CONTRACT OF SECURITY SERVICES

KNOW ALL MEN BY THESE PRESENTS:

This Contract made and executed this ___ day of February 2018 at __________________, Philippines,
between:

JL7 STAR SECURITY AGENCY, INC., a duly licensed security agency and existing under
and by virtue of laws of the Republic of the Philippines, with office address at LESB
Building Block 25 Lot 9 Sampaguita St., Pembo, Makati City, represented in this Act by
General Manager JEREK S. BAUTISTA, hereinafter referred to as the AGENCY;

- and -

HACIENDA MACALAUAN, INC., a private corporation existing under and by virtue of the
law of the Republic of the Philippines, with office address at 7 th Floor Pacific Star Bldg.
Se. Gil Puyat Ave. cor Makati Ave., Makati City, Metro Manila, Phils., represented in this
Act by its Chief Financial Officer, ANN M. CAPADA, hereinafter referred to as the
CLIENT;

WITNESSETH, That:

WHEREAS, the CLIENT desires to engage the service of the AGENCY for the purpose of guarding and
protecting its properties, equipment, installations, personnel and guests in the CLIENT’s premises free
from trespass, usurpation, injury, theft, pilferage, robbery, arson, damage and other destructive acts,
unlawful in nature, by strangers or third parties as well as to maintain peace and order around the
CLIENT’s premises.

WHEREAS, the AGENCY, which is duly licensed and bonded security guard agency operating under and
by virtue of the provisions of Republic Act 5487, has agreed to watch, safeguard and protect the
CLIENT against trespass, usurpation, injury, theft, robbery, arson, damage and or other unlawful act by
strangers or third parties within the CLIENT’S premises subject to stipulations set hereunder.

NOW THEREFORE, for and in consideration of the mutual premises, covenants, stipulations and
provisions hereinafter set forth, the parties have hereto agreed and do hereby mutually agree as
follows:

1. AGENCY – CLIENT RELATIONSHIP

There should be no employer – employee relationship between the CLIENT on one hand, and the
AGENCY and the guard who the AGENCY may assign to perform the services called for hereunder, on
the other hand. The AGENCY hereby acknowledge that no authority has been conferred upon it by the
CLIENT to hire any person on behalf of the CLIENT and that other than the purpose for which they are
intended, the security guard supplied by the AGENCY may be assigned to perform services required by
the CLIENT and the same shall be simply construed as desire by the CLIENT to ensure efficient result of
service rendered by the AGENCY.

It is expressly understood and agreed upon by the parties that the persons, who the AGENCY may
assign to perform the services called for, are and shall remain employees of the AGENCY only. As such,
the AGENCY hereby warrant to fully and faithfully comply with the provisions of the New Labor Code,
as well with other Presidential Decrees, Republic Acts, Letters of Instruction, General Orders, Rules and
Regulations relative to terms and conditions of employment.

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2. AGENCY RESPONSIBILITIES AND OBLIGATIONS

Agency – Guard Relationship

Administration, discipline, supervision and control of the security guards to be assigned by the AGENCY
under this Contract shall conform to Republic Act 5487, known as the Private Security Agency Law and
the Implementing Rules and Regulations prescribed hereunder by the Director of the Philippine
National Police as well as those of the AGENCY.

The AGENCY shall retain and exercise the sole, exclusive and absolute right as employer to select,
rotate, re-assign, suspend, lay off, terminate and/or impose disciplinary action over the individual
watchman or security guards assigned by it to the CLIENT. It is further understood that the AGENCY
shall select, engage and discharge its employees or agents and otherwise direct and control their
services. The determination of wage, salaries or compensations of its employees shall be within the
sole control and full control of the AGENCY.

Guard Assignment and Rotation

The AGENCY as employer shall retain and exercise the sole and absolute right to rotate, reassign,
suspend, direct and control the services of the security guards to be assigned to the CLIENT. The
CLIENT may request the AGENCY to replace a guard suitable to the CLIENT’s requirements.

Agency Contract Fee

In consideration of the services to be rendered by the AGENCY to the CLIENT and during the effectivity
of this Contract, the CLIENT shall pay to the AGENCY:

1. The amount of TWENTY SEVEN THOUSAND, FOUR HUNRED TWENTY FIVE PESOS and 87/100
only (Php.27,425.87) inclusive f 12% VAT and agency income per DAYSHIFT Guard per month for
twelve (12) hours duty; and

2. The amount of TWENTY EIGHT THOUSAND, FOUR HUNDRED THIRTY FIVE PESOS and 32/100
only (Php.28,435.32) inclusive of 12% VAT and agency income per NIGHT SHIFT Guard per month
for twelve (12) hours duty.

