BPLS INSPECTIONS GUIDE CONDUCTING BUSINESS FRIENDLY LOCAL INSPECTIONS IN THE PHILIPPINES

DISCLAIMER This document is made possible by the support of the American people through the United States Agency for International Development (USAID). Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the United States government.

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DISCLAIMER This document is made possible by the support of the American people through the United States Agency for International Development (USAID). Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the United States government.

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CONTENTS
Acronyms ----------------------------------------------------------------------------------Foreword ----------------------------------------------------------------------------------1. Introduction ---------------------------------------------------------------------------1.1 1.2 1.3 2.1 2.2 2.3 2.4 2.5 2.6 3.1 3.2 3.3 3.4 3.5 3.6 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 5.1 5.2 5.3 5.4 5.5 5.6 Overview -----------------------------------------------------------------------Rationale -----------------------------------------------------------------------Coverage -----------------------------------------------------------------------Zoning Inspections -----------------------------------------------------------Fire Safety Inspections -------------------------------------------------------Health and Sanitation Inspections -----------------------------------------Building Inspections ----------------------------------------------------------v xi 1 1 1 1 3 4 6 8 8 Acknowledgements ----------------------------------------------------------------------- vii

2. The Inspection System in the Philippines ------------------------------------------

Radial Distance Inspections -------------------------------------------------- 13 Prevailing Business Inspection Models ------------------------------------- 14 Zoning Inspections ------------------------------------------------------------ 19 Fire Safety Inspections -------------------------------------------------------- 20 Health and Sanitation Inspections ------------------------------------------ 21 Building Inspections ----------------------------------------------------------- 21 Radial Distance Inspections -------------------------------------------------- 22 Joint Inspection Teams -------------------------------------------------------- 22 Clear Legal Basis --------------------------------------------------------------- 25 Reasonable Fees --------------------------------------------------------------- 25 Prior Notice of Inspection --------------------------------------------------- 25 Prior Disclosure of Inspection Standards --------------------------------Prompt Notification of Results --------------------------------------------25 28 Professional Checklists and Procedures ----------------------------------- 27 Qualified Inspectors ----------------------------------------------------------- 28 Balanced Approach ------------------------------------------------------------ 28 Amending Local Ordinances ------------------------------------------------- 31 Streamlining Current Procedures ------------------------------------------- 32 Institutional Development Measures --------------------------------------- 36 Rationalization of Inspection Fees ------------------------------------------ 37 Automating the Inspection System ----------------------------------------- 40 Disseminating Relevant Information ---------------------------------------- 42

3. Process Improvements ---------------------------------------------------------------- 19

4. Best Practices for Effective Inspections -------------------------------------------- 25

5. Establishing Business Friendly Inspections ----------------------------------------- 31

CONTENTS

Continued

Appendix A: Legal Basis for Business Inspections Appendix B: Inspection Ordinance Template Appendix C: Unified Inspection Checklist Template

Illustrations Figures
Figure 1: Zoning Inspection Process Flow ---------------------------------------------- 5 Figure 2: Fire Safety Inspection Process Flow ----------------------------------------- 7 Figure 3: Health and Sanitation Inspection Process Flow ---------------------------- 9 Figure 4: Building and Occupancy Inspection Process Flow ------------------------- 11 Figure 5: Radial Distance Inspection Process Flow ----------------------------------- 35 Figure 6: Pre-Business Permit Inspection Process Flow ------------------------------ 15 Figure 7: Post Business Permit Inspection Process Flow ---------------------------- 16 Figure 8: Hybrid Business Inspection Process Flow ---------------------------------- 18 Figure 9: Integrated View of Building, Occupancy, and Business Permit Process - 35 Figure 10: Sample Automated Inspection System Scheme --------------------------- 39

Exhibits
Exhibit 1: Pre-Assessed Zoning in Singapore ------------------------------------------ 19 Exhibit 2: Supreme Court Ruling on License Fees ------------------------------------ 26 Exhibit 3: Supreme Court Ruling on Gross Receipts as Fee Setting Criteria ---- 39

Tables
Table 1: Proposed Inspector Qualifications -------------------------------------------- 29

ACRONYMS
ARTA BFP BO BP BPLO BR C/MPDO CDP CLUP DENR DILG DOH DOLE DOTC DPWH eBPLS ECC EHS EMB FALAR FSC FSIC GIS HLURB IRR JIT LGC LGU LUP MP NPCC NWACPC OBO OP PD PIN RA TOR TWG Anti-Red Tape Act Bureau of Fire Protection Building Officials Building Permit Business Permits and Licensing Office Business Registration City/Municipal Planning and Development Office Comprehensive Development Plans Comprehensive Land Use Plan Department of Environment and Natural Resources Department of Interior and Local Government Department of Health Department of Labor and Employment Department of Transportation and Communications Department of Public Works and Highways Electronic Business Permits and Licensing System Environmental Compliance Certificate Environmental Health Service Environmental Management Bureau Fire and Life Safety Assessment Report Fire Safety Clearance Fire Safety Inspection Certificate Geographic Information System Housing and Land Use Regulator Board Implementing Rules and Regulations Joint Inspection Team Local Government Code Local Government Units Land Use Plans Mayor's Permit National Pollution Control Commission National Water and Air Control Pollution Commission Office of the Building Official Occupancy Permit Presidential Decree Property Index Number Republic Act Terms of Reference Technical Working Group
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ACKNOWLEDGEMENTS
Managed for USAID/Philippines by Nathan Associates Inc., LINC-EGLocal Implementation of National Competitiveness for Economic Growthis a three-year project that began in 2008. LINC-EG assists policymakers in improving the environment for private enterprise to establish, grow, create jobs, and help reduce poverty. This guide was developed under the LINC-EG Project to assist the Philippine government in improving subnational systems for business permitting and licensing. Consultants Rachel Follosco and Noel Macalalad conducted extensive research with national and local government officials at workshops, seminars, and one-on-one meetings. We thank the officials for their advice and support. Undersecretary Zenaida Maglaya of the Department of Trade and Industry (DTI) and Undersecretary Austere Panadero of the Department of the Interior and Local Government (DILG) were particularly generous with their time. This guide would not have been possible without their reviews, recommendations, and validation of research findings. The guide also benefited greatly from analysis and editorial review by Mikela Trigilio and Alid Camara of Nathan Associates Inc. The contents are the sole responsibility of the authors and do not necessarily reflect the opinion of the Government of the Philippines or USAID.

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MESSAGE FROM THE DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT

The Department of the Interior and Local Government is pleased to be a partner of USAID through the Local Implementation of National Competitiveness for Economic Growth (LINCEG) project in producing this document. As the nation walks through the "matuwid na daan", this Guidebook is an important step that will deepen the reforms towards more efficiency in government operations. Inspection of business enterprises has been part of the business permits and licensing system (BPLS) of local governments to ensure compliance with the regulatory requirements for safety and general public welfare. However, the conduct of inspection and issuance of clearances, in most instances, add to the complexity of business registration processes in the country. This Guidebook, therefore, is an important undertaking that complements the Department's current project to upscale BPLS streamlining to all cities and municipalities, as part of the government's resolve to improve local competitiveness and spur local economic development. This Guidebook is significant since it is the first time that the procedures of local inspections have been documents guideposts for an effective and business-friendly local inspection system that will promote investments are provided. The streamlining reforms in the guidebook are quite comprehensive, covering the legal, institutional and procedural aspects of inspections, including a template inspection regulation that the local governments can use. The Department is confident that this guidebook will pave the way for more effective and efficient business registration services for businessmen at par with our ASEAN neighbors. Responding to the call of President Benigno S. Aquino III for good governance, we at the Department will continue to partner with the USAID in assisting our local governments in improving the investment climate in their localities and promote local economic development that will create much needed jobs and reduce poverty. Mabuhay!

Jesse M. Robredo Secretary, Department of the Interior and Local Governments Republic of the Philippines
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MESSAGE FROM THE DEPARTMENT OF TRADE & INDUSTRY

We commend the Department of the Interior and Local Government (DILG) and the United States Agency for International Development (USAID) through the Local Implementation of National Competitiveness for Economic Growth (L1NC-EG) project for producing this document. As a partner of the DILG in the Nationwide Streamlining of Business Permits and Licensing System (BPLS), the Department of Trade and Industry (DTI) is committed to pursue the goal of streamlining all business-related permitting processes. The tedious procedures involved in complying with the inspection requirements of both the national and local governments have long been considered by many private business groups as major deterrents to the competitiveness of the Philippine business environment.The Guidebook is therefore a welcome initiative that would support OTI's resolve to address the long processing time and lack of transparency associated with inspection processes. The recommendations in the Guidebook will also assist the OTI, through the Construction Industry authority of the Philippines (CIAP), in reviewing the current procedures in securing building as well as occupancy permits. Our partners in the business community welcome the Guidebook, which provides guideposts which local governments can use in designing business-friendly business permitting processes. We are pleased that the Guidebook puts a premium on the protection of the business sector during the inspection process, recommending for instance the use of checklists and venues for settling disputes, among others. Indeed, the document is an important and innovative governance project that business chambers will benefit from. As a major proponent of business registration reforms geared towards promoting the country's competitiveness, we at the Department will continue to partner with the OILG and USAIO in assisting our local governments in transforming their localities into business-friendly hubs that can attract investments and create much needed employment opportunities for our people. Mabuhay!

Gregory L. Domingo Secretary, Department of Trade & Industry Republic of the Philippines
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FOREWORD
USAID has supported Philippine local governments in improving the administration of business permits and licenses since 2005, particularly in Mindanao. Through partnerships with the World Banks International Finance Corporation and the German government, this support has been scaled up to the national level and extended to a number of local government units (LGUs). LGUs now recognize the economic benefit of simplifying procedures and practices for issuing business regulatory clearances. Streamlined and automated registration procedures are also increasingly accepted as a means to reduce opportunities for informal payments and as part of the overall anticorruption effort in the Philippines. In July 2010, USAID/LINC-EG supported a landmark effort of the national government to establish better service standards for business permitting and license systems (BPLS), such as unified registration forms, limits on processing times, and simpler payment procedures. USAIDs technical assistance to local governments in adopting these standards revealed that business inspections also need to be reformed. LGUs and businesses both identified the lack of a clear legal and regulatory framework for business inspections as a constraint on BPLS reform. This guide aims to clarify that framework. It refers to national rules as applicable, but focuses on the legal aspects of business inspections and rules backing local government practices and procedures. It recognizes that local reform can be complex and that Philippine LGUs have a regulatory duty to ensure public welfare and security. It also recognizes that deterring and punishing violations of public safety while using limited public resources efficiently requires that regulations not be unduly difficult to comply with. We hope that this guide will be useful to national and local policymakers as they embark on the next wave of BPLS reform and as they seek to make the inspection system less onerous for private enterprises without compromising public safety.

Alid David Camara Chief of Party, LINC-EG November 2011

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I. INTRODUCTION
1.1 OVERVIEW
The Philippines' attractiveness as a destination for local and foreign investment has been declining for the past several years. One reason for this decline is the difficulty of starting a business and renewing business permits. If the countryside is to attract enough investment to spur economic growth, business registration processes need to be simplified. Part of the registration process consists of inspections that aim to verify that a business has met regulatory requirements. These requirements ensure that public interest and social welfare are protected. The clearance or permit issued after an inspection assures the authority and the public that the business is safe and its operations are not detrimental to the community, environment, or public welfare. In most of the Philippines, inspections and the associated clearances are additional procedures or steps, and add time and complexity to the registration process. Any effort to simplify those processes should begin with the simplification of inspections to make them more investorfriendly. Such an effort raises a question about balancehow to simplify the business inspections without compromising public health and safety. Local governments are closest to businesses and their answer to this question has implications for private investment and business registrations.

1.2 RATIONALE
The objective of this publication is to recommend guidelines to local government units (LGUs) on how to simplify inspections and reduce the burden on businesses, especially small and micro businesses that do not have the resources necessary to cope with cumbersome regulations. Following these recommendations will allow an LGU to balance its local economic development objectives with its responsibility to safeguard and promote public welfare. The guide is written from a legal and regulatory perspective so LGUs may more readily comply with requirements and regulations for proper inspections.

1.3 COVERAGE
The guidance herein focuses on business registration inspections, and is based on the findings of a review of the legal, policy, and institutional framework for such inspections. Local regulations
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on inspections, to the extent available, were compared with the national laws related to different inspection systems. The study also examined the impact of the Local Government Code (LGC) on local inspection codes. The study assessed the inspection systems in ten cities: Quezon, Marikina, Manila, Mandaluyong, Cebu, Mandaue, General Santos, San Fernando, Olongapo, and Davao. Davao City was subjected to a closer scrutiny. In this document, LGU primarily refers to cities studied.

2. THE INSPECTION SYSTEM IN THE PHILIPPINES

The Local Government Code (LGC) of 1991 states that inspections are conducted primarily to verify and ensure compliance with rules and regulations adopted to promote and safeguard public welfare, including health, safety, and the enhancement of the right of the people to a balanced ecology. 1 Any effort to simplify the business registration process should thereafter take into account the purpose and goals of inspections without summarily dismissing them. A more rational method should be adopted for determining when inspections can be dismissed and when they should be undertaken despite the inconvenience to business permit applicants. Moreover, when an inspection is absolutely necessary, the LGU should strive to make the 4inspection as reasonable and business-friendly as possible. Business inspection in the Philippines is mandated under several laws for various purposes, and is to be conducted by different agencies of the government, either at the local or national levels. In almost all cases, it is an integral part of initial business registration and the annual renewal of business permits. However, while most mandatory business inspections are required for business registration (BR-linked inspections), a few inspections are still enforced and undertaken independent of business registration (NBR-linked inspections). BR-linked inspections include the following: Zoning Inspections, which are provided for in the LGC and determined by the local zoning ordinance. Fire Inspections, which are expressly required for the issuance of a business permit under the Fire Code of the Philippines of 2008. Health and Sanitation Inspections, which are usually required locally to secure a business permit even though the Code on Sanitation of the Philippines (Sanitation Code) states that a sanitation permit or clearance is only required for a few types of businesses. Miscellaneous Inspections, which may be applicable to certain enterprises because of the nature of their business, for example, inspections conducted by the Department of Transportation and Communications (DOTC) on Motor Vehicle Private Emission Testing Centers before accrediting these enterprises.

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Section 16 of the Local Government Code of 1991.

