
contingent on the provision of complete and accurate information as required herein
and that PPSI shall be held free and harmless for any error that may arise from
wrong, inaccurate or outdated information supplied by AFPGEN.

C.5 To avoid any breakdown of communication and to maintain the confidentiality of

the payroll, it is recommended that AFPGEN appoint only one (1) liaison officer
(Officer-in-Charge) to communicate with PPSI directly and a substitute only in
case the appointed Officer In-charge of payroll matters is not available.

D. PROCEDURES

The following procedures shall govern this agreement and the Services:

1. Regular Semi-Monthly Payroll

 1.1 Five (5) banking days before payday, AFPGEN shall be given
chance to submit to PPSI payroll instructions. Should there be any
changes after submission of instructions; AFPGEN should inform
PPSI the following day of any changes otherwise all changes will
be effected the following payday;

1.2 Within three (3) banking days after receipt of payroll instruction,
PPSI will forward to AFPGEN a soft copy of the processed
payroll register for its review and approval. AFPGEN shall send
comments, if any, on the processed payroll register no later than
the same date;

1.3 Upon receipt of AFPGENs approval of the payroll register, PPSI

shall provide the bank list together with the final payroll register.
PPSI will also forward to AFPGEN the individual sealed payslip
for AFPGENs distribution to the officers and employees.

1.4 Two (2) banking days after every payday, PPSI will deliver to
AFPGEN the report setting forth the accounting entries, payroll
breakdown, schedule of outstanding loans and receivables to all
your employees as of the payroll payment date, summary of
deductions for the period and accomplished BIR, SSS, PHIC and
HDMF forms for the month.

E. TURN OVER OF FILES

Every year end, PPSI will turn over all government remittances and payroll reports
to AFPGEN
F. TERM

This Agreement shall commence on the date this agreement is signed by both parties.
However, this Agreement may be terminated: (a) by either party upon 30 days prior
written notice; (b) upon 14 days written notice in the event of a material breach of this
Agreement, by the other party, unless such breach is substantially cured during such time
period; or (c) by either party upon written notice to the other party in the event the other
party dissolves or files or has filed against it a petition in bankruptcy or a receiver is
appointed for such party or substantially all of its assets. Upon termination of this
Agreement, AFPGEN shall pay PPSI for Services performed up to the effective date of
termination.

Upon receipt of a termination notice for this agreement, unless otherwise approved in
writing, PPSI shall not perform any Services that would incur additional cost to
AFPGEN; and provide its best efforts in winding up Services as directed by AFPGEN.

On termination of this Agreement or earlier request by the Company, PPSI shall return to
the AFPGEN all Confidential Information, including all copies, adaptations and
compilations in PPSIs possession.

G. POLICY MATTERS

1. Should there be any liability that may arise from PPSIs performance
of the above functions and such is directly attributable to its fault or
gross negligence, it is understood that PPSI shall be answerable for
any damage or liability only up to the equivalent amount of the actual
damage or the amount that PPSI shall have billed AFPGEN for its
 Services during the preceding three (3) months, whichever is less.
PPSI shall in no way be liable for indirect or inconsequential damages.

2. In the event that PPSI will be liquidated or ceases to operate for any
reason, we are committed to do a proper turnover to AFPGENs next
payroll provider.

3. PPSI agrees to keep confidential and not to disclose to third parties

any information provided by AFPGEN pursuant to or learned by PPSI
during the course of this Agreement unless PPSI has received the prior
written consent of the AFPGEN to make such disclosure. This
provision shall survive expiration and termination of this Agreement.
This obligation of confidentiality does not extend to any information
that is or shall become, through no fault of PPSI, available to the
general public. This provision shall survive the termination of this
Agreement for any reason.
4. In the event that either party is unable to perform its obligations under
this Agreement as a result of a force majeure, neither party shall be
liable to the other for direct or consequential damages resulting from
lack of performance. Force Majeure shall mean fire, earthquake,
flood, act of God, strikes, work stoppages, or other labor disturbances,
riots or civil commotions, acts of terrorism or other hostilities,
litigation, war or other act of any foreign nation, power of government,
or governmental agency or authority, or any other cause like or unlike
any cause above mentioned which is beyond the control of either party.

5. During the term of this Agreement AFPGEN shall have the right,
upon reasonable notice and at reasonable times, to examine and audit
the records and files of PPSI relating to the provision of Services.

6. PPSI shall maintain complete and accurate accounting records, in

accordance with accepted accounting principles as far as Payroll is
concerned, to substantiate PPSIs fees, charges, and expenses under
this Agreement. PPSI will retain such records for one (1) year from the
date of final payment upon request from AFPGEN.

7. Upon request and reasonable advance notice, PPSI shall permit

AFPGENs representatives to inspect copy and audit accounting
records at the AFPGENs cost. PPSI shall cooperate with any audit.
AFPGEN and its auditors shall treat all information produced during
the audit with the same degree of care and confidentiality that PPSI
treats AFPGENs Information.
8. PPSI shall submit reports as reasonably requested by AFPGEN. PPSI
shall perform the Services in a professional manner and in accordance
with: all applicable laws; this Agreement; the highest industry
standards; and any additional instructions AFPGEN provides
consistent with this Agreement.

9. Either partys failure to insist upon the performance of any term of the
Agreement shall not be construed as a waiver of that partys present or
future right to such performance. Each partys obligations in respect
thereto shall continue in full force and effect.
The individuals signing below hereby represent and warrants that they are duly
authorized to execute and deliver this Agreement on behalf of their organization and that
this Agreement is binding upon each party and organization in accordance with its terms.

Armed Forces and Police General Professional Payroll

Insurance Corporation. (AFPGEN) Specialists, Inc. (PPSI)

LTGEN ALAN R. LUGA AFP (RET) MA. CRISTINA S. ROSALES

President & CEO President & CEO

WITNESSES

_________________________ _________________________

Republic of the Philippines)

_____________________ ) S.S.

SUBSCRIBED AND SWORN TO before me this______ day of____________________ at

_____________________, Affiants exhibiting to me the following:

MA. CRISTINA R. ROSALES _________________

LTGEN ALAN R. LUGA (Ret) AFP TIN NO.127-951-868

NOTARY PUBLIC
Doc. No. __________
Page No. __________
Book No. __________
Series of __________