The CLIENT and the AGENCY clearly understood that only the AGENCY Income shall be subject to
issuance of an Official Receipt (OR). A 12% Value Added Tax (VAT) shall be charged on top of the
calculated total Agency Income. Moreover, the total Agency Income net on VAT shall be subject only to
2% expanded withholding tax. The balance representing guard’s salaries to be paid by the CLIENT
through the AGENCY shall be subject to the issuance of a Non-VAT Acknowledgement Receipt (AR)
consistent with paragraph IV of BIR Revenue Memorandum Circular No. 39-2007. (See Annex A – Cost
of Contribution).

It is understood that the portion of the above consideration equivalent to that amount to which the
security guard/s is/are entitled by way of salary or compensation shall be earmarked and set aside for
such remuneration by the AGENCY.

Payment Schedule

The CLIENT shall make payment twice a month on or before 15 th and 30th of each month covering
services rendered for the previous half month period.

Loss Determination

The CLIENT shall deduct, pending final determination of the responsibility of the AGENCY,
commensurate amount from the billing of the latter to the CLIENT for any loss that may occur subject
to Articles 4 and 5 of this Contract.

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Minimum Wage Rate

In case a decree, law, order or proclamation amends the MINIMUM WAGE RATE or provides new or
increase of benefits to employees, there shall be corresponding increase in contract rate base on the
PADPAO rates, subject to negotiation between the CLIENT and the AGENCY.

Unauthorized Loans and Accounts of Security Guards

The CLIENT shall not extend loan to any of the guards assigned /detailed to them by the AGENCY
without the consent of the AGENCY. Any private transaction entered into by and between the guard
and the CLIENT or by any of his/her employees shall not be considered an obligation of the AGENCY.

Guard Utilization

The CLIENT shall not utilize the guard of the AGENCY for other purposes or activities that are illegal
“per se” or declared illegal either by Special Law or by City/Municipal Ordinance. Further, guards
assigned to the CLIENT shall be utilized only within the premises of the CLIENT’s properties. Any liability
arising from the utilization of the guards assigned by the AGENCY to the CLIENT outside the premises
herein agreed upon or utilization of the guards other than the purposes herein prescribed shall be the
sole responsibility of the CLIENT.

3. AGENCY LIABILITY

The AGENCY shall assume full responsibility for any loss or damage due to theft, pilferage, robbery,
trespass, arson and other illegal or destructive acts which the CLIENT may suffer within the premises
being guarded by the security guards 24 hours from occurrence provided, it shall have been
established after a thorough investigation i.e., reported by PNP or any concerned Law Enforcement
Agency that said loss or damage was principally due to the negligence of the security guards of the
AGENCY during their tour of duty.

Before obligation attaches, it shall be necessary that the actual existence or the presence of the
property or articles allegedly lost or damaged inside the secured establishment or area, and the fact of
loss or damage shall have been established.

In the event of strikes, pickets, lockouts or occurrence of natural calamity, fire, earthquake, war, force
majeure or any event when there is suspension or stoppage of business operations of the CLIENT, this
Contract shall remain in effect for the duration of the said event, unless otherwise requested by the
CLIENT in writing.

4. AGENCY LIABILITY LIMITATIONS

The AGENCY shall not be held responsible, in any manner, for the action of the guards which are
contrary of the Laws of the Philippines. The AGENCY must take appropriate action against the
concerned security guard in accordance with Republic Act 5487. The AGENCY shall not be required to
take any action or contrary to or not authorized by this Act and liability shall be limited to its obligation
under this Act.

The AGENCY shall assume no responsibility or liability where loss in due to any of the following:

a) Where the loss or damage occurred inside a closed and or/locked warehouse, office, room
and/or building except when it has been proven that the door or any part of the building
has been forcibly opened and that said loss is reported to the guard immediately upon its
discovery;
b) For the loss of any property belonging to the CLIENT which are kept in an open space or
storage but not turned over to the AGENCY or its duly authorized representative for
physical and proper recording and safeguarding;
c) Although not kept in an open space and/or storage, when the property has been issued to
CLIENTS’s employees;

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 d) Loss, damage or injury exclusively due to the deliberate or negligent act or omission of the
employees of the CLIENT;
e) Where such loss was the result of any of the following: robbery in band, mob of violence,
tumultuous affray, act of dissidence, insurrection or revolution, demonstration or rally and
analogous cases;
f) Loss of pocketable items;
g) Inevitable loss due to the spontaneous nature of crime or totally beyond the capabilities of
any security agency to prevent such loss, based on number of guards on duty at the time;
h) Forced majeure or act of God or loss due to fortuitous event;
i) Loss and/or damage due to the act of guards while performing instructions and/or due to
the insistence of the CLIENT other than those specified in this Contract.