NBR-linked inspections include the following Building Inspections, which are conducted by building officials (BOs) or their authorized representatives in compliance with the National Building Code of the Philippines (Building Code), and includes plumbing, electrical, and mechanical inspections. These inspections are required for building and occupancy permits.The Implementing Rules of the Building Code (Building Code IRR) calls for these to be conducted on an annual basis. Labor Inspections, which are conducted by the Department of Labor and Employment (DOLE) to ensure compliance with labor laws. In many cases, inspections that are not, by law, BR-linked inspections are linked to business registration requirements by LGUs, or they are applied indiscriminately to all businesses rather than those that specifically require the inspection. The most common examples of this are the Health and Sanitation Inspections, which should apply only to businesses that could risk public health, and Building Inspections, which should be applied to the building owners rather than the businesses operating within.

2.1 ZONING INSPECTIONS

Zoning is mandated in the LGC. At the policy level, the LGC empowers local governments to set reasonable limits and restraints on the use of property in their territorial jurisdictions. The LGC also states that LGUs need to comply with all of these restraints and limits in a zoning ordinance, the basis for the regulation of subdivision and housing development; industrial location; and the reclassification of agricultural land into residential, commercial, industrial, institutional, or other purposes/classifications. The development of a zoning ordinance is usually based on the local governments Comprehensive Land Use Plan (CLUP).The CLUP estimates the optimum size of zones of use (e.g., agricultural, residential, commercial, industrial), with sizes guided by various standards and formulas from the rural and urban development sciences. Most LGUs also prepare city/municipal Comprehensive Development Plans (CDP), a strategic plan that states priorities and the basis for their development in the medium-term. CLUP preparation is mandated by Executive Order (EO) No. 72, which also appoints the Housing and Land Use Regulator Board (HLURB) as the national authority to review, evaluate, and approve or disapprove CLUPs of LGUs. Under EO 72, the HLURB is also empowered to prescribe standards and guidelines in the preparation of land use plans, monitor the implementation of such plans, and adjudicate and settle disputes among LGUs over their CLUPs and zoning programs. EO 72 likewise prescribes
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the mechanism for the development of the CLUP. It designates the City/Municipal Development Council to initiate the formulation and updating of the CLUP in accordance with the planning, zoning standards, and guidelines prescribed by the HLURB. The formulation of the plan is managed by the City/Municipal Planning and Development Office (C/MPDO). Businesses applying for a permit to operate, sometimes referred to as a Mayors Permit (hereafter referred to as a business permit) are required to check first with the C/MPDO to see if the proposed business is permitted in the area it plans to operate in Figure 2-1 shows the typical process followed in securing a zoning clearance. Figure 2-1 Zoning Inspection Process Flow

One of the requirements for a business permit is a sketch of the location of the business. This allows the zoning officer/staff to visually assess the zoning classification of the proposed enterprise. Using the location sketch, the zoning officer tries to accurately locate the proposed establishment on the zoning map of the city/municipality. After ascertaining the location, s/he notes the permissible use based on the zoning ordinance and checks if the proposed enterprise is allowed in the area. The use of roads as zonal boundaries enables the zoning officer to accurately determine location, as construction seldom traverses across roads. If it is allowed, a zoning clearance is issued to the applicant; if not, then the application is denied. The assessment process for the issuance of a zoning permit should normally take no more than 5 to 15 minutes. However, the need for onsite visits often severely delays the process. An actual
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onsite visit may be conducted if it is found that the proposed location is near or at the boundary between two zones. This is true for most ambiguous cases, although there are some notable exceptions, such as the SM Megamall in Mandaluyong City, where construction crossed a road and even linked two buildings over the road. In cases when the application is denied, most cities/municipalities allow the applicant to file a motion for reconsideration. This requires the council, the Mayor (Vice Mayor), and the Planning Office to deliberate on the appeal.To resolve the appeal, the Planning Office usually inspects the site, checks the development in the area by noting the types and number of establishments, the scale of the investment, and other city/municipality-specific considerations. If the area proves to have sufficient economic development and progress for the kind of business being proposed, then the appeal may be granted. Appeals involving zoning re-classification or exemptions to zoning regulations are addressed through the Sangguniang Panglungsod or Bayan.

2.2 FIRE SAFETY INSPECTIONS

Like the Building Code, the Fire Code also provides guidelines for the design, construction, and operation of a building or a building space regardless of its final use. The policy objective of the Fire Code is the advancement of public welfare and the protection of the environment while promoting the professionalization of the fire service. The Fire Code (and the Implementing Rules and Regulations of the Fire Code) lays down a comprehensive plan that includes provisions for self-funding and capacity building for the Bureau of Fire Protection (BFP). The Fire Code has a section devoted to the reorganization of the BFP that describes the needed competence and qualifications for fire safety professionals. It also provides for improvements in the remuneration of BFP personnel that facilitates the hiring and retention of highly-trained individuals. The Fire Code IRRs detail the certification/clearances that attest to the safety of a building or a space within a building. These include the following: Fire and Life Safety Assessment Report (FALAR). A FALAR2 is designed to be the primary source of information on fire safety. There are three types. FALAR1 and FALAR2 are required for new buildings according to the Fire Code IRRs. FALAR 3 is the statement of the fire safety of a building as a result of the design and construction review, and the annual building inspection process. FALARs 1 and 2 are supposed to be prepared by
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Memorandum Circular No. 2010 67 dated July 26, 2010 no longer requires the preparation of FALAR as a supporting document in the issuance of a Fire Safety Inspection Certificate.

the architect and the fire safety practitioner that designed and constructed the building. FALAR1 is issued with the building permit and is a certification that attests that the proposed building design complies with the guidelines set forth in the Fire Code. FALAR2 is issued alongside the occupancy permit and attests that the final construction complies with the guidelines set forth in the Fire Code. FALAR3 is signed by the building administrator upon the regular annual fire safety inspection and certifies the safety and the condition of the building after the annual fire inspection. Fire Safety Inspection Certificate . The FSIC is released by the BFP after an applicants compliance with the requirements of the FALARs.The Fire Code categorically provides that the FSIC is a pre-requisite for the issuance of a business or mayors permit and other permits. Fire Safety Clearance.The FSC is required for business establishments that store, handle, install, and transport hazardous material, or are engaged in hazardous operations and processes. The FSIC is the only clearance that is specifically required prior to the release of a business permit. Some observers have pointed out that the BFP inspection procedure for the issuance of this certification causes delay in the issuance of a business permit. The typical fire inspection process is illustrated below: Figure 2-2 Fire Safety Inspection Process Flow

2.3 HEALTH AND SANITATION INSPECTIONS

The policy objective behind the conduct of health and sanitation inspections (henceforth referred to as sanitation inspections) is the protection and promotion of public health. Sanitation inspections are generally required periodically and in certain instances, such as in the case of food establishments, more frequently than once a year. The Department of Health is the primary agency tasked with enforcing the Sanitation Code and the Secretary is authorized to develop the Implementing Rules and Regulations (or Sanitation Code IRRs). S/he is represented at the local level by the Local Health Officer.The City/Municipal Health and Sanitation Department conducts inspections both before and after the issuance of a business permit. The focus of the health and sanitation inspection varies depending on the stage at which it is conducted. In pre-business permit inspections (such as plumbing) or in inspections conducted during construction for the issuance of the occupancy permit, the focus is the consistency of the sanitation design and plumbing plans with the specifications prescribed in the Sanitation Code. These inspections are highly technical and focus on plumbing installations and other sanitation facilities, depending on the type of business. The common causes for delay during the pre-inspection stage are design-related. In such cases, the design engineers usually just amend the design to address the issues. This is in contrast to sanitation and health inspections related to business registration, which ordinarily seek to confirm that the employees have health certificates and that the business implements the sanitation practices relevant to its type of business. These inspections are typically conducted for high-risk businesses that require safety inspections prior to the issuance of a business permit. For businesses with low sanitation/health risks, inspection, if any, is done after the business permit is issued. High-risk businesses such as food establishments are not only required to undergo inspection prior to business permit issuance, but are also required to be inspected more frequently, often at least twice a year. The length of time required for a BR-linked inspection is dependent on the number of the enterprise's employees, which is used as a proxy for the size of the establishment.The sanitation inspection process is illustrated in Figure 2-3.

2.4 BUILDING INSPECTIONS

Building inspections are mandated under the Building Code for the issuance of building and occupancy permits. It is conducted to safeguard life, health, property, and public welfare, consistent
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Figure 2-3 Health and Sanitation Inspection Process Flow

with the principles of sound environmental management and control. An occupancy permit attests that a constructed/renovated building is suitable for its intended use and conforms to the applicable provisions of the Building Code, and certifies that the building/renovation is ready for immediate occupancy. The Building Code provides a framework for the use of minimum standards and requirements that guide, control, and regulate the structure's location, design, quality of materials, construction, use, occupancy and building maintenance, and other systems and installations. These standards and requirements must be applied in designing the building plan and requires the expertise of several licensed professionals, such as architects and engineers. A typical plan consists of several sections that correspond to the architectural, structural, plumbing/sanitation, electrical, mechanical, electronics, and fire safety3 components of the building. It is submitted by an applicant and is assessed before the building permit is issued. It is also the basis for the inspections that are conducted during construction to ensure that safety-compliant specifications are followed. The administration and enforcement of the Building Code is the responsibility of the Department of Public Works and Highways (DPWH) through its representatives and counterparts in the Office of the Building Official (OBO)4. The LGC amended the Building Code to state that the city/municipal engineer shall be concurrently the Building Official.The OBO enforces the Building
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The fire code now requires a separate design for fire protection, which must be signed by a licensed fire safety practitioner. Section 477 of the Local Government Code of 1991 reads, in part, as follows: SECTION 477. Qualifications, Powers and Duties (a) No person shall be appointed engineer unless he is a citizen of the Philippines, a resident of the local government unit concerned, of good moral character, and a licensed civil engineer. He must have acquired experience in the practice of his profession for at least five (5) years in the case of the provincial or city engineer, and three (3) years in the case of the municipal engineer.

Code in two stages: (1) the issuance of the building permit, and (2) the issuance of the occupancy permit. The securing of the building and occupancy permits is often mistakenly thought of as an integral part of the business permit and licensing process. The Building Code seems to suggest that this is a separate and distinct regulatory process in itself. The inspection process is shown in Figure 2-4.

Stage 1Application for a Building/Renovation Permit

An applicant must first secure two clearances before he or she can file an application for a building permit: Barangay Clearance. Securing a barangay clearance is not explicitly required by the Building Code for the filing of an application for a building permit. However, almost all LGUs require it to ascertain the location of the building and the sentiment of the affected community regarding the presence of the proposed building in its area. Zoning Clearance . Zoning clearances ensure that the LGUs can manage and control the prescribed reasonable limits and restraints on the use of property within their territorial jurisdiction. Once both clearances are secured, the applicant for a building/renovation permit is required to submit 5-6 copies of the building/renovation plans. Different units in the OBO correspond to various technical/engineering disciplines and are tasked to review the submitted design plans. The assessments these units conduct ensure that applicable design standards were followed by the design professional. The OBO also ensures that all the plans are properly signed by qualified and licensed individuals and that the plans comply with Building Code specifications. The OBO also coordinates with the Bureau of Fire Protection (BFP), which conducts an independent technical assessment of the building in the formulation of the Fire and Life Safety Assessment Report (FALAR). It is only when all of these requirements are satisfied that the building permit is issued. During specific stages of construction, the Building Official (BO) or his representatives conduct technical inspections based on the submitted construction schedule. These inspections are designed to ensure that the submitted plans are being followed and that changes in the plans are still compliant with Building Code standards and are appropriately noted in the construction
____________________________ The appointment of an engineer shall be mandatory for the provincial, city and municipal governments. The city and municipal engineer shall also act as the local building official.

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Figure 2-4 Building and Occupancy Inspection Process Flow

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log book. Deviation from the approved plans may be grounds to revoke or suspend the building permit that has been issued, particularly if the actual construction ceases to comply with the requirements of the Building Code. 5 The time required to complete the assessment depends on the size of the construction or renovation. The Building Code specifies that the business permit be issued within 15 days from payment of fees for Group A-J6 and 30 days for other groups of applicants. The common cause of delay in the inspection process is the extent of work involved in assessing design plans. An average-sized 10-storey building will typically have hundreds of design pages for review. Disputes in the use of design standards occasionally occur, but these are usually immediately resolved by the submission of a new design reflecting the correction of the design flaw.

Stage 2Application for an Occupancy Permit

At the end of the construction/renovation period, the contractor is required to submit six copies of the as-built plans, including a construction log book that is duly signed by the responsible engineers and architects. The OBO assessing officer then checks for plan modifications and determines if these are within the applicable design standards. The assessment also includes a review of the construction log book for the technical notes of the construction engineer. A site inspection is conducted to ensure that the submitted as-built plan reflects the actual construction/renovation.The whole construction, including all the variations between the original designs and the as-built plans, are again evaluated to ensure compliance with the Building Code. An occupancy permit is issued after the OBO validates that the construction/renovation is in accordance with the submitted plan, and that the actual construction/renovation is compliant with the appropriate provision of the Building Code. As with the assessment for the building permit, the time required to complete the assessment for the occupancy permit depends on the size of the construction or renovation. The typical assessment time for an average-sized structure is one to two weeks. Deviations from the submitted plan are the common cause of delay in the occupancy permit assessment. In most cases, the design professional is required to submit a design computation that justifies the change. When the application for deviation is denied, the applicant is required to submit new design computations, signed for by a responsible licensed professional.
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Section 306 of the Building Code. Section 701 of the Building Code classifies buildings according to their use or the character of its occupancy: Group A - Residential Dwellings; Group B - Residences, Hotels and Apartments; Group C - Education and Recreation; Group D - Institutional; Group E - Business and Mercantile; Group F Industrial; Group G - Storage and Hazardous; Group H - Assembly Other Than Group I; Group I - Assembly Occupant Load 1000 or More; Group J Accessory.

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2.5 RADIAL DISTANCE INSPECTIONS

The radial distance that should be observed between certain types of establishments is partly provided for by the Sanitation Code, particularly the Sanitation Code IRRs. 7 Chapter V, Section 8.1 of the Sanitation Code IRR recognizes the prerogative of LGUs to adopt zoning ordinances prescribing where various types of businesses may be located. However, if there are no zoning laws or ordinances, the Sanitation Code IRRs give the local health officer the responsibility, and thus the discretion to determine the suitability of the location of a particular business. There is no categorical directive under the Sanitation Code for this arrangement. Only businesses that are specifically required by ordinances or the Sanitation Code and its IRRs to be within certain distances from other types of establishments need to go through a radial distance inspection. This inspection generally includes a site inspection to verify the actual location of the business permit applicants proposed premises. The typical process for radial inspection is presented in Figure 2-5.

