SERVICE ENGAGEMENT CONTRACT

KNOW ALL MEN BY THESE PRESENTS:

This AGREEMENT is made and entered into by and between:

AIR MATERIEL WING SAVINGS AND LOAN ASSOCIATION

INC., (AMWSLAI) a corporation duly organized and existing under the
laws of the Republic of the Philippines, with office address at Corner
Boni Serrano and 18th Avenues, Murphy, Cubao, Quezon City,
represented herein by its Chairman and President, COL THADDEUS P
ESTALILLA PAF (RET), hereinafter referred to as the “PRINCIPAL”;
and

MELANIA B CAPARROS, of legal age, married/single, Filipino

citizen, doing business under the name and style of JOY & TIM
ENTERPRISES with business address at No. 7 Corner 3rd and 5th
Camarilla St., Murphy, Cubao Quezon City, hereinafter referred to as
the “SERVICE MANAGER” (SM);

WITNESSETH, That:

WHEREAS, the PRINCIPAL is engaged in the savings and loan business which
involves, among others, the solicitation of new loans, as well as the acceptance and
renewal of past due and current loans of its members;

WHEREAS, the PRINCIPAL is desirous of maximizing the revenue-generating

capacity of its lending operations;

WHEREAS, in order to achieve the aforestated objective, it is essential that the

PRINCIPAL expands its marketing and servicing capability by outsourcing the
functions of solicitation of new loans and the acceptance and renewal of past due and
current loans to duly qualified individuals and/or entities;

WHEREAS, the SERVICE MANAGER has represented that she/he possesses the
requisite capability, professional knowledge, experience and skill to assist AMWSLAI in
performing the functions of accepting renewal of past due and current loans and
solicitation of new loans, among others;

WHEREAS, the SERVICE MANAGER has offered to serve as a marketing agent

of the PRINCIPAL and the latter is desirous of engaging the services of the SERVICE
MANAGER as its marketing agent;

NOW THEREFORE, for and in consideration of the foregoing premises and of

the conditions and stipulations hereinafter set forth the parties have agreed as follows:

A. Effectivity

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 This Service Engagement Contract shall commence 02 April 2019 and will end on
01 October 2019.

This contract shall not be deemed extended by implication beyond the period
agreed upon unless the parties hereof enter into a new contract or agree to its renewal
within thirty (30) days before its expiration.

B. Scope and Nature of Services of the SERVICE MANAGER

1. Recruit and solicit new members for the PRINCIPAL.

2. Receive applications for renewal of all past due and/or current loans subject to
the existing policies and guidelines by the PRINCIPAL.
3. Transmit and monitor status of processed loan applications.
4. Assist the PRINCIPAL in the follow-up of non-moving/problem accounts
facilitated by the SERVICE MANAGER.
5. Participate in the information campaign about the PRINCIPAL within the
specified areas of responsibility.
6. Handle queries of members with proper coordination with the Branch Head, if
necessary.
7. Attend meetings/briefings called by the PRINCIPAL Head Office and/or its
branches/extension offices.
8. Perform and comply with all the rules, regulations, directives, instructions,
guidelines, requirements, and orders that are in effect, and which may
thereafter be instituted by the PRINCIPAL during and after the term of this
agreement.

C. Service Engagement Requirements of the Service Manager

The SERVICE MANAGER shall be required to submit the following documents

to AMWSLAI:

1. BSP (Bangko Sentral ng Pilipinas) License to Operate as Service Manager of

AMWSLAI
2. Bio-data/Resume (with two 2x2 recent photos)
3. Community Tax Certificate
4. NBI Clearance (not more than six (6) months from submission date)
5. Barangay Clearance
6. Police Clearance
7. Municipal Court Clearance (not more than six (6) months from submission
date)
8. List of Agents/Personnel (together with the above-stated requirements,
specifically 2 to 7)
9. Department of Trade and Industry (DTI) Registration

D. Obligations of the Service Manager

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 1. The SERVICE MANAGER shall be bound by his acceptance to carry out this
Service Engagement Contract and is liable for the damages, which, through his
act or omission, the PRINCIPAL may suffer.

