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GR. No. 171 427 March 30, 2011STERLING SELECTIONS CORPORATION VS. LAGUNA LAKE DEVELOPMENT

AUTHORITY (LLDA)Facts

The decision of Pasig City RTC and resolution of Court of Appeals that it was notconsidered as a cottage industry was assailed by Petitioner Sterling SelectionsCorporation.

Sterling Selections Corporation is a company engaged in the fabrication ofsterling silver jewelry with the products manufactured in the home of its principalstockholders. Sometime on January of 1998, it was complained because of the loudnoise and offensive toxic fumes coming from the manufacturing plant. A formalcomplaint was also filed with the Department of Environment and Natural Resources(DENR)NCR office, with the latter endorsing the complaint to the Laguna LakeDevelopment Authority (LLDA) which had territorial and functional jurisdiction over the

matter.

By virtue of R A 4850, a notice of violation and a cease and desist order (CDO)was served on petitioner after it was found that it was operating without an LLDAClearance and Permit. Petitioner contended that, it is a cottage industry and its jewelrybusiness is exempt from the requirement to secure a permit from the LLDA.

Issue

Whether or not Sterling Selections Corporation be classified as a cottage industry andwhether it is exempted from the requirement to secure a permit from the LLDA

Ruling

The Court ruled on the negative. It was a finding that amount of Php 312,500.00represents the total amount of the capital stock already subscribed and paid up by thecompanys stockholders. As such, the amount does not represent the totality of itsassets, even at the time of its registration. It is contrary to Section 3 of RA 6977, theprevailing rule during its incorporation, which provides that the term total assets wasunderstood to mean inclusive of those arising from loans but exclusive of the land onwhich the particular business entitys office, plant and equipment are situated.Petitioner's own evidence, i.e., balance sheets prepared by CPAs it commissioned itself,shows that it has assets other than its paid-up capital. According to the ConsolidatedBalance Sheet presented by petitioner, it had assets amounting to P4, 628,900.80 bythe end of 1998, and P1, 746,328.17 by the end of 1997. Obviously, these amounts areover the maximum prescribed by law for cottage industries. Therefore, the petitioner isnot a cottage industry and, therefore, is not exempted from the requirement of securingan LLDA clearance.

Courts will not interfere in matters which are addressed to the sound discretion ofthe government agency entrusted with regulation of activities coming under the specialand technical training and knowledge of such agency. The exercise of administrativediscretion is a policy decision and a matter that is best discharged by the governmentagency concerned and not by the courts. The Court recognizes the right of petitioner toengage in business and to profit from its industry. However, the exercise of the rightmust conform to the laws and regulations laid down by the competent authorities.

It is a doctrine of long-standing that factual findings of administrative bodies ontechnical matters within their area of expertise should be accorded not only respect buteven finality if they are supported by substantial evidence even if they are notoverwhelming or preponderant.

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