Figure 2-5 Radial Distance Inspection Process Flow

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The Sanitation Code IRR, unlike most IRRs of laws, is not contained in one document but consists of several issuances, each implementing a chapter of the code. The following are the IRRs so far issued: Chapter II Water Supply (Supplemental IRR); Chapter III Food Establishments; Chapter IV Markets And Abattoirs; Chapter V Public Laundry; Chapter VI School Sanitation and Health Services; Chapter VII Industrial Hygiene; Chapter IX "Rest Areas, Bus Terminals, Bus Stops And Service Stations; Chapter XI Dancing Schools, Dance Halls And Night Clubs"; Chapter XV Port, Airport, Vessel and Aircraft Sanitation; Chapter XVI Vermin Control; Chapter XVIII Refuse Disposal; Chapter XIX Nuisances And Offensive Trades And Occupations; Chapter XX Pollution of the Environment; and Chapter XXI Disposal of Dead Persons.

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In most cities, the City Engineering Office conducts the radial inspection. A field survey is required to officially measure the radial distance of the applicants establishment. The City Engineering Office issues a certificate of the official distance measurement between the establishment and key institutions in the area. This serves as basis for the BPLO to decide whether or not to issue a business permit on the basis of the radial distance.

2.6 PREVAILING BUSINESS INSPECTION MODELS

In general, BR-linked inspections in LGUs follow any of the following inspection models: (1) pre-business permit (traditional) model; (2) post-business permit regulatory compliance model; and (3) the hybrid model.

Pre-Business Permit Inspection

The process consists of conducting inspections before the release of a business permit (see Figure 2-6). A business permit, which does not include a temporary authority to operate, is released only after the business establishment complies with all applicable regulatory requirements. This process provides the least risk to public welfare and the local environment. However, this process can place an undue burden on LGU inspection units and discourage private investment and business registrations. There are three noted variations in the prebusiness permit inspection process; (1) inspections are conducted as pre-registration activities; (2) inspections are conducted upon receipt of business permit application; and (3) inspections are conducted upon proof of payment.

Post-Business Permit Inspection

Under this model, the compliance requirements are deferred to a later date in favor of getting the investor in to legally operate as quickly as possible.This is distinctly opposed to the procedure under the Pre-Business Permit Inspection Model, where businesses are not allowed to renew their permits unless they have complied with all the regulatory requirements.At the operational level, LGUs following this model have opted to provide business establishments with a grace period for complying with all the regulatory requirements. This grace period ranges from as short as 30 days to as long as 120 days. The inspection process under this model is shown in Figure 2-7. There are noted variations in this process: (1) temporary business permits after showing proof of payment, followed by official business permits once inspections have been completed; and (2) actual business permits, stating that permits are subject to revocation if the business does not comply with stated requirements.
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Figure 2-6 Pre-Business Permit Inspection Process Flow

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Figure 2-7 Post Business Permit Inspection Process Flow

Hybrid System
To address observed weaknesses in the inspection models, some LGUs practice calibrated restrictions and use building risk categories. Low risk establishments are allowed to go through the registration process unhampered. In some cities, these establishments are no longer inspected and can get their permits within 24 hours of applying.The process, however, becomes stricter as the perceived level of risk posed by the business establishment increases. This process offers some flexibility to LGUs, particularly for small and medium enterprises. However, this approach may make the inspections process cumbersome and lengthy for large businesses deemed to be risky or semi-risky. The success of the hybrid model (see Figure 2-8), depends mainly on the accuracy of the categorization of businesses according to the level of risk they pose to the public and the environment. There is some debate regarding how to categorize businesses into separate risk categories. For example, the city environment office requested that the car wash business be categorized as high risk, as the oil, soap and other chemicals used in it are potential threats to the environment. The BFP requested that mobile vendors using open flame stoves be classified as a high-risk business, despite its small size and minimal capitalization. There are several techniques for risk-based categorization, but set rules for classifying business risks do not yet exist. What is evident is that there is a need for consensus. A single risk category for all types of risks may not be justified or reasonable (e.g., a business may pose a significant fire risk but practically no sanitation risk, making a single classification for purposes of both types of inspections inappropriate). Best practice likewise dictates that the criteria used to evaluate the level of risk posed by a business for a particular type of risk should be specifically identified, and if necessary, assigned varying weights. For example, a business that poses a fire risk could be judged based upon the nature of the materials handled, the use of a fire/combustionprone process, and the number of people exposed to the risk at any given time.Widely accepted technical practices for risk evaluation in each sector should be relied upon when possible.

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Figure 2-8 Hybrid Business Inspection Process Flow

3. PROCESS IMPROVEMENTS
3.1 ZONING INSPECTIONS
Some LGUs have made improvements that speed up the processing of applications for zoning clearances. These include Requiring applicants to submit photographs. Including photographs of the front, back, and side of the building that show the nearest landmarks facilitates the process of locating the proposed location accurately by providing a reference point for the zoning officer. However, it adds to the expenses already incurred by the investor. Using Property Index Numbers. The Property Index Number is a unique number that identifies a parcel of land based on the tax map of a city or municipality. It is issued by the Real Property Office, also known as the Assessor's Office. Knowing this number makes identification and ascertaining the location of a proposed business location easier. Some LGUs associate it with tax mapping. If used in an integrated IT system, it makes it possible to trace payments of property and other relevant taxes, thus saving an investor from some inconvenience. There is a growing trend among LGUs to require property tax clearance prior to the renewal of a business permit. An online system will save a taxpayer the trouble of going to the Assessors Office to get a tax clearance. Using a Geographic Information System Map. The property number is best used with a geographical information system (GIS). A GIS is a database that can store pictures and text as a point in a map. This makes the GIS map an intelligent representation of city resources. Many LGUs use a GIS map to integrate data and information among offices in the city. The maps can be used in both the business registration inspection and assessment processes, while also ensuring accuracy in determining zoning classifications.

Exhibit 3-1
Pre-Assessed Zoning in Singapore One model that may be considered as best practice and could thus be emulated is the Singapore model where all spaces (e.g. land, a building, or a space within a building) in a locality are preassessed. These spaces are then pre-tagged for specific purposes, be it commercial, residential,
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or industrial. This implies that establishments will only be allowed to set up businesses in pretagged areas. For instance, a factory can only be built in areas pre-tagged for industrial purposes. Properly implemented, pre-tagging available spaces encourages investors to follow strict zoning regulations.

3.2 FIRE SAFETY INSPECTIONS

Fire safety inspections are challenging to both BFP inspectors and business permit applicants, but for different reasons. BFP inspectors are frequently unable to conduct all the required fire inspections due to a lack of manpower and resources. For businesses, the basic challenge is determining and understanding the requirements to pass fire safety inspections. This confusion can include items as fundamental as the correct number and type of fire extinguishers required for their premises. Some LGUs and the BFP have taken initiatives to better cope with the limitations faced by the BFP in conducting inspections, without foregoing inspections altogether. Some of these measures include the following: Post-application inspections and issuance of a temporary permit to operate which, in effect, allows the LGUs and the BFP to buy time to conduct necessary inspections. In Davao City, for example, the Temporary Authority to Operate that it issues gives the permit applicant and the business inspection teams an additional 30 working days to conduct the inspection and complete the business renewal process. Pre-application inspections in order to comply with the express mandate of the Fire Code for business permit applicants to secure an FSIC before they can get a business permit. In certain LGUs, such as Davao City, the BFP have conducted fire safety inspections ahead of the business permit renewal period. The results of the inspections made during the year serve as basis for the issuance of the FSIC for use in the subsequent years business permit renewal application. Other process enhancements require a change in the law and the Fire Code IRRs. These are discussed in Section 4, Establishing Business Friendly Inspections.

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3.3 HEALTH AND SANITATION INSPECTIONS

Health and sanitation inspections would benefit from the increased efficiency associated with risk-based categorization of businesses. Low-risk businesses, although exempt from regular inspections, may not be excused from the other basic requirement, such as the need for employees to secure health certificates. However, there is no need for an actual inspection to ensure that employees have health certificates. Compliance with this requirement can be checked by asking the new/renewed business permit applicant to provide a list of employees, which can be checked against the database containing the names of holders of health certificates and their respective employers.This assumes that the application form for a health certificate requires the disclosure of the name of the applicants employer.

3.4 BUILDING INSPECTIONS

It is clear that the assessments conducted for the issuance of building and occupancy permits are comprehensive, involving each aspect of construction. Thus, to require building-related inspections to be conducted again during the initial business permitting process would be unnecessary if the building will be used for exactly the same purpose as declared during the building permitting stage. The following measures are recommended to improve the processing of applications for building and occupancy permits: Building and Occupancy Permits Database. Some LGUs make use of a database of all constructed and renovated facilities to minimize the need for site inspections. The availability of such a database enables the BPLO to directly check for inspection clearances that have recently been issued. This renders it unnecessary to conduct new inspections or seek confirmation from the OBO/LGUs engineer. Significant investments in information technology may enable an LGU to maintain and update information on buildings in their locality, including the history of renovation for a particular building. GIS systems are particularly useful in matching locations with permit data. Naga City relies on such a database to determine if a business establishment requires an inspection. Adoption of Risk-Based Classification. If LGUs determine that there is a sound legal basis for annual building inspections, a risk-based classification of businesses should be established. Under a risk-based system, low risk businesses will have less onerous inspection requirements. The practice of some LGUs that have dismissed buildingrelated inspections for business premises measuring 50 square meters or less may have some basis and is helpful in simplifying registration for small businesses.

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 Pre-inspected Sites. Technical inspections are best done during the construction/ renovation phase. This practice appears to be similar to the way Singapore managed to implement a business-friendly process, despite more stringent regulatory requirements. Elimination of Building Inspections for New Businesses.The technical clearances needed for building-related approvals can be lengthy, and in fact, unnecessary for some new businesses. The findings of the Regulatory Simplification Project of the Ateneo School of Government and the International Finance Corporation noted that 80 percent to 90 percent of new businesses required some form of construction/renovation. This means that the majority of the new business premises have just undergone a thorough inspection during construction/renovation. The BPLO could do without the building inspections if that can be sufficiently treated as a separate set of procedures. This measure is now being practiced in some cities that require just copies of the occupancy permit as a requirement for new business registration.

3.5 RADIAL DISTANCE INSPECTIONS

Radial inspections can be done away with by using digital maps freely made available on the internet, a detailed database of the location of registered businesses in the LGU, and local maps that reflect the provisions of the LGU's zoning regulations. These resources enable the LGU to check compliance with prescribed radial distances through desk checking, removing the need to conduct onsite inspections. Alternatively, a business establishment that is subject to radial distance constraints may be required to complete a questionnaire demonstrating its adherence to the regulations.As a safeguard against any erroneous declarations of the required information, the LGU may require the declaration to be made under oath, thereby subjecting the application to prosecution for perjury and a revocation of their business license.

3.6 JOINT INSPECTION TEAMS

The Joint Inspection Team (JIT) is an international best practice recently been introduced in the Philippines. It is an approach to conducting actual inspections regardless of the regulatory or policy directive. The JIT method referred to in this publication is one where all regulatory inspection offices, through their respective representatives, conduct a coordinated inspection of the business premises of an applicant. Instead of separate visits by each of the offices required to conduct inspections, business owners are able to schedule a one-stop inspection. Cebu, Mandaue, and four other cities in the Visayas currently field JITs. Cebu City uses JITs only for new businesses, while Mandaue City uses it for both new and renewed business permits. The self-reported benefits to Cebu and Mandaue include
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Positive public perception because JITs are equated with being business-friendly, Minimal disturbance of businesses, Better relationships with the business sector; Improved regulatory compliance, and Minimizing of corruption.

In some cities in Metro Manila, however, there is a perception that JITs are impractical given budget, manpower, and other constraints involved in coordinating across departments to field a JIT for a high number of business establishments. During the regulatory simplification upgrade of the IFC, the Quezon City Simplification Project Team8 expressed reservation that a JIT may not be feasible given the number of registered business, the physical size of the city, and the prevalent traffic in Metro Manila. The team also indicated that adopting a JIT process will necessarily require more inspectors. Other cities claim that lack of manpower prevents them from shifting to the JIT scheme. This was observed in some cities where there is a noticeable imbalance in the number of inspectors between the BPLO and BFP, with the former having more. Until it is able to increase recruiting efforts, the BFP maintains that separate fire inspections are the most efficient mechanisms. There is also the matter of timing. Some inspections take much longer than others, creating inefficiencies in the process. Advocates of JIT point out that JIT is best done by zone, thus, those who are finished with their inspection with one business can move on to the next business establishment while the others are finishing up with their inspection, all within a particular area or zone. In the end, JIT has both advantages and disadvantages.The most important determinant for success of the JIT method is buy-in from the LGU as a whole. The LGU must be willing and able to do whatever is necessary to ensure the success of a JIT, including the hiring of additional inspectors for offices lacking manpower. Further details on how to establish JITs are included in Section 5.3.

____________________________
8

Simplification Project Teams are representatives from the various departments that are involved in the registration and renewal of business permits.

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4. BEST PRACTICES FOR EFFECTIVE INSPECTIONS

4.1 CLEAR LEGAL BASIS
Approving and codifying the legal aspects of business inspections is important because inspections without a legal basis are likely to be arbitrary. The conduct of the business inspection can be prescribed and authorized under a national law, a local law, or both. The inspection process should have clear policy objectives and a way to safeguard these objectives. The legal bases for business inspections are summarized in Appendix A. The lack of a legal basis at a national level does not indefinitely impede the conduct of business inspections at the LGU level. If an inspection does not have any statutory basis in national law LGUs can readily have the legislative assembly consider and pass an ordinance prescribing the conduct of the business inspection.

4.2 REASONABLE FEES

Fees are imposed to recover the cost of a service rendered. As such, inspections and their corresponding fees may not be imposed in order to raise revenue. In the exercise of its authority to set fees, it should be clear that fees are separate and distinct from taxes. In this regard, the discussion of the case decide by the Supreme Court is instructive (see Exhibit 4-1). Details on how to establish reasonable fees for business friendly inspections are provided in Section 5.4.

4.3 PRIOR NOTICE OF INSPECTION

Inspections should be conducted with prior notice to the business permit applicant at the time the application is submitted, or by separate written notice. Prior notice is important so that business owners may exercise their right to be assisted by the appropriate professionals, such as an engineer, during the inspection.This will help business establishments comply with inspection requirements, prevent misunderstandings with the inspecting authority, and more immediately remedy negative findings. Notifications also allow the business establishment to analyze their schedule and be prepared to receive the inspector.

4.4 PRIOR DISCLOSURE OF INSPECTION STANDARDS

Checklists detailing inspection standards, steps, and pass/fail criteria should be created for each inspection. The checklist should be completed during the inspection and a copy left with the owner of the business establishment or his or her representative. Checklists
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 Standardize the inspection process, minimize subjectivity from its conduct, and limit the discretion of the inspector; Ensure the observance of a minimum standard of quality standard in the conduct of the inspection, such that the quality of the inspection does not depend solely on the inspectors individual level of competence and thoroughness. Spare establishments surprises and ensure transparency because they allow postinspection verification and thus the filing of protest against findings.