In case of disagreement on whether or not the AGENCY is liable for any loss or damage to the CLIENT,
the latter shall not deduct from or withhold payment of the amount or compensation due to the
AGENCY without meeting first the following conditions:

a) The fault, guilt or negligence of the AGENCY’s guard or personnel has been established upon
reasonable investigation wherein both parties are given the opportunity to be heard; and
b) The value or cost of the damage or injury has been proven and/or ascertained by the
mutual agreement of the parties.

During the term of the Contract, the AGENCY agrees to continue to provide the services to the CLIENT
and the CLIENT agrees to continue to make service payments.

Once the foregoing conditions are met, the CLIENT shall thereafter bill the AGENCY separately and the
same shall be deducted and/or reflected in the succeeding billing statements of the AGENCY, but in no
case shall the CLIENT automatically deduct from the billing submitted by the AGENCY.

5. GUARDS AND SHIFT

As required by the CLIENT, the security detachment to be established and assigned by the AGENCY
shall consist of:

No. of Guards Two (2)

No. of Hours Twelve (12) hours
Shifting Hours 12 Hours interval

The AGENCY shall provide the above-stated Security Guard services to the CLIENT’s business address at
Block 10 Lot 12 BF Martinville, Canaynay Ave., Manuyo Dos, Las Piňas City.

The number of contracted guards may be increased or decreased at anytime upon the request of the
CLIENT.

6. CONFIDENTIALITY

This Contract and its provisions are confidential. The guilty party of unauthorized disclosure of the
terms of this Contract resulting to substantial and irreparable damage to the competitiveness of the
AGENCY or compromise the CLIENT shall be liable for damages commensurate to the damage or injury
suffered by the innocent party.

7. SEVERABILITY

Each paragraph of this Contract shall remain separate from, independent of and severable from any
and all other paragraphs herein except when otherwise indicated by the context of this Contract. Any
decision or declaration that one or more paragraphs herein found to be null and void shall have no
effect on the remaining paragraphs of this Contract.

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Guard Qualifications

The AGENCY shall provide the CLIENT with security guards who possess the following qualifications:

a) Not addicted to liquors or drugs and have never used illegal drugs;
b) With good moral character and reputation, courteous, alert, without criminal or police record
and not convicted of a crime;
c) Physically and mentally fit, at least 5 feet and 4 inches in height, 21 years of age but not more
than 55 years of age and a citizen of the Republic of the Philippines;
d) Have completed security training and proficient in the use of firearms;
e) Duly licensed, properly screened and cleared by the PNP, NBI and other government offices
issuing clearances for employment;
f) With educational attainment of at least High School Graduate/College level.

If it should be determined later that a guard does not meet of any of the above qualifications, the
AGENCY shall be obliged to immediately replace the guard with another guard meeting the above
qualifications.

Guards Compensation and Benefits

As the employer of the security guards, the AGENCY agrees to assume responsibility for the former’s
wages with notice to them at the time of hiring including other terms and conditions of employment.
(See attached Cost Distribution Per Month for 12 Hours: Annex “A”)

Law Enforcement Assistance

The AGENCY, with additional charges, shall actively aid the Philippine National Police and other law
enforcement agencies in the investigation of cases involving injuries, loss or damage that directly
involve the AGENCY and the CLIENT.

Equipment

The AGENCY shall provide at its expense handcuffs to the security guards assigned to the CLIENT during
their tour of duty including the following security equipment:

a) Service firearm revolver 38;

b) Nightstick and whistle;
c) Search light; and
d) Hand held radio transceiver or cell phone

Inspections

The AGENCY shall ensure that regular post-inspection shall be conducted to exercise discipline, control,
supervision and administration over the guards. The inspector shall be allowed to conduct anytime
without notice.

Emergencies

The AGENCY shall ensure immediate response in case of emergencies and fortuitous events. Cellphone
numbers apart from regular land lines shall be provided to the CLIENT’s representative upon the
perfection of this Contract.

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Discipline

Discipline and administration of the security guards shall be the sole responsibility of the AGENCY. The
Guards are required to conform to the rules and regulations of the AGENCY and Republic Act 5487 and
other laws of the Philippines. The guards assigned to the CLIENT shall receive instructions from the duly
designated representative of the CLIENT.

The guards provided by the AGENCY shall perform the services enumerated in the second “WHEREAS”
clause and shall enforce and implement the policies, rules and regulations of the CLIENT aimed at
maintaining security, safety and good order approach.