2. The SERVICE MANAGER shall be authorized to reach out to AMWSLAI

membership by disseminating and collecting information which AMWSLAI
management deems pertinent to its loans campaign program.

3. The SERVICE MANAGER is obliged to recruit and engage the services of

qualified personnel. SERVICE MANAGERS shall deal directly with and shall
exercise full control and supervision of these personnel and as such shall be
liable for all damages that may arise due to omissions, violations and
unauthorized actions committed by his/her agents/personnel.

4. The SERVICE MANAGER is required to submit a complete list of his

personnel/agents to the PRINCIPAL upon signing of this Service Engagement
Contract. The SERVICE MANAGER shall be obliged to update the said list of
agents/personnel on a monthly basis or as needed in order to protect the interests
of AMWSLAI and its members.

5. The SERVICE MANAGER is responsible and therefore warrants that the identity
of the prospective members/borrowers of AMWSLAI and their signatures in the
membership and/or loan documents are genuine.

6. The SERVICE MANAGER expressly agrees to pay in cash, or through their

earned commissions the damages suffered by the PRINCIPAL in the instance of
the following offenses:

a. The SERVICE MANAGER, based on the evidence gathered by the

PRINCIPAL, has solicited a fraudulent/fictitious loan. *

*A loan shall be considered fraudulent/fictitious when any of the

following circumstances are attendant: a) documents submitted are
falsified, b) the signatures appearing on the loan documents are
forged, c) submission of a document purporting to be a copy of an
original document when no such original exists, d) when there is
identity theft e.g. when a borrower was made to appear that he applied
for a loan when the truth of the matter is that he/she did not apply for
said loan, e) any other acts of fraud as defined under Philippine laws.

The PRINCIPAL has the option to file the appropriate criminal and or civil
cases against the SM or any of his/her agents before the courts.

b. The Service Manager fails to submit any of the required documentary

requirements he/she has to submit pursuant to this contract.

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 c. The SM has committed any of the following: 1) Commission of any of the
prohibited acts specified in item E hereof and 2) Violation of the
confidentiality clause.

d. Any other act analogous to the foregoing.

E. Prohibitions on the Service Manager/Agents

1. The Service Manager and her agents/personnel are prohibited from performing
the following:

a. Acts inimical to the interest of the PRINCIPAL:

i. Work simultaneously with a competitor or office with similar

business as the PRINCIPAL;
ii. Induce members not to borrow from the PRINCIPAL;
iii. Claim, collect, receive deposit and loan payments from the
PRINCIPAL’S members;
iv. Claim loan insurance;
v. Enter into separate contract/s (different from those authorized by
PRINCIPAL) with any AMWSLAI member/prospective member
whether related or not to the transaction of the member with
AMWSLAI;
vi. Waive any loan requirement or document;
vii. Solicit fictitious loans by the resulting to monetary loss to
AMWSLAI;
viii. Use of the AMWSLAI seal or insignia in any poster, calling card,
leaflets or any other document without the prior authority from
the PRINCIPAL;
ix. Spreading of wrong information about AMWSLAI, its Trustees,
Management Officers and products;
x. Improper behavior/etiquette;
xi. Any other act analogous to the foregoing.

5. Acts inimical to the interest of the borrower/member:

i. Claim ID, passbooks, loan voucher;
ii. Act as Attorney-in-Fact/representative or authorized
representative in any transaction with AMWSLAI;
iii. Claim loan proceeds of the member;
iv. Encash loan proceeds of the member; and
v. Collect fees from the borrowers; and
vi. Any other act analogous to the foregoing.

F. Operational Guidelines

1. The SERVICE MANAGER’S (SM) agents/personnel shall solicit loans from the
AFP/PNP/BJMP/BFP camps/stations/units.

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 2. Only the designated representatives shall be allowed to follow up on loans upon
filing and upon release.

3. The SM’s agents/personnel shall not be allowed to collect any fees from the
borrowers.

4. The SM’s agents/personnel are not allowed to transfer from one SM Group to
another without proper consent from the former SM.

5. The SM’s agents/personnel shall be required to wear the proper ID, duly
approved by the PRINCIPAL, when dealing with the PRINCIPAL’s members.