EXHIBIT 4-1 Supreme Court Ruling on License Fee

It is often loosely used to include levies for revenue as well as levies for regulatory purposes such that license fees are frequently called taxes although license fee is a legal concept distinguishable from tax: the former is imposed in the exercise of police power primarily for purposes of regulation, while the latter is imposed under the taxing power primarily for purposes of raising revenues.Thus, if the generating of revenue is the primary purpose and regulation is merely incidental, the imposition is a tax; but if regulation is the primary purpose, the fact that incidentally revenue is also obtained does not make the imposition a tax. To be considered a license fee, the imposition questioned must relate to an occupation or activity that so engages the public interest in health, morals, safety and development as to require regulation for the protection and promotion of such public interest; the imposition must also bear a reasonable relation to the probable expenses of regulation, taking into account not only the costs of direct regulation but also its incidental consequences as well. When an activity, occupation or profession is of such a character that inspection or supervision by public officials is reasonably necessary for the safeguarding and furtherance of public health, morals and safety, or the general welfare, the legislature may provide that such inspection or supervision or other form of regulation shall be carried out at the expense of the persons engaged in such occupation or performing such activity, and that no one shall engage in the occupation or carry out the activity until a fee or charge sufficient to cover the cost of the inspection or supervision has been paid. Accordingly, a charge of a fixed sum which bears no relation at all to the cost of inspection and regulation may be held to be a tax rather than an exercise of the police power.
SOURCE: Progressive Development Corporation vs. Quezon City, G.R. No. L-36081dated April 24, 1989

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4.5 PROFESSIONAL CHECKLISTS AND PROCEDURES

The use of checklists is very effective in ensuring that there is no inconsistency in the parameters used during inspections to evaluate compliance. The checklist should be completed during the inspection, and the evaluation parameters should apply uniformly to similar businesses. If the checklist is not customized to the types of business, then the inspector needs to indicate which items in the checklist are not applicable to a particular business. The minimum information that should appear on the completed checklist includes (1) the name of the inspector and his/her position together with his/her signature; (2) the time and date of the inspection; and (3) an affirmative statement where the business owner or his authorized representative acknowledges the conduct of the inspection, receipt of a copy of the inspection report, and a verifies that s/he has a clear understanding of any negative findings and what measures must be taken to ensure compliance. The Fire Code IRRs already include checklists for the inspection of various types of businesses while the IRRs of the various chapters of the Sanitation Code include detailed lists of what needs to be checked in the course of an inspection. These lists can readily be reorganized and converted into standard checklists. A sample checklist for sanitation inspection is provided in Appendix C. In addition, the following procedures should be observed during inspections: Inspections should be efficiently conducted and completed within a reasonable period of time without undue delay. Except when justified, no more than two inspectors from the same inspectorate group should conduct the actual inspection. Inspectors should present an identification card from his/ her office and an original copy of the Mission Order or another competent proof of authority, unless the prior notice already includes these details. Inspections should be conducted in the presence of a representative of the business establishment, preferably a person who is knowledgeable about the relevant circumstances and can properly relay the comments and findings of the inspectors to the owners of the establishment. One checklist should be used and completed in the course of the inspection, including all negative findings, comments, and recommended courses of action for their own reference and that of the business owner.
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 The checklist should record the reasons why a business establishment is or is not compliant with each criteria through an indicator detailing the level of compliance. Findings should be explained to the representative of the business establishment and, if necessary, clarifications/explanation should be sought from him or her. A copy of the completed checklist, signed and dated by the inspector, should be left with the representative of the business establishment.The copy retained by the inspector should be signed by the representative to verify his or her receipt of a copy of the checklist. If possible, the checklist should also indicate the proposed timeframe for remedying a negative finding, and when the business applicant can expect another inspection. The business applicant should be informed of how he or she may go about contacting the inspector to reschedule the inspection.

4.6 PROMPT NOTIFICATION OF RESULTS

If there is no negative finding, the certificate, clearance, or permit applied for should be issued no later than one day after the inspection. If there is a negative finding, it should be made clear what the consequences will be, including whether (1) the negative finding can simply be satisfied/ remedied and thereafter, the permit issued; (2) the negative finding cannot be remedied and results in the non-issuance of the permit/clearance applied for; or (3) the negative finding will result in a fine or other penalties for the continued failure of the applicant to correct or remedy the noted violation. If there is disagreement regarding the outcome of the inspections, the LGU should provide a dispute resolution mechanism so that the business applicant can appeal the decision. Further details on how to implement an appeals process is include in Section 0.

4.7 QUALIFIED INSPECTORS

Inspections for the issuance of new and renewed business permits are technical and should be conducted by professionals with commensurate education and training. Basic technical qualifications for inspectors are proposed in Table 4-1.

4.8 BALANCED APPROACH

The business registration and renewal process is a delicate balancing act between an LGU's desire to improve its business friendliness and its need to protect public welfare and the local
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Table 4-1 Proposed Inspector Qualifications

environment. The local economy improves due to the influx of new investments or expansion of existing businesses that generate jobs, alleviate poverty, and improve living standards. However, every business that is permitted to operate in the city or municipality potentially puts public welfare and the local environment at risk. Every new business generates waste that goes into the landfill, contributes to pollution, uses natural resources, and creates other forms of environmental pressure. It cannot be emphasized enough that this delicate balance between the need to enhance local economic development and the need to protect public welfare and the local environment must be maintained in order to create a sustainable practice. This balance is maintained by, among other factors, the inspection processes that the local governments implement, provided that the regulatory purposes of the different kinds of inspections are achieved.Achieving the regulatory
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purposes of inspections is best served through a cooperative effort between the business community and the local government. This requires a common understanding among all stakeholders of the purpose of each inspection.

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5. ESTABLISHING BUSINESS FRIENDLY INSPECTIONS

5.1 AMENDING LOCAL ORDINANCES
While national laws affecting the inspection and regulation of businesses at the local level still need to be amended to improve the policy environment, LGUs may take measures on their own to improve regulation in their jurisdictions, particularly regulation of registration and inspections. The basic restrictions on this authority are the mandatory provisions of law, which LGUs cannot defy and which no ordinance issued by them may contradict. Many LGUs have not passed detailed inspection ordinances even though a significant number of inspection issues can be addressed by such ordinances. Ideally, these ordinances should provide the legal basis for the prescribed inspection, purpose of the inspection, method for conducting inspections, applicable penalties for noncompliance, method for applying penalties, and recourse for applicants who do not pass inspections, among others. Appendix B is a template for a local ordinances concerning health and sanitation inspections. This template, which can be modified for other types of inspections, follows the best practices for effective inspections discussed above and reflects other recommendations presented in this chapter. Repeal of Duplicative Fire Inspection Fees. LGUs are advised to repeal ordinances that require fire inspection fees above and beyond those collected by the BFP, unless it is proven that their fire marshals are separate and distinct from those of the BFP, and that these personnel enforce other legal requirements based on a legal basis or authority other than the Fire Code. Appropriate Application of Fees.To reduce confusion, LGUs may revisit their ordinances that categorically prescribe inspection fees and assess whether it is best to refer to these fees in a more general way as "regulatory fees. LGUs are not always able to inspect all registration applicants for all required inspections, yet they still charge the corresponding fees. This being the case, LGUs may not continue to charge inspection fees for inspections they do not conduct. Disambiguation of Similar Fees. The simultaneous imposition of closely related fees, particularly those that are not readily distinguishable on the basis of their names, such as Environmental Protection/Supervision Fee and Environmental Protection Office Accreditation Fee as well as Sanitation Inspection Fee and Sanitation Permit Fee,
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should be avoided as much as possible.To applicants, the distinction is not apparent and makes them suspect duplication. Fees should be distinct and what is being paid for should be made clear, including the reason for imposition of a fee.

5.2 STREAMLINING CURRENT PROCEDURES

The ability of LGUs to conduct inspections all the time for all business establishments in their respective jurisdictions is seriously restricted by resource limitationsinadequate manpower and finances. These constraints are compounded during the legally mandated business renewal period, which is restricted to a mere three weeks each year (January 121). LGUs need to streamline current inspection procedures in order to service all business renewals in the restricted period. As a matter of reform a combination of the following options may be considered, and to some extent are already being observed in several LGUs: (1) total elimination of unnecessary inspections, (2) selective inspection of enterprises based on risk level and business size, and (3) staggered inspections.

Elimination of Duplicative Inspections

Several inspections can be eliminated for certain types of businesses altogether: Commercial Building Inspections . Building inspections may no longer be needed for individual establishments located in shared premises, such as commercial buildings and malls.9 The inspection requirements are already covered by the annual building inspection prescribed under the Building Code IRRs. Omitting these inspections eliminates duplicative inspections and fees. In this case, the annual building inspection fee may be charged directly to the building owner, who will then allocate fees among tenants accordingly. Renewal Sanitation Inspections. The annual sanitation inspection of business premises may be dismissed as a prerequisite for business permit renewal in the case of businesses that are not subject to such inspection under the Sanitation Code, although an initial sanitation permit is still required for new businesses. Zoning and Radial Distance Inspections. Inspection for purposes of zoning and radial distance clearance may be eliminated completely, particularly in the following instances:
____________________________
9

Davao City practices this method.

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 When the business is clearly within the area authorized for such purpose based on the provisions of the LGUs zoning ordinance and various zoning maps; Business permit renewals when there is no change in the address of the business establishment; The business permit sought is clearly within the declared purpose of the building, as may be apparent from the building permit and occupancy permit that was issued for the building; and The business permit applicant owns the building; has just secured an occupancy permit not more than one year prior to the date of application for a business permit; and the business is consistent with the declared purpose or use of the building as indicated in the occupancy permit.

Risk and Size-based Categorization

Risk-based targeting requires LGUs to formally adopt a system of classifying risk posed by various businesses and then provide an inspection prioritization scheme on that basis. This is similar to the low-risk/high-risk classification scheme being implemented by some LGUs. However, the classification method enforced by certain LGUs could be refined or improved in the following manner: Create and/or adopt formal criteria for assessing risk and defining the applicable regulatory parameters for each level of risk. Develop unique risk criteria for each type of inspection. Transparently communicate risk levels to business permit applicants, including for each type of inspection and the consequences/regulatory parameters of the risk level classification that a business has been given.10 These recommendations are also applicable to categorization businesses by size. The number of inspections that new business permit applicants are subjected to, and the resulting high cost of registration has discouraged small businesses from formalizing their businesses by securing the needed permits. LGUs seeking to lure new businesses, particularly smaller ones, may set a
____________________________
10 Based on information provided in an interview of paralegals doing business registration work, while Quezon City applies a risk-based classification allowing low-risk businesses to forego inspections, this practice is not clearly communicated to the business permit applicants.

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threshold business size based on capitalization11 that qualifies an enterprise for simplified business registration procedures. See Section 5.4 for more details on implementing a riskbased system and how it may impact fee setting.

Staggered Inspections
LGUs may find it feasible and preferable to integrate the building, occupancy, fire and business permitting processes by requiring that all building inspections be conducted during the construction of the business venture. If corrections or alterations to the structure are necessary to comply with regulatory requirements, it would be more cost-effective to remedy perceived problems at this stage, rather than after the completion of construction. Under this scheme, all technical inspections during the business permitting process will be redundant, creating a significantly streamlined registration procedure as shown in Figure 5-1.This scheme could reduce the typical business permitting process to just two steps. Fire, health and sanitation, and other building-specific inspections are best conducted during the construction phase. Occupancy inspections would be the only building-specific inspections that would take place after construction. Any deviation from the intended declared use should automatically mean that the applicant will be required to apply for a building permit.This process is clearly spelled out in the Building Code as change of use. To synchronize the building business permit processes, the building permit application would include the purpose of the structure being constructed. If the structure is being constructed for business purposes, then the BPLO should be notified during the construction stage.This procedure links the two processes and makes the building inspection less redundant. For inspections that need to be conducted after the business has opened, LGUs should focus on operation-oriented rather than asset-oriented inspections. Asset-specific inspections are focused on determining or evaluating whether applicable technical standards and specifications (such as those prescribed under applicable codes like the Building Code) relative to an asset, such as a building, have been complied with. On the other hand, an operations-specific inspection is focused on determining whether in the course of the operation of an entity of its business, applicable safety, health, and environmental standards are being observed or complied with. 12 For example, the existence of a waste disposal area or facility, built in accordance with specifications such as size and capacity, could be checked in the course of an asset-specific
____________________________
11 Sole proprietors generally indicate an arbitrary amount of capital investment in their application forms. This is because their personal properties are often not seen as distinct assets, therefore they do not strictly account for the assets of their business and their personal funds separately, unlike in the case of corporations where the assets of the corporation are generally clearly distinct from the assets of the shareholders. 12 Local Government Academy. 2011. Asset Specific Inspection and Operations Specific Inspection. Available at http//lga.gov.ph/bpls-faq3.

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Figure 5-1 Integrated View of Building, Occupancy, and Business Permit Process

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inspection. However, whether or not the waste disposal area or facility is actually being used and maintained as required is a matter that is best ascertained in the course of an operationoriented inspection. Similarly, the existence of fire exits complying with the required size/ specification will be confirmed by an asset-specific inspection, but the operation-specific inspection will determine whether or not the fire exit is subsequently locked, broken, barricaded or blocked. Operation-oriented inspections do not necessarily need to be conducted during the limited business renewal period from January 1st through 20th of each year. Relevant LGU departments could conduct inspections throughout the year, on a staggered basis, so long as certifications of inspections are valid for one year following issuance.

5.3 INSTITUTIONAL DEVELOPMENT MEASURES

From the institutional development standpoint, the following measures are recommended to make the inspection process more business-friendly: Forming Joint Inspection Teams LGUs wishing to implement JITs may consider the following steps: 1. Form a Technical Working Group (TWG) composed of representatives from the city/ municipalitys inspection units to assess the feasibility of adopting JITs in the city/municipality; 2. Formulate the JIT Inspection Process, once a consensus is established: the LGU registration process is the best starting point; 3. Select a Registration Model (pre-, post-, or hybrid) once an agreement on the JIT process is reached, and develop the JIT Terms of Reference (TOR), which should detail the following: Composition of the JIT Objectives and functions of the JIT Schedule and frequency of inspections Inspection process for each unit per business type Format of the Mission Order for each inspection Head of the JIT Staff training needs and a training plan if needed The primary objectives of each inspection, ensuring that the rationale for inspection is aligned with national and local policy Inspection procedures, indicating Anti-Red Tape Act (ARTA) commitments for various units
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 Organizational structure of the JIT, including structure of each field inspection team Reporting requirements. 4. Secure Approval from the department/unit heads involved and the mayor. 5. Issue an Executive Order forming the JIT from the Mayors Office. 6. Craft the Enhanced Inspection Ordinance (see Appendix B) and ensure its alignment with the approved TOR. 7. Develop an Inspection Manual of Operation. 8. Inform the Public and Potential Investors of the changes and when these will take effect. 9. Execute and Ensure Sustainability by providing for regular meetings of the TWG to assess the efficiency and impact of the JIT, and improve the JIT process.