8. CLIENT RESPONSIBILITIES AND OBLIGATION

Reporting

The CLIENT obliges itself to report in writing to the AGENCY through its guard-in-charge assigned the
existence of any loss or damage to the CLIENT’s properties within 24 hours after the occurrence or
upon discovery. Otherwise the CLIENT shall have waived its rights to proceed against the AGENCY for
such loss or damage.

9. ENTIRE AGREEMENT

This Contract constitutes the entire agreement between the parties hereto and contains all of the
covenants, representations and warranties of the respective parties. No oral representations or
warranties, of any kind, shall be recognized between the parties. This Contract may not be amended, in
any respect, except by written instrument signed by the parties. Any oral amendments or modification
shall be of no force and void.

10. TERMS OF CONTRACT

This Contract shall take effect upon signing of this contract and shall cover the period of ONE (1) YEAR
from February ____, 2018 to February ___, 2019 and shall be deemed renewed unless sooner or later
terminated for cause by either parties pursuant to Article 11 hereof.

11. TERMINATION NOTIFICATION

Either party may terminate this Contract for any justifiable cause or causes at anytime by written
notice given to the party at least (30) days prior to the intended date of termination. In case of serious
breach of any of the provisions of this Contract by any party, the non-breaching party may immediately
terminate this Contract by giving written notice with effectivity on the date so specified in the written
notice. In case the CLIENT terminates the Contract within the 30-day period after the signing hereof
without justifiable reasons pertaining to the expected services, it is understood that FULL PAYMENT of
the total monthly contract price for one (1) month by the CLIENT, as herein agreed, multiplied by the
number of guards posted, shall be billed in full plus the necessary incidental expenses incurred by the
AGENCY in connection therewith. However, the AGENCY may, without complying with the 30-day
period notice, outright terminate the security service extended to the CLIENT for non-payment of an
accumulative account of at least two (2) billing periods;

Should any disagreement occur between the parties, any of the parties shall give a written notice to
the other party within thirty (30) days and negotiate to settle the problem. In addition, both parties
agree to settle legal issues or injury suffered through conciliation, mediation or third party arbitration.

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In case of any legal action that may arise by reason of this Contract, both parties agree that the venue
thereof shall be in the proper Courts of Makati City.

IN WITNESS WHEREOF, the parties have hereunto set their hand at the place on the date first stated
above.

CLIENT AGENCY

By: By:

MS. ANN M. CAPADA MR. JEREK S. BAUTISTA

Chief Financial Officer President/General Manager

SIGNED IN THE PRESENSE OF:

________________________ ___ _________________________

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES)

CITY of__________________) S.C

BEFORE ME, a Notary Public for and in the City of ______________________, Philippines, this
_______ day of February, 2018 personally appeared the following:

Competent Evidence of Identity Date of Issue Place of Issue

JEREK S. BAUTISTA _____________________ ___________ __________________

ANN M. CAPADA Multi-Purpose I.D. No. ___________ __________________

CRN-0111-2787305-4

Known to me and to me known to be the same person who executed the foregoing instrument,
and acknowledged to me that the same is their free and voluntary act and deed.

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 This is a Contract of Security Services which consists of eight (8) pages, including this page on
which this Acknowledgmet is continued, and is signed by the parties and their witnesses on each and
every page thereof.

WITNESS MY HAND AND SEAL on the above date and at the place first above written.

Doc. No. _______;

Page No._______;
Book No._______; _____________________________
Series of 2018 Notary Public

ANNEX A
Cost Distribution Per Month for 12 Hours

Post:
Day Shift Night shift
Minimum Wage Rates 512.00 512.00
No. of Days / year 393.50 393.50

SALARIES & WAGES

Average Pay/Month 16,789.33 16,789.33
13th mo. Pay 1,244.55 1,244.55
COLA 0.00 0.00
Service Incentive Leave 225.58 225.58
Uniform Subsidy 100.00 100.00
Night Differential 0.00 788.63
Overtime 0.00 0.00
Total Amt to Guard 18,359.46 19,148.09

Statutory / Government Requirements

SSS Premium 1,495.00 1,495.00
Philhealth Contribution 275.00 275.00
Pag-ibig Fund 200.00 200.00
State Insurance 100.00 100.00
Retirement Benefit 997.00 997.00
Total Amount to Govt 3,067.00 3,067.00
TOT AMT TO GUARD & GOVT 21,426.46 22,215.09
AGENCY FEE 5,356.62 5,553.77
12% VAT 642.79 666.45
CONTYRACT RATE PER MONTH 27,425.87 28,435.32
Less: 2% EWT 107.13 111.08
NET CONTRACT RATE PER MONTH 27,318.74 28,324.24

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