6. The SM’s agents/personnel shall abide by all the rules, regulations, guidelines,
requirements and standard operating procedures of AMWSLAI which are
currently in effect or which will be established in the future.

7. Only authorized agents/personnel of the SM, whose names have been submitted
to AMWSLAI, may operate as stated under the Service Engagement Contract.

G. Guidelines on the Payment of Commissions

The Service Manager shall be entitled to the payment of commission based on

the following guidelines:

1. AMWSLAI’s Management Information Service Division (MISD) shall prepare

a report, which will be the basis for the payment of commissions. A copy of
the said report will be furnished to the Service Manager who has five (5) days
from his receipt thereof to submit or present additional claims or objections,
after which, all deficiencies and claims shall be deemed waived.

2. The incentive scheme for Loan Renewals, New Loan, New Member with New
Loan shall be as follows:

AFP ACTIVE / PNP / AFP PENSIONERS

BFP / PVAO / PCG /
BFP / PNP PENSIONERS

Loan 7.25% of Interest & FOC 3.625% of Interest & FOC Rate
Renewal Rate

New 8.25% of Interest & FOC 4.125% of Interest & FOC Rate
Loan Rate

New 9.50% of Interest & FOC 4.750% of Interest & FOC Rate
Member Rate
/ New
Loan

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 The computation shall be as follows:

1st 12mos interest + 1st 12mos FOC multiplied by the above rates = Commission

a. Loan Renewal shall include:

1. Loans with absorbed old loan.
2. Loans paying in full existing loan/s.

b. New Loan shall include:

1. Additional Loan
2. Loans with new deduction

c. New Member with New Loan shall include

1. First loan granted within one (1) month from membership
2. Membership was opened by the same SMR soliciting the new loan

• Release schedule is as follows:

a. On the 1st month following the date of loan approval and release of
proceeds will be the first installment release of the commission
equivalent to 80% of the total commissions earned per booked loan
account. The actual release of commission is 5 days after the 15th or
30th of the month the loan was approved or booked.

b. The remaining 20% of the total commissions earned will be

released monthly within 2 months. The monthly installment
release will be equivalent to 10% of the total commissions earned
per booked loan account.

CONDITION of RELEASE: release of commission will be 5 days

after the 15th or 30th of the month upon confirmation and receipt of
remittance.

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 • No collection, no commission within the duration of the 5-month
commission release schedule.

3. Each SMR Group shall submit a loan production report (hard and soft copy) no
later than the 1st working day after the 15th and 30th/31st of the current month to
the Administrative Assistant, Business Operations Directorate (BOD), duly
signed by the SMR Group Head and properly received by said personnel. No
report, no commission.

4. In the case of SERVICE MANAGERS/agents, who were former service

assistants/dealers/collection service contractors of the PRINCIPAL and who still
have outstanding liabilities with AMWSLAI, they shall allocate thirty percent
(30%) of the fifty percent (50%) of their total commission (each for supervisor and
agent as the case may be) for the settlement of their obligation until the same has
been paid in full.

H. Qualifications for the Renewal of the Service Engagement Contract

The PRINCIPAL has the option to renew the Service Engagement Contract with
the SERVICE MANAGER based on the following qualifications:

1. The SERVICE MANAGER has maintained an acceptable Collection Efficiency

Ratio (CER) standard as prescribed by the PRINCIPAL.

2. The SERVICE MANAGER has shown that his performance, in terms of loan
solicitation, is within the standard prescribed by the PRINCIPAL.

3. The SERVICE MANAGER is able to address/answer complaints promptly

and is compliant with the submission of Commission Reports.

4. The SERVICE MANAGER has shown compliance with the provisions of the
Service Engagement Contract.

5. The renewal of the SERVICE MANAGER has been favorably recommended

by the Senior Vice President for Business Operations Directorate (BOD).

6. The renewal of the SERVICE MANAGER has been confirmed/approved by

the Board of Trustees of the PRINCIPAL.

I. No Employer-Employee Relationship

1. There shall be no employer-employee relationship between AMWSLAI and the

Service Manager and/or the latter’s agents/personnel. As such, the
agents/personnel of the Service manager shall not be entitled to any salary or
benefits due to the regular employees of AMWSLAI.