Mechanisms for Dispute Resolution

It is important to maintain a simple and transparent procedure for disputing findings so that permi applicants do not view imposed penalties as arbitrary, unjust, or unreasonable.The appeals process should specify the venue for the appeal, the date by which a complaint must be lodged, and the estimated duration of the appeals process.The LGU should be responsible for providing a venue for the appeals process, and ensuring that disputes are resolved within a reasonable timeframe. Ideally, the dispute resolution and appeals process should be codified in an inspection ordinance. The deadlines and consequences provided under the ARTA could be applicable in the absence of any specific provision in the local ordinance.

5.4 RATIONALIZATION OF INSPECTION FEES

Fee is defined under Section 131 of the LGC as a charge fixed by law or ordinance for the regulation or inspection of a business or activity. All applicants in a given LGU are assessed and required to pay various inspection fees on an annual basis. However, in practice many of the fees collected only end up as net revenues for LGUs, as many inspections are never conducted due to limited resources. This directly contradicts Philippine jurisprudence, which is replete with decisions emphasizing the distinction between fees and taxes.13 The LGC, under its Section
____________________________
13

Serafica v. Treasurer of Ormoc City, et al., L-24813, April 28, 1969; Victorias Milling Co., Inc. v. Municipality Victorias, Negros Occidental, L-21183, September 27, 1968; City of Iloilo v. Villanueva, et al., 105 Phil. 337;Physical Therapy Organization of the Philippines Inc. v. Municipal Board of the City of Manila, 101 Phil 1142; Cuunjieng v. Patstone, 42 Phil. 818; PAL v. Edu, L-41383, August 15, 1989; and Chevron Philippines, Inc. v. Bases Conversion Development Authority, GR No. 173863, September 15, 2010.

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147, provides the measure of reasonable fees which can be charged on businesses and occupations, (i.e., it is commensurate with the cost of regulation, inspection, and licensing before any person may engage in such business or occupation, or practice such profession or calling ). To remedy this disconnect between de jure and de facto inspection fees, it is recommended that LGUs establish a risk-based categorized system based on benchmarks in comparable localities. This system should be driven by transparent criteria that determine the overall cost of regulations to the LGU.A rationalization of fees need not result in the diminution of aggregate fees collected by the LGU. Reforms can be implemented to ensure a reallocation of inspection fees among business applicants according to their size and risk level without placing an undue burden on productive enterprises. In addition, lower fees for low-risk businesses may encourage small and medium enterprises to join the formal economy, thereby increasing revenues for the LGU through volume rather than value. LGUs should take care that the categorization system does not disincentivize businesses from growing or taking income-generating risks that may require additional regulations.

Risk-Based Fees
Adopting a risk-based fee structure is usually a more equitable fee-setting scheme. The cost of regulating and inspecting high-risk business establishments exceeds that of lower-risk businesses. Many LGUs already prioritize the inspection of high-risk businesses over low-risk businesses, often foregoing inspections for low-risk businesses altogether. This practice would benefit from the formal establishment of risk categories based on objective, publically available criteria, and the assessment of inspection fees based on these categories. It is recommended that businesses be identified as low, medium, or high risk using relevant criteria. Under this classification system, high-risk businesses that are regularly subjected to inspections would pay a higher inspection fee than low-risk businesses, which are often not inspected at all. There are many ways to categorize businesses according to their relative risk to public welfare. Initially, the classification into various risk levels could be based on the type or industry of the business enterprise and the type of inspection being conducted. Some businesses may be highrisk from the perspective of fire safety, but not high-risk from the perspective of health and sanitation. This would allow businesses to qualify for different risk ratings for each type of inspection.A risk-based fee-setting scheme may be further refined by the inclusion of enterprisespecific considerations, such as past inspection results for the immediately preceding years;
____________________________ Villanueva, et al., 105 Phil. 337;Physical Therapy Organization of the Philippines Inc. v. Municipal Board of the City of Manila, 101 Phil 1142; Cuunjieng v. Patstone, 42 Phil. 818; PAL v. Edu, L-41383, August 15, 1989; and Chevron Philippines, Inc. v. Bases Conversion Development Authority, GR No. 173863, September 15, 2010.

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violation incidence records; and/or third-party certifications, validations, or accreditations, such as ISO accreditation. For example, a business that poses an environmental risk could demonstrate that it is ISO 14001-2004-certified,14 indicating compliance with environmental rules and regulations, and meriting a lower risk rating.

Size-Based Fees
While a risk-based system is recommended as the primary means for setting fees for businesses, size and complexity of operations may be used as secondary means for determining the cost of regulation. Proxies for size and complexity include gross receipts, area of business premises, number of personnel, and any other relevant factor that could directly impact the cost of inspections. In a Supreme Court case, it was held that the use of gross receipts as a basis for computing the fees due to Quezon City for regulation and supervision of the sale of foodstuff to the public is valid and reasonable (see Exhibit 5-1). However, the amount of gross revenue may not always be relevant as it is not always the most relevant driver of risk in a particular business. In other businesses, the number of people served/ foot traffic, number of personnel, or area occupied may be more relevant.

Exhibit 5-1
Supreme Court Ruling on Gross Receipts as Fee Setting Criteria [T]he use of the gross amount of stall rentals as basis for determining the collectible amount of license tax, does not by itself, upon the one hand, convert or render the license tax into a prohibited city tax on income. Upon the other hand, it has not been suggested that such basis has no reasonable relationship to the probable costs of regulation and supervision of the petitioner's kind of business. For, ordinarily, the higher the amount of stall rentals, the higher the aggregate volume of foodstuffs and related items sold in petitioner's privately-owned market; and the higher the volume of goods sold in such private market, the greater the extent and frequency of inspection and supervision that may be reasonably required in the interest of the buying public.
SOURCE: Progressive Development Corporation vs. Quezon City, G.R. No. L-36081dated April 24, 1989.

____________________________
14

ISO 14001:2004 specifies requirements for an environmental management system to enable an organization to develop and implement a policy and objectives which take into account legal requirements and other requirements to which the organization subscribes, and information about significant environmental aspects. It applies to those environmental aspects that the organization identifies as those which it can control and those which it can influence. Available at http://www.iso.org/iso/iso_catalogue/management_and_leadership_standards/environmental_management/ iso_14000_essentials.htm as viewed on 17 July 2011.

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Referencing Comparable Benchmarks

Theoretically, fees should be deemed reasonable if their amount is commensurate with the cost of regulation, since cost recovery or reimbursement is their primary purpose, not revenue generation. However, it is not always easy to readily ascertain the exact cost of regulation. Aside from the difficulty of determining the amount of each cost item, there is also a need to determine what cost items should be included in the formula. Because of these difficulties, it would be good practice or at least prudent for an LGU to benchmark fees against those of other LGUs. Comparing rates could provide an LGU with a practical basis to assess the reasonableness of its fees and ensure that these remain attractive for investors. An LGU could set these fees at an equal or lower level than other LGUs, or if this is not possible, ensure that there are other advantages of doing business in the locality.

5.5 AUTOMATING THE INSPECTION SYSTEM

The value of an information database for the business registration process should not be underestimated. A computerized information system with a comprehensive database would enable the LGU to be much more efficient, as follows: Building and Occupancy Permits Database .As discussed in Section 3.4, if this information were readily accessible electronically, it could be a sufficient basis to justify the omission of inspections done already in connection with the occupancy permit application. Access Results of Past Inspections. The results of previous inspections stored in the database will enable the BPLO to make informed decisions on whether or not to waive the inspection requirement. This is particularly true if the inspectors are required to rate the level of compliance. Businesses that rate exceptionally high in a preliminary inspection should merit a lower priority in the conduct of actual inspections. Zoning and Radial Distance Maps. A well-developed system and a complete database would readily provide the information needed to determine whether or not the proposed location of the business is acceptable. Digital maps as well as searchable text files of the zoning ordinance should suffice as bases for deciding to issue a zoning clearance, precluding the need for a site inspection. Likewise, depending on the level of sophistication of the information system of the LGU, it is also possible to readily check radial distances between different types of establishments in order to ensure, for example, that a bar is not located in the immediate vicinity of a school.

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Figure 5-2 Sample Automated Inspection System Scheme

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 Access, Print, and Transmit Checklists. Readily access, print, or transmit applicable checklists of requirements for the type of business of the business permit applicant, and for each type of inspection to concerned stakeholders; and automatically print out the official notices and electronically send out reminders. Figure 5-2 shows the conceptual integration schema of Mandaluyong City for interconnecting LGU departments, the BFP and the public. In this scheme, the schedule of inspection is controlled via an interface with an electronic BPLS (eBPLS). All inspection units are interconnected and the central database can provide real-time status updates for the results of each inspection as well as historical records. The inspection system is connected via a local area network (LAN) to the Real Property Assessor office and property information. Budget permitting, supporting offices may be linked to facilitate efficient collection of applicant information and faster processing of the application. Similarly, sharing of information has the potential to replace time consuming and inefficient inspections with a simple validation check of information The final integration schema should reference the eBPLS Baseline Design Guide, which provides an overview of technical specifications recommended for an eBPLS solution. Suggestions for planning and managing the roll-out of an eBPLS solutions are in the eBPLS Planning and Implementation Guide. Both documents were developed by the National Computer Center in collaboration with USAID/LINC-EG.

5.6 DISSEMINATING RELEVANT INFORMATION Providing Online Access

Data and other information can be made available online to improve compliance and promote transparency. This information may be classified into two categories: (1) data subject to access restrictions and requiring password authorization; and (2) general information available to anyone with Internet access. Information that could be published online includes the following:
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Copies of relevant ordinances Names of all registered businesses, addresses, and the nature of their business Risk-based classification levels Compliance checklists Application forms, appeal or dispute forms, and other routinely-used forms Schedule of inspections Other official announcements.

Electronic Notices
Electronic notices may also be issued in lieu of hardcopy of notices, cutting costs for LGUs. BPLS notices include the following: Prior notice of inspection Result of most recent inspection Results of inspections from the past five years, including levels of compliance, if applicable Inspection fees paid or overdue Business taxes paid or overdue

Real property taxes paid or overdue, particularly if the LGU withholds the issuance of business permits in order to enforce collection of other fees and taxes not necessarily related to business permit renewal

Publication in Local Newspapers

Some local newspapers are distributed for free or are sold at very reasonable prices. The publication rates of these local newspapers are also often reasonable. LGUs should consider circulating information about business inspection ordinances and policies through these newspapers. Suggested information for publication includes the following: Newly-prescribed inspection procedures, particularly if the LGU adopts an inspection ordinance. Information about the risk-based classification of businesses and the practical implications of each classification level. List of requirements and table of inspection fees. Remedies available to business permit applicants in case of disputes or issues arising from the conduct of business inspections.

Amendment to Citizens Charters

The information in Citizens Charters is often too general and simple. In most cases, these charters indicate the need for inspection with the words conduct of inspection by x x x without indicating the requirements that the permit applicant must comply with in order to pass the inspection. While it may be difficult to include detailed checklists for each type of business and for each type of transaction in the Citizens Charter, the public should at least be informed that applicants will be required to prove compliance with a checklist of requirements applicable to their business, and where such checklist of requirements may be obtained.
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APPENDIX A. LEGAL BASIS FOR BUSINESS INSPECTIONS

BUILDING INSPECTIONS
As briefly discussed above, building inspections should not be a requirement for securing a new or renewed business permit. The building permit is only a requirement when a person, juridical or otherwise, erects, constructs, alters, repairs, moves, converts or demolishes any building or structure.This permit is obtained from the assigned Building Official in the proposed location of the building. There is no categorical provision in the Building Code which imposes the presentation of a building permit for purposes of business permit issuance, whether new or renewed, unlike the Fire Safety Inspection Certificate which the Fire Code specifically mandates as a prerequisite for business permit application and renewal purposes. There is, however, mention of an annual inspection of buildings in the IRR of the Building Code, but this inspection is with respect to the building itself. The IRR of the Building Code provides: SECTION 207. Duties of the Building Official. The BO shall have the following duties: Be primarily responsible for the enforcement of the provisions of the Code and its IRR, as well as circulars, memoranda, opinions and decisions/orders issued pursuant thereto. His actions shall always be guided by appropriate orders/directives from the Secretary. Have overall administrative control and/or supervision over all works pertinent to buildings/structures in his area of responsibility and shall be charged with the processing of all permit applications and certificates as well as the issuance of the same. Ensure that all changes, modifications, and alterations in the design plans during the construction phase shall not start until the modified design plan has been evaluated and the necessary amendatory permit issued. Undertake annual inspections of all buildings/structures and keep an up-to-date record of their status.

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PLUMBING INSPECTIONS
The inspections mandated under the Plumbing Code do not and should not qualify as BRlinked Inspections as they pertain to inspection that needs to be conducted in the course of construction/renovation.

HEALTH AND SANITATION INSPECTIONS

While the Sanitation Code provides for specific sanitation standards and requirements for various business establishments, it only explicitly requires or authorizes the conduct of sanitation inspections for a select number of business establishments. Particularly, sanitation inspections are only required or authorized for the following: 1. 2. 3. 4. Operation of Food Establishment Markets Public swimming pools and bathing places Equipment and installations of port and airport premises.

Inspection of food establishments is provided under Sections 31 and 33 of the Sanitation Code. Inspection of markets and abattoirs, public swimming pools and bathing places, and equipment and installations of airport and port premises are provided under Sanitation Code Sections 35, 53, and 66, respectively. For sanitation permits, it is the duty of the local health officer to conduct all related inspections as deemed necessary for the enforcement of the Sanitation Code and its IRRs. The local health officer directs the sanitation engineer/inspector to conduct the appropriate inspection, which must be carried out within seven (7) working days after receiving payment of the inspection fee, as set by the local ordinance. Inspections are conducted pursuant to Section 478 (b)(4)(vi) of the Local Government Code (LGC), which states: The Health Officer SECTION 478. Qualifications, Powers and Duties. (b) The health officer shall take charge of the office on health services and shall: xxx (4) In addition to the foregoing duties and functions, the health officer shall: (vi) Direct the sanitation inspection of all business establishments selling food items
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or providing accommodations such as hotels, motels, lodging houses, pension houses, and the like, in accordance with the Sanitation Code; xxx While the sanitation inspection of all business establishments selling food or providing accommodations appears to be a mandatory requirement under the LGC, the LGC itself and the Rules and Regulations Implementing the LGC (LGC IRR) are both silent on the specific manner and frequency of sanitation inspections. However, under Section 478 (b)(4)(vi) of the LGC, it is the LGUs health officer who must direct the conduct of sanitation inspections. With the grant of such authority to the head of the LGUs office on health services, it would appear that conduct of sanitation inspections is based on the procedures established by the LGUs office on health services.

