G.R. No. 171427 ; March 30, 2011
STERLING SELECTIONS CORPORATION, Petitioner, vs. LAGUNA LAKE DEVELOPMENT AUTHORITY (LLDA) and JOAQUIN G. MENDOZA, in his capacity as General Manager of LLDA, Respondents.

FACTS

Petitioner Sterling Selections Corporation is a company engaged in the fabrication of sterling silver jewelry, operating from the home of its principal stockholders in Barangay Mariana, Quezon City. In 1992, a neighbor complained about noise and toxic fumes, leading to an Agreement for petitioner to relocate, which it failed to do. In 1998, another neighbor, Alicia P. Maceda, filed complaints with the Barangay and the DENR, which were endorsed to respondent Laguna Lake Development Authority (LLDA). An LLDA inspection found petitioner operating without the required LLDA Clearance and Permit under R.A. No. 4850 , resulting in a Notice of Violation and a Cease and Desist Order. The Office of the Mayor of Quezon City also issued a Closure Order for operating without a business permit and violating zoning and environmental laws. Petitioner filed a petition for mandamus with the RTC, arguing that as a cottage industry, it was exempt from LLDA permit requirements. The RTC denied the petition, ruling petitioner failed to prove its cottage industry status and that mandamus does not lie to compel a discretionary duty. The RTC also noted that petitioner was not registered with the National Cottage Industries Development Authority (NACIDA) and that LLDA Resolution No. 41, Series of 1997, does not include jewelry making in its list of exempted cottage industries. The Court of Appeals dismissed petitioner’s appeal, holding that even if it were a cottage industry, it must prove it is exempt under the specific enumeration in Section 2(30) of LLDA Resolution No. 41, which lists “stuffed toys manufacturing,” “handicrafts,” and “rattan/furniture manufacturing.” Applying the principle of ejusdem generis, the CA ruled that jewelry manufacturing is not of the same kind as the enumerated, less environmentally critical industries and is therefore not exempt.

ISSUE

Whether petitioner Sterling Selections Corporation, claiming to be a cottage industry, is exempt from the requirement to secure a clearance and permit from the LLDA under Section 2(30) of LLDA Resolution No. 41, Series of 1997.

RULING

No. The Supreme Court denied the petition and affirmed the decisions of the lower courts. The Court held that petitioner failed to substantiate its claim of being a cottage industry entitled to exemption. The Court emphasized that the power to classify and define a cottage industry for purposes of exemption from LLDA clearance requirements is vested in the LLDA as the specialized administrative agency. LLDA Resolution No. 41, Series of 1997, explicitly enumerates the exempted cottage industries: stuffed toys manufacturing, handicrafts, and rattan/furniture manufacturing. Applying the principle of ejusdem generis, the manufacture of jewelry is not similar in kind to the listed industries, which are characterized as less environmentally critical. The Court deferred to the LLDA’s interpretation and application of its own rules, noting that administrative agencies’ expertise in their respective fields commands respect. Furthermore, the Court found that petitioner’s operations, involving around 200 employees and being an accredited exporter, deviated from the concept of a small-scale, family-based cottage industry. Since exemptions from statutory requirements are construed strictly against the claimant, and petitioner failed to prove it falls within the contemplation of the exemption, it is not exempt from complying with the LLDA’s clearance and permit requirements under R.A. No. 4850 and its implementing rules.