EXHIBIT 99.3

                              COMMERCE GROUP CORP.
                               6001 NORTH 91ST ST.
                            MILWAUKEE, WI 53225-1795
                         414/462-5310 . FAX 414/462-5312
        Stock Symbols: CGCO (OTCBB) CMG OR CMG.BN (Boston Stock Exchange)

AND/OR COMMERCE/SANSEB JOINT VENTURE (Joint Venture)
AND/OR HOMESPAN REALTY CO., INC. (Homespan)
AND/OR ECOMM GROUP INC. (Ecomm)
AND/OR SAN LUIS ESTATES, INC. (SLE)
AND/OR SAN SEBASTIAN GOLD MINES, INC. (Sanseb)
AND/OR UNIVERSAL DEVELOPERS, INC. (UDI)
ALL LOCATED AT THE SAME ADDRESS



May 13, 2002


Mr. Edward L. Machulak
Edward L. Machulak Rollover
Individual Retirement Account
903 West Green Tree Road
River Hills, Wisconsin  53217

Dear Mr. Machulak:

At today's Commerce Group Corp.  (Commerce)  Directors'  meeting,  the Directors
were informed about the confirmation, disclosure and status letter you requested
from Commerce and its affiliates to establish and confirm the amount due and the
collateral  pledged to the Edward L.  Machulak  Rollover  Individual  Retirement
Account (ELM RIRA) as of  Commerce's  fiscal year ended March 31,  2002.  Today,
Commerce's  Directors  approved,  ratified  and  confirmed  the contents of this
letter and authorized me to authenticate and confirm the outstanding obligations
due to the ELM RIRA, and the collateral pledged to the ELM RIRA as of Commerce's
fiscal year ended March 31, 2002, which are as follows:

1.   Promissory Notes and Other Obligations

     The total amount of all of the open-ended,  secured,  on-demand  promissory
     notes,  together with interest due to the ELM RIRA,  amounts to $703,646.92
     as of March 31, 2002.  These  promissory  notes,  since April 1, 1994, bear
     interest,  payable monthly,  at the rate of 4% over the prime base interest
     rate  established  from time to time by the First National Bank of Chicago,
     Chicago,  Illinois,  (now  Bank  One),  but not  less  than  16% per  annum
     (Schedule of Principal and Interest as of March 31, 2002, Exhibit A).

     On August 14, 2000,  Commerce's Directors authorized Commerce's Officers to
     negotiate a sale of its non-income producing assets, in this case, precious
     stones and jewelry, to the ELM RIRA at Commerce's book value of $172,100 in
     exchange for a reduction of debt owed by Commerce to the ELM RIRA.

<PAGE>

Mr. Edward L.  Machulak
Edward L. Machulak
Rollover Individual Retirement Account
May 13, 2002
Page 2 of 5 Pages



2.   Collateral Pledged to the ELM RIRA

     General Lumber & Supply Co., Inc.  (GLSCO),  Edward L. Machulak (ELM) as an
     individual  and not as a Director or Officer of Commerce,  the ELM RIRA and
     the  Sylvia  Machulak  Rollover  Individual  Retirement  Account  (SM RIRA)
     collectively  and  individually  identified  as the  lender(s),  have  been
     assigned on October 19, 1987, all of the rights, titles,  claims,  remedies
     and  interest  in and to the  mine  concession  which  was  granted  by the
     Government of El Salvador to Mineral San Sebastian,  S.A. de C.V. (Misanse)
     on July 23,  1987,  and  thereafter  from time to time  amended,  and which
     Misanse  then  assigned to the Joint  Venture on September  22, 1987.  This
     collateral  specifically  includes  all  of the  San  Sebastian  Gold  Mine
     precious metal ore reserves.  Commerce and the Joint Venture have the right
     to assign this and any subsequent concession  agreement.  Reference is made
     to Exhibit 2 included in the April 9, 1990 confirmation  letter.  Effective
     February 1996, the Government of El Salvador approved a rev ised version of
     the mining law. Therefore, Commerce applied for the San Sebastian Gold Mine
     mining concession applicable to this mining law. This concession is subject
     to  compliance  requirements  which have been  presented to the El Salvador
     Director of Mines and  Hydrocarbons.  Therefore,  it is clearly  understood
     that this concession,  and all of the rights thereunder, in addition to the
     concession  granted on July 23, 1987,  together with all precious metal ore
     reserves,  is pledged as collateral to all of the parties mentioned herein,
     and also  includes  Sylvia  Machulak,  as an  individual,  and  hereinafter
     referred to as SM.

3.   Cross Pledge Collateral Agreement

     GLSCO,  ELM,  the ELM RIRA and the SM RIRA  individually  are  entitled  to
     specific  collateral  that  has  been  pledged  to  them by  Commerce,  its
     subsidiaries,  affiliates and the Joint Venture.  Upon default by Commerce,
     or its  subsidiaries or affiliates or the Joint Venture,  then GLSCO,  ELM,
     the ELM RIRA and the SM RIRA have the first right to the proceeds  from the
     specific  collateral pledged to each of them.  Commerce,  its subsidiaries,
     affiliates and the Joint Venture,  also have  cross-pledged  the collateral
     without  diminishing the rights of the specific  collateral pledged to each
     of the following: GLSCO, ELM, the ELM RIRA and the SM RIRA. The purpose and
     the intent of the cross pledge of collateral  is to assure GLSCO,  ELM, the
     ELM RIRA and the SM RIRA,  that each of them  would be paid in full;  thus,
     any  excess  collateral  that  would be  available  is for the  purpose  of
     satisfying  any debts  and  obligations  due to each of the named  parties,
     including  SM. The formula to be used (after  deductin g the payments  made
     from the  specific  collateral)  is to total all of the debts due to GLSCO,
     ELM,  the ELM RIRA,  the SM RIRA and SM, and then to divide this total debt
     into each individual debt to establish each individual's  percentage of the
     outstanding  debt due. This percentage then will be multiplied by the total
     of the excess  collateral to determine the amount of proceeds  derived from
     the  excess  collateral  and then the  amount  due to each of them would be
     distributed accordingly.