ZONING AND RADIAL DISTANCE INSPECTIONS

The LGC is replete with provisions explicitly granting LGUs the authority to reclassify lands and enact zoning ordinances, as evidenced below. Section 20 of the LGC provides: SECTION 20. Reclassification of Lands. (a) A city or municipality may, through an ordinance passed by the sanggunian after conducting public hearings for the purpose, authorize the reclassification of agricultural lands and provide for the manner of their utilization or disposition in the following cases: (1) when the land ceases to be economically feasible and sound for agricultural purposes as determined by the Department of Agriculture or (2) where the land shall have substantially greater economic value for residential, commercial, or industrial purposes, as determined by the sanggunian concerned: Provided, that such reclassification shall be limited to the following percentage of the total agricultural land area at the time of the passage of the ordinance: (1) For highly urbanized and independent component cities, fifteen percent (15%); (2) For component cities and first to the third class municipalities, ten percent (10%); and (3) For fourth to sixth class municipalities, five percent (5%): Provided, further,That agricultural lands distributed to agrarian reform beneficiaries pursuant to Republic Act Numbered Sixty-six hundred fifty-seven (R.A. No. 6657). otherwise known as "The Comprehensive Agrarian Reform Law", shall not be affected by the said reclassification and the conversion of such lands into other purposes shall be governed by Section 65 of said Act.

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(b) The President may, when public interest so requires and upon recommendation of the National Economic and Development Authority, authorize a city or municipality to reclassify lands in excess of the limits set in the next preceding paragraph. (c) The local government units shall, in conformity with existing laws, continue to prepare their respective comprehensive land use plans enacted through zoning ordinances which shall be the primary and dominant bases for the future use of land resources: Provided,That the requirements for food production, human settlements, and industrial expansion shall be taken into consideration in the preparation of such plans. (d) Where approval by a national agency is required for reclassification, such approval shall not be unreasonably withheld. Failure to act on a proper and complete application for reclassification within three (3) months from receipt of the same shall be deemed as approval thereof. (e) Nothing in this Section shall be construed as repealing, amending, or modifying in any manner the provisions of R.A. No. 6657. Section 215 states: SECTION 215. Classes of Real, rules and regulations; establish fire limits or zones, particularly in populous centers; and regulate the construction, repair or modification of buildings within said fire limits or zones in accordance with the provisions of the Fire Code; Section 458, in part, states: SECTION 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall: (2) Generate and maximize the use of resources and revenues for the development plans, program objectives and priorities of the city as provided for under Section 18 of this Code, with particular attention to agro-industrial development and city-wide growth and progress, and relative thereto, shall:

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(viii) Reclassify land within the jurisdiction of the city, subject to the pertinent provisions of this Code; (ix) Enact integrated zoning ordinances in consonance with the approved comprehensive land use plan, subject to existing laws, rules and regulations; establish fire limits or zones, particularly in populous centers; and regulate the construction, repair or modification of buildings within said fire limits or zones in accordance with the provisions of the Fire Code; Section 468, in part, states: SECTION 468. Powers, Duties, Functions and Compensation. (a) The sangguniang panlalawigan, as the legislative body of the province, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the province and its inhabitants pursuant to Section 16 of this Code in the proper exercise of the corporate powers of the province as provided for under Section 22 of this Code, and shall: (2) Generate and maximize the use of resources and revenues for the development plans, program objectives and priorities of the province as provided for under Section 18 of this Code, with particular attention to agro-industrial development and country-wide growth and progress and relative thereto, shall: (vii) Review the comprehensive land use plans and zoning ordinances of component cities and municipalities and adopt a comprehensive provincial land use plan, subject to existing laws; and xxx Securing the necessary zoning clearance is only mentioned in Article 34 of the Implementing Rules and Regulations of the LGC on Eminent Domain: ARTICLE 34. Prerequisites. In acquiring private property for public use or purpose, LGU shall first establish the suitability of the property to be acquired for the use intended, then proceed to obtain from the proper authorities the necessary locational clearance and other requirements imposed under existing laws, rules and regulations. It would appear that the zoning clearance referred to above is not obtained from the LGU itself but from the proper authorities. Occasionally the basis for zoning inspections for certain types of establishments or businesses can be found in the various rules and regulations implementing the Sanitation Code, and not
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under the LGC itself. For instance, in the Sanitation Implementing Rules and Regulations, the portion on Markets and Abattoirs specifically provides: 3.1.1 The market site shall be located at least 50 meters (164 feet) from schools, religious institutions, public offices, funeral establishments, and other public gathering places and 25 meters (82 feet) from abattoirs and other possible sources of contamination. In another example, the IRR on Disposal of Dead Persons of the Sanitation Code provides as follows: SECTION 3. Burial Ground Requirements. 3.1The following are the requirements for securing an initial clearance from the Department of Health in establishing and opening of a public cemetery or memorial park: 3.1.3 Map of the proposed cemetery in triplicate copies indicating the dimensions of the cemetery in length and width and the 25-50 meter zones, the dwelling places and sources of water supply within said zones. 3.1.5 Certification from the sanitation engineer of the Department of Health with regards to the suitability of the land proposed to be utilized as a cemetery, as to the depth of water table during the dry and rainy seasons, highest flood level, direction of run-off, drainage disposal, the distance of any dwelling house within the 25 meter zone and drilling of a well or any source of potable water supply within the 50 meter zone.

ENVIRONMENTAL INSPECTIONS
While the Sanitation Code contains environmental provisions for the health of workers applicable to all industrial establishments, and dedicates an entire chapter to pollution of the environment, there is no explicit provision under the Sanitation Code which directly authorizes the conduct of environmental inspections as a separate or additional requirement prior to the operation of a business establishment. Sec. 48 of the Sanitation Code provides: SECTION 48. Environmental Provisions. The environmental provisions enumerated hereunder for the protection of the health of workers are applicable to all industrial establishments: a. Control of atmospheric contaminants 1.
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Workers shall not be exposed to atmospheric contaminants hazardous to health.

2.

Control of atmospheric contaminants shall be accomplished by methods approved by the Secretary or his duly authorized representatives or other government authority.

b. Control of infectious agents 1. Control measures shall be provided to eliminate or control the transmission of infectious diseases through processing or handling of industrial products or wastes.

c. Control of possible sources of radiation hazards should be carried out under the supervision of the Radiation Health Officer or his authorized representative. d. Noise Control measures shall be provided to reduce intensity of noise sufficiently to render it harmless to workers and to eliminate it at its source as a nuisance by following the recommendations of the local health or other government authority. e. Illumination 1. Adequate lighting shall be provided and distributed in all work areas in amount required for the type of work or seeing tasks measured by a light-meter with a minimum of glare and contrasting intensities between work and workroom. Where the specific task requires more light than provided by general illumination, supplementary lighting shall be supplied.

2.

f. Ventilation 1. Natural or artificial ventilation shall be provided in all work areas at a rate to insure a safe and healthful working atmosphere, free from injurious amounts of toxic materials and reasonably free from offensive odours and dust throughout the establishment. 2. Proper control measures shall be used to reduce concentration of toxic contaminants to allowable limits. 3. Air inlets shall be arranged, located and equipped to insure sufficient air velocity and an exhaust system which shall be located so that discharged materials shall not reenter places of employment or habitations nor create any hazard of nuisance. The Chapter on Pollution of the Environment in the Sanitation Code provides for the applicability of (i) Republic Act No. 3931 (RA 3931), An Act Creating the National Water and Air Pollution Control Commission, (ii) its implementing rules and regulations, and (iii) Presidential Decree No. 480 (PD 480) dated 6 June 1974 which is a decree creating a radiation health office in the Department of Health. Moreover, Section 88 under the said chapter explicitly authorizes the
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Secretary of Health to promulgate rules and regulations for the control and prevention of various types of pollution. Sec 88 of Chapter XX of the Sanitation Code provides: SECTION 88. Authority of the Secretary. The Secretary is authorized to promulgate rules and regulations for the control and prevention of the following types of pollution: a. Pollution of pesticides and heavy metals; b. Pollution of food caused by chemicals, biological agents, radioactive materials, and excessive or improper use of food additives; c. Non-ionizing radiation caused by electronic products such as laser beams or microwaves; d. Noise pollution caused by industry, land and air transport and building construction; e. Biological pollutants including the causative agents of intestinal infections; f. Pollution of agricultural products through the use of chemical fertilizers and plant pesticides containing toxic chemical substances and unsanitation agricultural practices; and g. Any other type of pollution which is not covered by the provisions of Republic Act 3931, the Rules and Regulations of the National Water and Air Pollution Control Commission, the provisions of Presidential Decree No. 480 and the rules and regulations of the Radiation Health Office of the Department of Health which is likely to affect community Health adversely. A perusal of RA 3931 would however reveal that the former National Water and Air Control Pollution Commission (NWACPC) has the duty and responsibility under Sec. 6(b)(6) to inspect the construction and maintenance of sewage works and industrial wastes disposal system for compliance of the approved plans and to authorize its representatives to enter at all reasonable times in or upon any property of the public dominion and private property devoted to industrial, manufacturing, processing or commercial use without doing damages for the purpose of inspecting and investigating conditions relating to the pollution or the possible imminent pollution of any waters or atmospheric air of the Philippines. Moreover under Section 9 of RA 3931, [n]o person shall perform any of the following activities without first securing a permit from the city or district engineer for the discharge of all industrial wastes and other wastes which are or may be discharged into the waters or atmospheric air of the Philippines, which could cause pollution thereof:

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(1) the construction, installation, modification or operation of any sewage works or any extension or addition thereto; (2) the increase in volume or strength of any wastes in excess of the permissive discharge specified under any existing permit; (3) the construction, installation, or operation of any industrial or commercial establishments or any extension or modification thereof or addition thereto, the operation of which would cause an increase in the discharge of wastes directly into the waters or atmospheric air of the Philippines or would otherwise alter the physical, chemical or biological properties of any waters or atmospheric air in the Philippines or would otherwise alter the physical, chemical or biological properties of any waters or atmospheric air of the Philippines in any manner not already lawfully authorized; (4) the construction or use of any new outlet for the discharge of any waste, gaseous or liquid, directly into the waters or atmospheric air of the Philippines. The NWACPC was subsequently reorganized as the National Pollution Control Commission (NPCC) under Presidential Decree No. 984 (PD 984) dated 18 August 1976. Under PD 984, the NPCC retained the power to [a]uthorize its representative to enter at all reasonable times any property of the public dominion and private property devoted to industrial, manufacturing, processing or commercial use without doing damage, for the purpose of inspecting and investigating conditions relating to pollution or possible imminent pollution. Later, the NPCC was abolished under Section 16 of Executive Order No. 192 (EO 192) dated 10 June 1987 and its powers and its functions were integrated into or absorbed by the Environmental Management Bureau (EMB). On the other hand, the IRR of the Chapter on Pollution of the Environment of the Sanitation Code which applies to all establishments, premises and facilities that are producing, processing, manufacturing, handling, storing, transporting, selling, distributing, using and disposing xxx fertilizers, pesticides, heavy metals, chemicals, biological agents and pollutants, radioactive materials, food additives, products emitting ionizing and non-ionizing radiation and other products and byproducts that may cause harm to public health and to projects, conditions or activities such as industry, transport, energy, infrastructure, food, agricultural and other processes that may generate pollutants that are likely to adversely affect public health, expressly provides under Sec. 8 that it is the duty of the city/municipal health officer to inspect and evaluate every establishment, premises, or facility covered by the IRR at least every three (3) months, and to conduct as many additional inspections, re-inspections and evaluations as deemed necessary for the enforcement of the provisions of the IRR.
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It must be pointed out, however, that such inspection pertains to the standard sanitation inspection and not to an environmental inspection that is separate and distinct from the sanitation inspection. Consistent with the procedures and requirements for the conduct of sanitation inspection as provided in various other IRRs of the Sanitation Code, the sanitation inspection under the IRR on Pollution of the Environment (i) must be conducted within seven (7) working days after payment of the inspection fee to the city/municipal treasurer concerned; (ii) entails the payment of a sanitation inspection fee of such amount prescribed by local ordinance, (iii) requires the issuance by the municipal/city health officer or the chief of the sanitation division/section/unit of the local health office of a mission order for the conduct thereof by the sanitation engineer/ inspector. This IRR also identifies specific projects that warrant additional requirements, such as the procurement of an Environmental Compliance Certificate (ECC). This is particularly true for Health Sensitive Projects, which are required to conduct an environmental health impact assessment as part of the Environmental Impact Statement to be submitted to the Department of Environment and Natural Resources (DENR).The Health Sensitive Projects shall be reviewed at the national level by the DOH Environmental Health Service (EHS) in accordance with the specific procedure indicated in the IRR. Under the IRR of the Chapter on Pollution of the Environment of the Sanitation Code, Health Sensitive Project is defined as a project, whose raw materials, by products, intermediate products, finished products, waste products, and other processes during the construction, operation and decommissioning phases will pose a significant health risk to the workers and the communities exposed. Such undertakings can be classified into major development projects such as, but not limited to the following: 1. Heavy Industries (e.g., non-ferrous metal industries, iron and steel mills, smelting plants, petroleum, and other petrochemical industries, including oil and gas); 2. Resource Extractive Industries (e.g. major mining and quarrying projects, forestry projects like logging, grazing and extraction of mangrove products, fishery projects including dikes and fishpond development projects); 3. Power Generation Operations (e.g. thermal, geothermal, hydroelectric, nuclear, and other nontraditional sources of power and energy); 4. Infrastructure Projects (e.g. major dams, major reclamation projects, major roads and bridges); and 5. Golf Course Projects.