2. The Service Manager warrants to fully and faithfully pay the commissions,
salaries and emoluments of its agents/personnel in accordance with the Labor

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 Code, as well as all other laws, rules and regulations pertaining to the
employment of labor.

3. The Service Manager shall be solely liable for any damages that may arise due to
omissions, violations and unauthorized actions committed by his/her
agents/personnel.

J. Confidentiality Clause

The Service Manager, who has access to information, data, records, materials,
whether written, mechanical or oral relating to the business of AMWSLAI, hereby
undertakes:

a. To keep the information received from AMWSLAI (such as but not limited to
information relating to members/borrowers and applications and/or deposit, as
well as any information on the operations of AMWSLAI) completely confidential;
b. Not to disclose in whole or any part of the confidential information to any
person, unless authorized in writing by AMWSLAI;
c. Not to use any confidential information obtained from AMWSLAI for its own
benefit or for the benefit of anyone other than AMWSLAI;
d. To use the confidential information only for the purpose for which it is supplied
by AMWSLAI; and
e. To maintain the confidentiality of information obtained as property of
AMWSLAI.

K. Watchlisting

It is expressly understood that in the event that the SERVICE MANAGER or any
of his/her agents/personnel get involved in any crime/irregularity the principal is
bound to report to the Bangko Sentral ng Pilipinas (BSP), the latter, subject to
Monetary Board approval, may include the said agents/personnel in the BSP watch
list of individuals disqualified from holding any position in institutions under BSP
supervision.

L. Grounds for the Termination/Suspension of this Contract

The PRINCIPAL shall implement a “ONE-STRIKE RULE” wherein a Service

Manager, including his/her agents, who is found to have violated any of the
provisions in this contract, may be suspended for a specified period/ terminated
depending on the gravity of the offense.

The following grounds may result in the suspension/termination of the SM

and/or his agents:

a. Violation and/or failure to submit the requirements as specified in Section C.

b. Violation and/or failure to observe the provisions stated in Section D.
c. Violation of any of the provisions in section E and F hereof.
d. Violation of the Confidentiality clause stated in section J hereof.

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 e. Failure of the SERVICE MANAGER to submit the required list of
agents/personnel.
f. Revocation by the BSP of the SM’s License to Operate as Service Manager.
g. Any other offenses/grounds, which are considered detrimental to the interests of
the Association.

M. Termination

Either party has the option to terminate this Agreement by serving a thirty (30)
day prior written notice.

N. Amendment

This agreement may not be modified or altered except by an instrument in writing

duly signed by the contracting parties.

O. General Provision

1. The Agreement is personal in nature and may not be assigned by either party
without the prior written consent of AMWSLAI and the SERVICE MANAGER.

2. The SERVICE MANAGER agrees that any legal action arising from this contract
shall be brought before the courts of competent jurisdiction in Quezon City to the
exclusion of all other courts.

AIR MATERIEL WING SAVINGS AND JOY & TIM ENTERPRISES

LOAN ASSOCIATION INC (AMWSLAI)

By: By:

COL THADDEUS P ESTALILLA PAF (RET) MELANIA B CAPARROS

Chairman and President Proprietress

Signed in the presence of:

_____________________________ ___________________________

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 ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES)

) S.S.

BEFORE ME, a Notary Public for and in _____________, this ___ day of
_________ 2019, personally appeared the following parties with their respective
Competent Evidence of Identity, to wit:

ID No. Date/Place of Issue

Thaddeus P Estalilla TIN 160-045-435-000 ________________________
Melania B Caparros Passport No. EC7978871 08Jun21/DFA NCR Northeast

known to me and to me known to be the same persons who executed the foregoing
instrument and acknowledged to me that the same is their free and voluntary act and
deed and the free and voluntary act and deed of their principals.

This instrument, consisting of ten (10) pages including the page whereon the
acknowledgment is written, refers to a Service Engagement Contract between
AMWSLAI and Joy & Tim Enterprises and has been signed by the parties and their
respective witnesses on each and every page hereof.

WITNESS MY HAND AND NOTARIAL SEAL.

Notary Public

Doc. No. ______;

Page No. ______;
Book No. ______;
Series of 2019.

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