<PAGE>

Mr. Edward L.  Machulak
Edward L. Machulak
Rollover Individual Retirement Account
May 13, 2002
Page 3 of 5 Pages


4.   Cancellation of Inter-Company Debts Upon Default

     Since part of the collateral pledged to GLSCO, ELM, the ELM RIRA and the SM
     RIRA is the common stock of Homespan,  Ecomm, Sanseb, SLE, Misanse, UDI and
     the interest in the ownership of the Joint Venture,  Commerce agreed,  upon
     default of the payment of  principal  or interest to any of the  individual
     lender(s)  mentioned  herein,   that  it  will  automatically   cancel  any
     inter-company   debts  owed  to  Commerce   by  any  of  its   wholly-owned
     subsidiaries  or affiliates or the Joint Venture at such time as any of the
     stock or Joint Venture  ownership is transferred to the collateral  holders
     as a result of default of any promissory note.

5.   Guarantors

     This agreement  further confirms that Commerce and all of the following are
     guarantors  to the loans made by the ELM RIRA to Commerce:  Joint  Venture,
     Homespan,  Ecomm, SLE, Sanseb and UDI. They jointly and severally guarantee
     payment of the note(s)  that were issued and also agree that these  note(s)
     may be  accelerated  in  accordance  with the  provisions  contained in the
     agreement  and/or any collateral or mortgages  securing these notes.  Also,
     Commerce,  all of its subsidiaries and the Joint Venture agree to the cross
     pledge of collateral for the benefit of GLSCO, ELM, the ELM RIRA and the SM
     RIRA.  Reference  is made to  Exhibit  3  included  in the  April  9,  1990
     confirmation letter.

6.   Re-Execution Agreement

     In the event the ELM RIRA deems that it is necessary  or advisable  for the
     ELM  RIRA  to  have  Commerce  re-execute  any  document(s)  entered  into,
     including,  but not limited to the promissory note or collateral agreement,
     Commerce will re-execute such  document(s)  reasonably  required by the ELM
     RIRA. Commerce also acknowledges that Commerce may be liable to pay certain
     costs related to any of the transactions entered into with the ELM RIRA. If
     at a later date the ELM RIRA  determines that an error has been made in the
     payment of such costs to the ELM RIRA, then the ELM RIRA may demand payment
     and Commerce does hereby agree to make such payment forthwith. All requests
     for  corrections  of any errors  and/or  payment of costs shall be complied
     with by Commerce  within seven (7) days of the ELM RIRA's written  request.
     The  failure of Commerce to comply  with  Commerce's  obligation  hereunder
     shall  constitute a default and shall  entitle the ELM RIRA to the remedies
     available  for default under any pr ovisions of the  agreements  including,
     but not  limited  to the  promissory  note  and/or  the  collateral  pledge
     agreement.

<PAGE>

Mr. Edward L.  Machulak
Edward L. Machulak
Rollover Individual Retirement Account
May 13, 2002
Page 4 of 5 Pages



7.   Omissions

     Commerce  believes that it has included all of its obligations,  monies due
     and has listed all of the  collateral due to the ELM RIRA,  however,  since
     these  transactions  have taken  place over a long  period of time in which
     changes  could have taken place,  it is possible  that  inadvertently  some
     item(s),  particularly collateral,  could have been omitted. If that should
     prove to be a fact, then Commerce, the Joint Venture, Homespan, Ecomm, SLE,
     Sanseb, and UDI agree that those omissions of collateral, if any, are meant
     to be included as collateral under this confirmation agreement.

If you are in agreement with the contents of this letter,  please sign below and
return one copy to Commerce.

Very truly yours,

COMMERCE GROUP CORP.

/s/ Edward A. Machulak

Edward A. Machulak
Secretary

<PAGE>

Mr. Edward L.  Machulak
Edward L. Machulak
Rollover Individual Retirement Account
May 13, 2002
Page 5 of 5 Pages



The contents of this letter are agreed by the following:

COMMERCE/SANSEB JOINT VENTURE           HOMESPAN REALTY COMPANY, INC.
as Guarantor (Joint Venture)            as Guarantor (Homespan)

/s/ Edward L. Machulak                  /s/ Edward L. Machulak
-----------------------------           -----------------------------
By:  Edward L. Machulak,                By:  Edward L. Machulak,
     Auth. Designee                          President


ECOMM GROUP INC.                        SAN LUIS ESTATES, INC.
as Guarantor (Ecomm)                    as Guarantor (SLE)

/s/ Edward A. Machulak                  /s/ Edward L. Machulak
-----------------------------           ----------------------------
By:  Edward A. Machulak,                By:  Edward L. Machulak,
     President                               President


SAN SEBASTIAN GOLD MINES, INC.          UNIVERSAL DEVELOPERS, INC.
as Guarantor (Sanseb)                   as Guarantor (UDI)

/s/ Edward L. Machulak                  /s/ Edward L. Machulak
-----------------------------           ---------------------------
By:  Edward L. Machulak,                By:  Edward L. Machulak,
     President                               President


Accepted by:

/s/ Edward L. Machulak
---------------------------------------
Edward L. Machulak Rollover Individual
Retirement Account
Date:  May 13, 2002


<PAGE>



                        Exhibit A to 99.3
     (Schedule of Principal and Interest as of March 31, 2002
         has been purposely omitted as it only reflects
        the calculations of the principal and interest.)