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Based on the aforementioned, unless there is a separate local ordinance on the matter, no separate environmental inspection is warranted since it is already covered under the health and sanitation inspection, according to the Sanitation Code. On the other hand, additional environment-related clearances and permits, such as the ECC, are prescribed under national laws and are specifically enforced directly by the DENR rather than devolved t

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APPENDIX B. INSPECTION ORDINANCE TEMPLATE

Ordinance No. XXX Series of 2011 AN ORDINANCE AUTHORIZING THE CONDUCT OF SANITATION INSPECTIONS OF BUSINESS ESTABLISHMENTS WITHIN THE TERRITORIAL JUSRISDICTION OF THE CITY OF [INSERT CITY] AS A REQUIREMENT FOR THE ISSUANCE AND RENEWAL OF A SANITATION PERMIT AND ESTABLISHING THE PROCEDURE, REQUIREMENTS, AND FEES FOR THE CONDUCT THEREOF Sponsored by: XXX XXXXX XXX XXXXX WHEREAS, the conduct of business registration-related inspections is broadly contemplated under Article XII, Section 6 of the 1987 Philippine Constitution which provides that [i]ndividuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands; WHEREAS, under Section 16 of Republic Act 7160, the Local Government Code of 1991 (the Local Government Code), each LGU is authorized to promote the general welfare of its inhabitants and for this purpose regulate any business, occupation, or practice of profession within its territorial jurisdiction through the issuance of permits and licenses subject to certain requirements or conditions; WHEREAS, the Local Government Code further authorizes each local government unit to create its own sources of revenue through the levy of taxes, fees, and charges subject to the limitations imposed therein as may be consistent with the basic policy of local autonomy; WHEREAS, Presidential Decree No. 856, the Code on Sanitation (Code on Sanitation), dated 23 December 1975, authorizes the conduct of sanitation inspections of business establishments
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for the issuance or renewal of sanitation permits necessary for the operation of specified businesses; NOW, THEREFORE, be it ordained by the City Council of the City of [Insert City] in session assembled, that: Section 1. Short Title - This Ordinance shall be known as the Sanitation Inspection Ordinance of 2011.
[Please note that this Ordinance template pertains specifically to the conduct of Sanitation Inspections for the issuance or renewal of sanitation permits which is required for the issuance of a business permit. While the provisions herein contained are definitely relevant to the conduct of sanitation inspections, some of the provisions in this template Ordinance may be applicable to other types of inspections in relation to the issuance of a business permit. Other types of inspections may, however, require the inclusion of additional provisions which are not relevant to or necessary in relation to the conduct of sanitation inspection.]

Section 2. Declaration of Policy It is hereby declared the policy of the City of [Insert concerned city] to regulate all businesses which intend to operate or are operating within its territorial jurisdiction in line with the promotion of the general welfare of its inhabitants. Toward this end, the City shall, unless otherwise exempted or waived in accordance with the provisions of this Ordinance, require all businesses to secure a sanitation permit prior to operation and to renew the same annually thereafter as a condition for continuing business operations within the City. Under the general welfare clause of the Local Government Code and the Code on Sanitation, the City is authorized to conduct sanitation inspections as a requirement for securing and renewal of sanitation permit.
[The specific law which authorizes the conduct of a specific type of inspection must be cited in the Declaration of Policy. For instance, the National Building Code must be cited for building-related inspections.]

Section 3. Objective of Sanitation Inspection - Except for business establishments that may be determined to be exempt, or in the case of a waiver in accordance with the provisions of this Ordinance, the conduct of sanitation inspections as a condition for the issuance or renewal of a sanitation permit shall be undertaken to ensure that business establishments which intend to operate and are operating within the territorial jurisdiction of the City comply or continue to comply with sanitation and health standards for the protection and promotion of health within the Citys territorial jurisdiction.

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[The rationale for the conduct of a specific type of inspection must be indicated. For instance, the rationale for the conduct of building inspection may be for the promotion of safety within the Citys territorial jurisdiction.]

Section 4. Definition of Terms - As used in this Ordinance, the following words or terms shall have the meaning given to it in this section, as follows: Sanitation Permit a certification in writing by the City Health Officer or in his absence, by the chief or head of the sanitation division/section/unit that the business establishment complies with existing sanitation requirements upon evaluation and conduct of sanitation inspection. Local Health Authority the City Mayor who is responsible for the application or implementation of a prescribed health measure in the City. City Health Officer the head of the City Health Office. Risk-based Targeting System - a system of risk classification of various businesses and the corresponding inspection prioritization scheme on this basis.
[Insert other terms that must be defined. Please note that each type of inspection would have a distinct set of terms that must be defined.]

Section 5. Coverage. Except as may otherwise be declared exempt or waived in accordance with the provisions of this Ordinance, the conduct of sanitation inspection shall cover all business establishments within the territorial jurisdiction of the City applying for the issuance or renewal of sanitation permit, provided, the following business establishments, regardless of their risk-based classification, shall in no case be exempt from the conduct of sanitation inspection: Food Establishments; 15 Markets and abattoirs; 16 Public laundry; 17 Schools; 18 Industrial establishments; 19

____________________________
15 16 17

Covered under Chapter III of the Code on Sanitation. Covered under Chapter IV of the Code on Sanitation. Covered under Chapter V of the Code on Sanitation. 18 Covered under Chapter VI of the Code on Sanitation. 19 Covered under Chapter VII of the Code on Sanitation.

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Public swimming pools and bathing places; 20 Camps and picnic grounds; 21 Dancing schools, dance halls, and night clubs; 22 Tonsorial and beauty establishments; 23 Massage clinics and sauna bath establishments; 24 Hotels, motels, apartments, lodging, boarding or tenement houses, and condominium; 25 Nuisances and offensive trades and occupations as defined under the Code on Sanitation;26 Funeral and embalming establishments; 27 Port and airport premises; 28and Such other businesses classified as high risk businesses in accordance with Section 7 of this Ordinance which activities, by their nature, involve or create substantial or significant risks to public health and the environment. The application for the issuance or renewal of sanitation permit shall be filed with the City Health Office. A valid sanitation permit shall be a prerequisite for the issuance of the business permit and any renewal thereof, for businesses listed above.
[Please note that it is among the recommendations that sanitation inspections be dispensed with as a requisite for business permit renewal in the case of businesses which do not require inspections under the Sanitation Code. Under the Code on Sanitation and its IRRs, only the business establishments enumerated above are subject to sanitation inspections, although there are other establishments which are required to secure a sanitation permit under the Code on Sanitation.]

Section 6. Inspection Checklist All business establishments applying for the issuance or renewal of sanitation permit shall be given a checklist of requirements that must be complied with for the issuance of sanitation permit. The City Health Office, in consultation with relevant professional groups and industry representatives, shall develop a detailed checklist of requirements for each distinct class of business or industry group. The checklist shall provide for requirements and minimum quality standards that an applicant business establishment must comply with and shall be used to ensure that there will be no arbitrariness in the parameters used in the conduct of
____________________________
20 21 22 23 24 25 26 27 28

Covered under Chapter VIII of the Code on Sanitation. Covered under Chapter X of the Code on Sanitation. Covered under Chapter XI of the Code on Sanitation. Covered under Chapter XII of the Code on Sanitation. Covered under Chapter XIII of the Code on Sanitation. Covered under Chapter XIV of the Code on Sanitation. Covered under Chapter XIX of the Code on Sanitation. Covered under Chapter XXI of the Code on Sanitation. Covered under Chapter XV of the Code on Sanitation.

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sanitation inspection and evaluating compliance by the applicant business establishment of the requirements for the issuance of a sanitation permit.The evaluation parameters shall be uniformly applied to businesses falling under the same business class or industry group. To the extent applicable, the checklists shall indicate the legal basis for the inclusion of such a requirement, such as the relevant provision of the Code on Sanitation, if any.The checklists developed shall specifically consider all applicable requirements under the Code of Sanitation and its Implementing Rules and Regulations. The checklist for the top ten (10) business classes shall be released by the City Health Office within one hundred twenty (120) days after the effective date of this Ordinance.The checklist for the next ten (10) top business classes shall be released one hundred twenty (120) days after the first deadline, and so on until all the checklists for all business classes within the City shall have been released. The checklist shall indicate the weight given to each criteria or requirement. The rating system shall be indicated in such checklist. Section 7. Adoption of Risk-based Targeting System The City adopts a risk-based targeting system of classification of all types of businesses in the City.The risk-based classification of a particular business shall be the primary basis for determining the level of regulation that will be imposed on the business for the enforcement of the requirements under this Ordinance including the Code on Sanitation and its IRRs. Within sixty (60) days from the effective date of this Ordinance, the City Health Office shall formulate a business classification system that would categorize all businesses in the City in into a minimum of three (3) and a maximum of five (5) risk categories (i.e., Risk Levels 1 to 5) on the basis of a criteria which shall likewise be developed. The risk profile of each category shall be clearly indicated in as much detail as possible, to allow for ready classification of businesses into the appropriate category and for clear distinction between categories to exist. All establishments belonging to category with the highest risk level shall be mandatorily inspected at least annually and should possess valid sanitation permits at the time of their application for a business permit, including renewals thereof. For medium-risk businesses, the conduct of sanitation inspection prior to the issuance of sanitation permit shall be made every other year provided there is no negative finding for the past two (2) years and its most recent compliance rating is higher than 75%. For low-risk businesses, prior conduct of sanitation inspection shall be conducted once every three (3) years provided the sanitation
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permit issued may be revoked if upon subsequent conduct of sanitation inspection the business establishment obtains a compliance rating lower than [indicate the threshold compliance rating]. The City Health Office shall form a team composed of [Insert composition] and headed by the City Health Officer, hereinafter referred to as the Sanitation Risk Evaluation Group, which shall be responsible for identifying and the criteria for evaluating risk and for formulating risk assessment parameters. The full regulatory implications of each risk category adopted shall likewise be as prescribed by the Sanitation Risk Evaluation Group. The formulation of risk assessment parameters shall be made in consultation with relevant professional groups, such as medical doctors, sanitation engineers, environmental groups, among others, in the City and public hearings shall likewise be held prior to the finalization or adoption of such risk assessment parameters. The Sanitation Risk Evaluation Group shall, after consultation and hearing, finalize its recommended classifications and the criteria for risk evaluation. The sanitation risk categories and criteria shall be subject to approval by the City Mayor. The primary criteria for classification shall be the nature of the business activity.Accordingly, the business activities listed in Section 5 above, being businesses preliminarily considered under the Code on Sanitation to be critical businesses from the point of view of sanitation, shall be preliminarily considered for inclusion under the highest risk category, unless the Sanitation Risk Evaluation Group can justify a lower applicable risk category. Other than the nature of the business activity, secondary classification criteria such as but not limited to the following shall likewise be identified and given consideration in the classification of a particular business establishment: number of employees; number of people they business office deals with on a daily basis; the size of the office area occupied; and results of past inspections.

Provided, however, that the consideration of the secondary bases, taken as a whole, shall only result in no more than an increase or decrease by one (1) level in the risk level category of the business, as appropriate. Section 8. Implementation of the Risk-based Classification Upon the application for the issuance or renewal of a sanitation permit, the applicant business establishment shall preliminarily be given its risk category based solely on the nature of its business. Upon the conduct of a sanitation inspection undertaken under this Ordinance, the risk category of the business registrant may be adjusted accordingly based on Section 7 above. The risk category of a
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business shall be indicated on the face of its sanitation permit. The risk category of a business registrant shall be evaluated not more often than once every three (3) years, unless a supervening violation, business development, or incident justifies the immediate reclassification of the business to a higher or lower risk category.
[Please note that, initially, the classification into various risk levels may be based on the type or industry classification of the business. Likewise, the risk levels may vary depending on the area of regulation. Some businesses may be high-risk businesses from the perspective of fire inspection but not high-risk with respect to sanitation inspection. Thus, a business establishment may have different risk rating for each type of inspection. A distinct set of risk criteria must then be developed for each type of inspection.]

Section 9. Pre-inspection Notice At least three (3) days prior to the conduct of sanitation inspection, an applicant business establishment for the issuance or renewal of sanitation permit must be given an inspection notice to allow the applicant to avail of the assistance of a consultant or appropriate professional such as an engineer during the conduct of sanitation inspection to ensure that findings are legitimate and well-explained and harassment is avoided. The prior notice of inspection may, however, be voluntarily waived in writing by the applicant business establishment. Section 10. Mission Order - The City Health Officer shall issue a mission order for every sanitation inspection that will be conducted by the sanitation inspector. The mission order must contain the date, mission order number, the name of sanitation inspector and his ID number, the business name(s) and address(es) of the applicant business establishments that will be subject to sanitation inspection, the classification or category of the applicant business establishment to be inspected and the scheduled dates of sanitation inspection. Sanitation inspection shall be conducted by the sanitation inspector designated by the City Health Officer. The deployment of two or more inspectors to inspect a particular business establishment shall be avoided unless justified under the circumstances and should be subject to the prior approval of the City Health Officer. The mission order must be shown to the operator of the applicant business establishment before any sanitation inspection is conducted. The owner or operator of the applicant business establishment shall report to the City Health Office any sanitation inspection conducted without a mission order. Section 11. Conduct of Sanitation Inspection by Sanitation Inspector In the conduct of sanitation inspections, the Inspection Team shall observe the following:
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Uniform and Materials of Sanitation Inspector During the conduct of the sanitation inspection, the sanitation inspector shall be required to wear the uniform of the City Health Office with the proper identification card.The sanitation inspector shall also bring all the equipment and supplies needed in the sanitation inspection such as inspection forms, clipboards, thermometers, flashlight, measuring tape, camera, light meter, water pressure gauge, residual chlorine and pH comparator kits, blacklight, food and drink sampling kit, copy of sanitation laws, regulations, standards and other materials needed in the sanitation inspection.

[This provision is specific to sanitation inspection. Other types of inspection may require the use of other materials during inspection.]

Use of Checklist The checklist shall be actually accomplished in the course of the sanitation inspection. In the event the checklist used by the sanitation inspector is not customized for the specific class of business of the applicant business establishment subject of inspection, the sanitation inspector shall specifically indicate the items in the checklist that are not applicable to the business establishment.

