Case Digest: Sterling Selections Corp. v. LLDA & Mendoza
G.R. No. 171427: March 30, 2011
STERLING SELECTIONS CORPORATION, Petitioner, v. LAGUNA LAKE DEVELOPMENT AUTHORITY (LLDA) and JOAQUIN G. MENDOZA, in his capacity as General Manager of LLDA, Respondents.
NACHURA, J.:
FACTS:
Petitioner is a company engaged in the fabrication of sterling silver jewelry. Its products are manufactured in the home of its principal stockholders, Asuncion Maria and Juan Luis Faustmann (Faustmanns), located in Barangay (Brgy.) Mariana, New Manila, Quezon City.
For creating loud unceasing noise and emitting toxic fues coming from the plant, one of petitioners neighbors filed a complaint with the Barangay. During conciliation proceedings, petitioners management undertook to relocate its operations within a month. The parties signed an Agreement to that effect. However, petitioner failed to abide by the undertaking and continued to manufacture its products in its Brgy.
Alicia P. Maceda (Maceda), another neighbor filed a complaint before the barangay and a formal complaint with the DENR. After, investigation a Notice of Violation and a Cease and Desist Order (CDO) were served on petitioner after it was found that it was operating without an LLDA Clearance and Permit, as required by Republic Act (R.A.) No. 4850.
Petitioner then filed a petition for mandamus before the Regional Trial Court of Pasig City. Contending that, as a cottage industry, its jewelry business is exempt from the requirement to secure a permit from the LLDA. The RTC denied the petition. Upon denial of its motion for reconsideration, petitioner appeals to the CA. The CA however dismissed the appeal. Petitioner moved for the reconsideration of the Decision, but the CA denied the same. Hence, petitioner filed this petition for review.
ISSUE: Whether petitioner is exempted from complying with the requirement to obtain a clearance from the LLDA to operate its business.
HELD: No. CA Decision Affirmed.
Political Law- Assets consist of property of all kinds, real and personal, tangible and intangible, including, inter alia, for certain purposes, patents and causes of action which belong to any person, including a corporation and the estate of a decedent.
In view of the emphasis in law after law on the capitalization or asset requirements, it is crystal clear that the same is a defining element in determining if an enterprise is a cottage industry.
Petitioner argues that its assets amount to onlyP312, 500.00, representing its paid-up capital at the time of its SEC registration. The law then in force was R.A. No. 6977, which, to recapitulate, states:
The P312,500.00 represents the total amount of the capital stock already subscribed and paid up by the company's stockholders. It does not, however, represent the totality of its assets, even at the time of its registration. By the expert opinion of petitioners own consultant, independent CPA Maximiano P. Sorongon, Jr., it does not mean that the paid-up capital is the only source of funds of the corporation for it to support its recurring operational requirements, as well as its increased financial requirements later on, as and when the business grows and expands.
In other words, its paid-up capital is not the only asset of the company. Under R.A. No. 6977, the term total assets was understood to mean "inclusive of those arising from loans but exclusive of the land on which the particular business entity's office, plant, and equipment are situated."
Assets consist of property of all kinds, real and personal, tangible and intangible, including, inter alia, for certain purposes, patents and causes of action which belong to any person, including a corporation and the estate of a decedent. It is the entire property of a person, association, corporation, or estate that is applicable or subject to the payment of his, her, or its debts.
Petitioner cannot insist on using merely its paid-up capital as basis to determine its assets. The law speaks of total assets. Petitioners 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 Consolidated Balance Sheet presented by petitioner, it had assets amounting to P4,628,900.80 by the end of 1998, and P1,746,328.17 by the end of 1997. Obviously, these amounts are over the maximum prescribed by law for cottage industries.
Based on the foregoing, it is clear that petitioner cannot be considered a cottage industry. Therefore, it is not exempted from complying with the clearance requirement of the LLDA.
DENIED.
STERLING SELECTIONS CORPORATION, Petitioner, v. LAGUNA LAKE DEVELOPMENT AUTHORITY (LLDA) and JOAQUIN G. MENDOZA, in his capacity as General Manager of LLDA, Respondents.
