In the Matter of ARLEFF Holdings, Inc. Sec. Reg. No. CS200800888

August 22, 2011 SEC CRMD CASE NO. 11-219 IN THE MATTER OF ARLEFF HOLDINGS, INC. SEC. REG. NO. CS200800888 ARTHUR M. LOPEZ AND LETICIA J. LOPEZ , petitioners. FOR : Petition for Revocation of the Certificate of Filing of Increase of Authorized Capital Stock ORDER This refers to the petition of ARLEFF HOLDINGS, INC., represented by Arthur M. Lopez and Leticia J. Lopez, President and Treasurer, respectively, verified on July 4, 2011, praying for the revocation of the increase of its authorized capital stock, approved on January 20, 2010, and the issuance of 7,500 shares from the unsubscribed portion, so as to warrant the reversion of its capital stock from P4,000,000.00 to P1,000,000.00, and the issued shares back to the original 2,500 shares, respectively. Petitioner is a domestic corporation registered with the Commission on January 21, 2008, with principal office at La Maison Rada Condo. Corp., 115 Rada St., Legaspi Village, Makati City, established to operate as a holding company. Petitioner alleges, among others, that: 1. At the time of its incorporation on January 21, 2008, it has an authorized capital stock of One Million Pesos (PhP1,000,000.00), divided into ten thousand (10,000) shares, with a par value of One Hundred Pesos (P100.00) each; THAECc 2. On May 7, 2009, the Board of Directors approved the issuance of 7,500 shares from its unissued capital to Arthur M. Lopez and Leticia J. Lopez, which they paid by way of assignment of real properties; 3. Likewise, on May 7, 2009, the corporation approved the increase of its authorized capital stock from P1,000,000.00 to P4,000,000.00, whereby out of the P3,000,000.00 increase, P2,843,200.00 worth of shares were subscribed by petitioners Arthur M. Lopez and Leticia J. Lopez; 4. Thus, in exchange for the subscriptions of P2,843,200.00 as paid-up capital for the increase in authorized capital stock and P750,000.00 for the previously unissued shares, petitioners executed a deed of assignment transferring their rights to the titles of real properties covered by TCT Nos. T-112,787 and T-112,788 in favor of the corporation; 5. On January 20, 2010, the Commission approved the application for increase of authorized capital stock of the corporation and the assignment of real properties by the petitioners in exchange for the shares subscribed to the corporation; 6. On account of the foregoing transactions, to avail of the benefits of the National Internal Revenue Code, Section 40 thereof, petitioners requested a tax ruling from the Bureau of Internal Revenue that the assignment of real properties is tax-exempt; 7. However, as of July 4, 2011, considering that a tax ruling from the BIR has not as yet been obtained, petitioners will not be able to comply with the directive of the Commission to submit proof of transfer of ownership in the name of the transferee-corporation; EScAHT 8. Thus, this petition for the revocation of the Certificate of Approval of Increase of Capital Stock, approved on January 20, 2010, and the Board Resolution dated May 7, 2009, authorizing the issuance of 7,500 shares of stock from the corporation's unsubscribed portion out of the original authorized capital stock. Records of the Commission show that petitioner filed on October 23, 2009 an application for increase of capital stock from P1,000,000.00 to P4,000,000.00 and the corresponding amended articles of incorporation amending Article VII thereof. Petitioner likewise filed an application dated May 7, 2009 requesting confirmation that the issuance of 7,500 shares of stock from its authorized but unissued capital stock, paid by way of real properties described in item 4 above, is an exempt transaction pursuant to Section 10.1 of the Securities Regulation Code. On January 20, 2010, the Commission approved these increase of capital stock and amended articles of incorporation, subject to the condition that the corporation must submit proof of transfer of ownership of the parcels of land used as paid-up capital within the prescribed period, pursuant to the Guidelines of the Commission issued on November 15, 1994 covering corporations using properties as paid-up capital. On September 9, 2010, the Commission approved the request of the corporation for extension of another ninety (90) days to comply with the aforesaid SEC Guidelines. However, despite the extension and considerable period given to the corporation, it still manifests its inability to comply with its obligation due to non-issuance of the BIR tax exempt ruling, hence the instant petition may be given due course. DHSaCA WHEREFORE, premises considered, and in view of the fact that no stockholders or third person will be prejudiced thereby, the Petition is hereby GRANTED. The Certificate of Approval of Increase of Capital Stock and Certificate of Filing of Amended Articles of Incorporation amending Article VII thereof, increasing the authorized capital stock from P1,000,000.00 to P4,000,000.00, approved on January 20, 2010, are revoked and cancelled. Further, the application for confirmation of exempt transaction dated May 7, 2009 pertaining to the additional subscription of P750,000.00 worth of shares paid by way of property is also cancelled. Let a copy of this ORDER be furnished the Corporate Filing and Records Division of the Company Registration and Monitoring Department for inclusion in the corporate records on file. SO ORDERED. Mandaluyong City, Philippines. August 22, 2011. (SGD.) BENITO A. CATARAN Director