The accomplished checklist shall bear the name of the sanitation inspector, his position, signature, the time and date of inspection, and acknowledgement by the owner, operator, or manager of the applicant business establishment or his representative of (i) the conduct of sanitation inspection, (ii) the fact that the negative findings were properly explained, (iii) the period given for the business owner to remedy any negative findings, and (iv) of the fact that a copy of the record of inspection was provided to them. Other findings of the sanitation inspector during the conduct of sanitation inspection shall be indicated on the same checklist. Any pending matters, recommended course of action, and the period of, or deadline for compliance or remedial action shall likewise be indicated on the checklist. There shall be no denial of a sanitation permit on grounds other than those appearing on the face of the checklist. The sanitation inspector shall prepare at least two (2) copies of the duly accomplished checklist. One (1) copy of the record of inspection shall be furnished to the applicant business establishment for its reference upon the termination of inspection. Another copy of the record of inspection shall be encoded into the City Health Office database and the said hard copy of the record of inspection shall be retained by the City Health Office for a minimum period of five (5) if there are no negative findings pertaining to the concerned applicant business establishment for the past five (5) years and ten (10) years if there are negative findings.
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Section 12. Period to Remedy Whenever a record of inspection indicates non-compliance with certain items on the checklist, the sanitation inspector shall notify in writing the applicant business establishment, through its owner, operator, or manager of the corrections to be made with an indication of a reasonable period to remedy the same which period shall in no case be less than ten (10) calendar days. The owner, operator, or manager of the applicant business establishment may request in writing for an extension of the grace period to remedy prior to the expiration of the same. The owner, operator or manager of the establishment may file for a motion for reconsideration of the action of the City Health Officer. Section 13. Re-inspection Upon the lapse of the period indicated by the sanitation inspector to remedy non-complying items in the checklist, the sanitation inspector shall conduct a reinspection of the applicant business establishment. Such re-inspection must comply with all the requirements for the conduct of sanitation inspection by the sanitation inspector as provided under Section 11 hereof. If upon re-inspection the sanitation inspector finds that the corrections to the non-complying items on the checklist have not been effected, he shall report the same to the City Health Officer who shall recommend to the local health authority the non-issuance of a sanitation permit. In addition to the copy of the duly accomplished checklist used during the reinspection reflecting the adverse findings, the applicant business establishment shall likewise be notified in writing within three (3) days from the date of re-inspection. The sanitation permit applicant may appeal the same in accordance with the procedure provided in this Ordinance. Section 14. Issuance of Sanitation Permit - If upon inspection or re-inspection, the sanitation inspector finds that the applicant business establishment has complied with all the items on the checklist, the sanitation inspector shall recommend to the City Health Officer the issuance of a sanitation permit. The City Health Officer shall, in turn, endeavor to issue the sanitation permit within the day of receipt of a favorable recommendation and in no case later than three (3) calendar days later. Failure of the City Health Officer to issue a sanitation permit within ten (10) calendar days from the date of application without any adverse finding from an inspection shall result in the presumption that the applicant has been duly issued a sanitation permit and shall not be deemed to be in violation of the sanitation permit requirement. Proof of the lapse of the 10-day period shall suffice to take the place of the sanitation permit for business permit purposes.
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Section 15. Validity of the Sanitation Permit The sanitation permit shall be valid for a period of one (1) year from the date of its issuance, thus it must be renewed every year thereafter in accordance with the procedure provided for the renewal of the same under this Ordinance. Section 16. Timing of Sanitation Inspections The sanitation inspection shall be conducted within seven (7) working days from the payment of the sanitation permit fee as provided herein, provided that the applicant business establishment shall be given at least three (3) days prior notice of the actual date of inspection. Section 17. Frequency of Sanitation Inspections Unless otherwise prescribed under the Code on Sanitation and its IRRs, and as will be indicated on the face of the Sanitation Permit, sanitation inspection shall be conducted not more often than once a year upon application for the issuance or renewal of sanitation permit and payment of the corresponding fee. For food establishments, sanitation inspection shall be conducted upon application for the issuance of sanitation permit and every six (6) months thereafter. Section 18. Renewal of Sanitation Permit Applications for the renewal of sanitation permit shall be filed with the City Health Office before the expiration of the sanitation permit. The conduct of sanitation inspection for the renewal of sanitation permit may be dispensed with based on specific criteria such as the absence of negative findings for a specific number of years as determined by the City Health Office, threshold business size, and capitalization. Section 19. Sanitation Permit Fee The Sangguniang Panglungsod shall not later than 120 days after the approval of the risk-based classification and the criteria for the purpose shall adopt a formula for the computation of fees for the issuance of the sanitation permit. In any case, any rate-setting scheme that is adopted shall be primarily risk-based such that high-risk businesses which are regularly subjected to sanitation inspection shall pay a higher sanitation inspection fees than medium-risk and low-risk businesses. The risk-based fee-setting scheme may be further refined by the inclusion of enterprisespecific considerations, such as, the inspection results for the immediately preceding specified number of years, incidents record, any third-party certification, validation, or accreditation, such as ISO accreditation for an aspect relevant to the conduct of sanitation inspection, gross receipts of the business, area of business premises, number of personnel, or any other relevant factor that could directly impact the level of risk of the business.Thus, the secondary criteria for risk classification referred to in Section 7 of this Ordinance shall be factored in, in any fee-setting scheme that is hereinafter adopted. In all cases, however, the sanitation inspection fees must be commensurate to the cost of regulation.
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The revised schedule of sanitation inspection fees must be published in local newspaper and posted in three (3) conspicuous places in the City Hall for two (2) consecutive weeks upon their approval. Such prescribed rates shall not be changed more often than once every five (5) years. The prescribed sanitation inspection fee for a particular applicant business establishment shall be paid at the Office of the City Treasurer upon filing of an application for the issuance or renewal of sanitation permit.
[The fee should be termed a permit fee instead of an inspection fee to enable the City to validly collect a fee notwithstanding the fact that no inspection is carried due to the fact that a business is a low-risk business. Likewise to avoid the duplication of seemingly similar fees, it is recommended that the permit fee should already be inclusive of the fee charged for any inspection that may need to be conducted.]

Section 20. Qualification of Sanitation Inspectors The sanitation inspectors who shall be designated by the City Health Officer to conduct sanitation inspection shall have the following minimum or baseline qualifications:
[Insert list of minimum qualifications which shall include minimum educational attainment and length of experience.]

In order to develop the skills of sanitation inspectors and to ensure their proper conduct of sanitation inspections, the City Health Office shall ensure that its sanitation inspectors shall undergo training or re-training at least once every [___] years. Further, as a measure to ensure impartiality in the conduct of sanitation inspections, the City Health Office shall develop a system of rotation of sanitation inspectors such that no sanitation inspector shall be designated to conduct sanitation inspection for the same business establishment for two (2) consecutive instances. Further, as a measure to avoid harassment of applicant business establishments, the City Health Office shall designate no more than two (2) sanitation inspectors at any one time. Section 21. Information System To develop a more efficient, orderly and organized manner of conducting sanitation inspections, the City Health Office shall develop a well-structured and comprehensive computerized information system which shall, among others, contain: Previous results of sanitation inspection to track the level of compliance of a sanitation permit renewal applicant.

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 Applicable checklist of requirements for the various types of business or business classification which can be readily accessed, printed or transmitted to the applicant business establishment. Official notices and reminders that can be sent electronically.
[In relation to the issuance of other permits, the information system should be able to readily ascertain whether a business permit applicant is the same person who has recently secured a building permit and occupancy permit and whether the property subject of such permits is the same as the premises proposed to be used for the business. If such information can be readily accessed electronically, then such information can serve as sufficient basis to justify the omission of whatever inspections which have just been undertaken in connection with the occupancy permit application.

In relation to the issuance of a zoning certificate and locality clearance, the information system should be able to readily provide information needed by a reviewing BPLO officer to determine whether the proposed location of the business is in an acceptable location. Digital maps as well as searchable text file of the zoning ordinance should suffice for the purpose of issuing a zoning or locality clearance, dispensing with the need to conduct an actual inspection for the purpose. It would also be advisable if the information system can be used to check radial distances between different types of establishments.] Section 22. Information Dissemination The City Health Office shall cause the dissemination of information in relation to the conduct of sanitation inspection and issuance of sanitation permit through the following modes: Online The information that may be made available online may be classified into two (2) categories, i.e., (i) information subject to access restrictions such that password authorization is required, and (ii) general information to which access is generally given to any one with internet access. Among the information that the City Health Office shall generally publish online are as follows: names of all registered businesses, their address, and the nature of their business; the classification of the business on the basis of risk; compliance checklists; application forms, appeal or dispute forms, among other forms routinely used; schedule of the conduct of inspections, among other official announcements.

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On the other hand, information such as the results of inspections over the immediately preceding five (5) years, including compliance ratings obtained, if applicable shall be subject to access restrictions. As a cost-saving measure, the City Health Office may also issue electronic notices in lieu of hardcopy of notices regarding the conduct of inspection.
[For other types of inspection in relation to the issuance of business permit, the following information may be included as information to be published online subject to access restrictions:

(i) information about the business taxes paid, overdue amount, etc.; and outstanding liability for real property taxes, particularly if the LGU has adopted cross-enforcement procedures, i.e., withholding the issuance of business permits in order to enforce collection of other fees and taxes not necessarily related to business permit renewal.] Publication in a local newspaper The City Health Office shall circulate information on sanitation inspection and other business inspection-related ordinances and policies through local newspapers. Such information shall include: newly prescribed procedures in the conduct of sanitation inspection; information about the risk-based classification of businesses and the practical implications of each classification level; list of requirements and schedule of inspection fees; and remedies available to applicants of sanitation permit in case of disputes or issues arising from the conduct of sanitation inspections.

[The information provided herein pertains specifically to sanitation inspection. Other information may be required for other types of business inspection-related inspection.]

Providing printed checklist in the registration area or at the time of inspection The City Health Office shall provide the applicant business establishment with printed forms and checklists before commencing the process of issuance or renewal of sanitation permit. The City Health Office shall print separate checklists for each specific type of business or business classification with a distinct set of requirements.

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Section 23. Review/Appeal of Result of Inspection/Re-inspection Upon receipt of the result or record of inspection or re-inspection, the applicant business establishment may file a written appeal of such results to the local health authority who shall issue a written acknowledgement of receipt of the written appeal.The written appeal must indicate the date when the record of inspection or re-inspection was received, the portion of the record of inspection or reinspection appealed from, and the grounds relied upon for filing such written appeal. The City Health Office shall decide on the written appeal within thirty (30) days from receipt of the written appeal. The local health authority may conduct such hearings or conferences as he may deem necessary in deciding the written appeal.The applicant business establishment must be furnished a written copy of the decision of the local health authority on the written appeal. The decision of the local health authority on the written appeal of the applicant business establishment shall be final and executable upon the lapse of fifteen (15) days from receipt by the applicant business establishment of the decision of the City Health Officer on its written appeal and no motion for reconsideration is filed. The applicant business establishment may file a motion for reconsideration of the decision of the City Health Officer within fifteen (15) days from receipt thereof. The motion for reconsideration must indicate the date when the decision of the City Health Officer was received, the portions of the said decision sought to be reconsidered, and the grounds relied upon for such motion. The City Health Officer shall have fifteen (15) days from receipt of the motion for reconsideration to decide on the same. The applicant business establishment shall be furnished a written copy of the local health authoritys decision on the motion for reconsideration. The decision of the local health authority on the motion for reconsideration is final and shall be executable five (5) days from receipt of the applicant business establishment of the said decision. Section 24. Suspension of Sanitation Permit The sanitation permit may be summarily suspended whenever the City Health Officer finds unsanitary or unhealthy conditions in the operation of the concerned business establishment which constitute a substantial hazard to public health. The concerned business establishment shall be furnished a written copy of the summary suspension which shall indicate the grounds for summary suspension and the period during which the summary suspension shall be in effect. The concerned business establishment may file a written petition to the City Health Office for the lifting of suspension and shall be afforded a hearing within forty-eight (48) hours from the issuance of an order imposing summary suspension of sanitation permit. The City
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Health Officer may affirm, modify or reverse the suspension. The decision of the City Health Officer shall be final unless amended or reversed by the City Mayor upon a request for reconsideration filed within fifteen (15) days from the date of receipt of the decision of the City Health Officer. A business owner may take appropriate judicial remedy should it be prejudiced by an adverse final decision of the City Mayor at the administrative level. Section 25. Revocation of Sanitation Permit The sanitation permit may be revoked for any of the following grounds: Refusal of a business establishment to be subjected to subsequent sanitation inspection; Violation by the business establishment of any sanitation rule or regulation enforced within the City; Failure to continue to comply with minimum sanitation standards; [Insert other possible grounds for revocation].

Section 26. Penalties - Any person who shall violate, disobey, refuse, omit or neglect to comply with the mandatory provisions of this Ordinance shall be guilty of misdemeanor and upon conviction shall be punished by imprisonment for a period not exceeding six (6) months or by a fine in an amount not exceeding One Thousand Pesos (Php1,000.00) or both depending upon the discretion of the court. Any person who shall interfere with or hinder, or oppose any officer in the performance of his duty under this Ordinance shall be guilty of a misdemeanor and shall punishable upon conviction by imprisonment for a period not exceeding six (6) months or by a fine in an amount not exceeding One Thousand Pesos (Php1,000.00) or both depending upon the discretion of the Court. Section 27. Transitory Provision Within sixty (60) days from the approval of this Ordinance, the City Health Office shall have developed the risk-based classification system as provided in Section 8 hereof, the checklist as provided in Section 7 hereof, and the information system and other standard forms as provided in Sec. 21 hereof. Current sanitation inspectors who do not meet the minimum or baseline qualifications as provided under Section 22 shall be given a reasonable period, which shall in no case exceed ____ years, from the approval of this Ordinance within which to comply with such minimum or baseline qualifications.
[Insert other necessary transitory provisions.]
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Sec. 28. Supplementary Application The provisions of this Ordinance shall be interpreted in harmony with the provisions of the Code on Sanitation and its applicable IRR. In case of conflict between a mandatory provision of the Code on Sanitation and the terms of this Ordinance, the provisions of the Code on Sanitation shall take precedence; on all other matters, the provisions of this Ordinance shall take precedence. Sect. 29. Repealing Clause All ordinances, rules, and regulations issued by the Sangguniang Panlungsod or other local offices or parts thereof in conflict with this Ordinance are hereby repealed, provided that rights that are already vested upon the effectiveness of this Ordinance shall not be impaired. Sec. 30. Separability Clause Should any provision or provisions of this Ordinance be declared unconstitutional or illegal, the remaining provisions hereof not affected thereby shall remain in full force and effect. Sec. 32. Effectiveness This Ordinance shall take effect fifteen (15) days after the date of its publication in a newspaper of general circulation and posting in bulletin boards in at least three (3) conspicuous places in the City Hall.

Enacted by the Sangguniang Panlungsod of the City of [Insert City] at its regular session today, [Insert date]. Approved by his Honor, the Mayor on [Insert date] APPROVED: Mayor Vice Mayor and Presiding Officer City Council, [Insert City]

ATTESTED: Secretary to the Mayor Secretary of the City Council

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APPENDIX C. UNIFIED INSPECTION CHECKLIST TEMPLATE

Inspected by: ________________________________________________ Inspection: _________________________ HEALTHY EATING PLACE HEALTHY PLACES CAMPAIGN DAVAO CITY Date of

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SANITATION STANDARD RATING Percentage Rating 90 100% 70 89% 50 69% ` HEALTHY EATING PLACES Sanitation Standard Excellent Very Satisfactory Satisfactory Color Code Luminous Green Luminous Yellow Luminous Red

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