NACHURA, J.:
FACTS:
Petitioner is a company engaged in the fabrication of sterling silver jewelry. Its products are manufactured in the home of its principal stockholders, Asuncion Maria and Juan Luis Faustmann (Faustmanns), located in Barangay (Brgy.) Mariana, New Manila, Quezon City.
For creating loud unceasing noise and emitting toxic fues coming from the plant, one of petitioners neighbors filed a complaint with the Barangay. During conciliation proceedings, petitioners management undertook to relocate its operations within a month. The parties signed an Agreement to that effect. However, petitioner failed to abide by the undertaking and continued to manufacture its products in its Brgy.
Alicia P. Maceda (Maceda), another neighbor filed a complaint before the barangay and a formal complaint with the DENR. After, investigation a Notice of Violation and a Cease and Desist Order (CDO) were served on petitioner after it was found that it was operating without an LLDA Clearance and Permit, as required by Republic Act (R.A.) No. 4850.
Petitioner then filed a petition for mandamus before the Regional Trial Court of Pasig City. Contending that, as a cottage industry, its jewelry business is exempt from the requirement to secure a permit from the LLDA. The RTC denied the petition. Upon denial of its motion for reconsideration, petitioner appeals to the CA. The CA however dismissed the appeal. Petitioner moved for the reconsideration of the Decision, but the CA denied the same. Hence, petitioner filed this petition for review.
ISSUE: Whether petitioner is exempted from complying with the requirement to obtain a clearance from the LLDA to operate its business.
HELD: No. CA Decision Affirmed.
Political Law- Assets consist of property of all kinds, real and personal, tangible and intangible, including, inter alia, for certain purposes, patents and causes of action which belong to any person, including a corporation and the estate of a decedent.
In view of the emphasis in law after law on the capitalization or asset requirements, it is crystal clear that the same is a defining element in determining if an enterprise is a cottage industry.
Petitioner argues that its assets amount to onlyP312, 500.00, representing its paid-up capital at the time of its SEC registration. The law then in force was R.A. No. 6977, which, to recapitulate, states:
SEC. 3. Small and Medium Enterprises as Beneficiaries. "Small and medium enterprise" shall be defined as any business activity or enterprise engaged in industry, agribusiness and/or services, whether single proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entity's office, plant, and equipment are situated, must have value falling under the following categories:
xxx
cottage:P50,001 P500,000Accordingly, it should be considered as a cottage industry, petitioner insists.
The P312,500.00 represents the total amount of the capital stock already subscribed and paid up by the company's stockholders. It does not, however, represent the totality of its assets, even at the time of its registration. By the expert opinion of petitioners own consultant, independent CPA Maximiano P. Sorongon, Jr., it does not mean that the paid-up capital is the only source of funds of the corporation for it to support its recurring operational requirements, as well as its increased financial requirements later on, as and when the business grows and expands.
In other words, its paid-up capital is not the only asset of the company. Under R.A. No. 6977, the term total assets was understood to mean "inclusive of those arising from loans but exclusive of the land on which the particular business entity's office, plant, and equipment are situated."
Assets consist of property of all kinds, real and personal, tangible and intangible, including, inter alia, for certain purposes, patents and causes of action which belong to any person, including a corporation and the estate of a decedent. It is the entire property of a person, association, corporation, or estate that is applicable or subject to the payment of his, her, or its debts.
Petitioner cannot insist on using merely its paid-up capital as basis to determine its assets. The law speaks of total assets. Petitioners 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 Consolidated Balance Sheet presented by petitioner, it had assets amounting to P4,628,900.80 by the end of 1998, and P1,746,328.17 by the end of 1997. Obviously, these amounts are over the maximum prescribed by law for cottage industries.
Based on the foregoing, it is clear that petitioner cannot be considered a cottage industry. Therefore, it is not exempted from complying with the clearance requirement of the LLDA.
DENIED.
