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BPLS INSPECTIONS GUIDECONDUCTING BUSINESS FRIENDLY LOCAL INSPECTIONSIN THE PHILIPPINES
DISCLAIMERThis document is made possible by the support of the American people through the United States Agencyfor International Development (USAID). Its contents are the sole responsibility of the author or authorsand do not necessarily reflect the views of USAID or the United States government.
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DISCLAIMERThis 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 notnecessarily reflect the views of USAID or the United States government.
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CONTENTS
Acronyms ----------------------------------------------------------------------------------- v
Acknowledgements ----------------------------------------------------------------------- vii
Foreword ----------------------------------------------------------------------------------- xi
1. Introduction ---------------------------------------------------------------------------- 1
1.1 Overview ------------------------------------------------------------------------ 1
1.2 Rationale ------------------------------------------------------------------------ 1
1.3 Coverage ------------------------------------------------------------------------ 1
2. The Inspection System in the Philippines ------------------------------------------ 3
2.1 Zoning Inspections ------------------------------------------------------------ 4
2.2 Fire Safety Inspections -------------------------------------------------------- 6
2.3 Health and Sanitation Inspections ------------------------------------------ 8
2.4 Building Inspections ----------------------------------------------------------- 8
2.5 Radial Distance Inspections -------------------------------------------------- 13
2.6 Prevailing Business Inspection Models ------------------------------------- 14
3. Process Improvements ---------------------------------------------------------------- 19
3.1 Zoning Inspections ------------------------------------------------------------ 19
3.2 Fire Safety Inspections -------------------------------------------------------- 20
3.3 Health and Sanitation Inspections ------------------------------------------ 21
3.4 Building Inspections ----------------------------------------------------------- 21
3.5 Radial Distance Inspections -------------------------------------------------- 22
3.6 Joint Inspection Teams -------------------------------------------------------- 22
4. Best Practices for Effective Inspections -------------------------------------------- 25
4.1 Clear Legal Basis --------------------------------------------------------------- 25
4.2 Reasonable Fees --------------------------------------------------------------- 25
4.3 Prior Notice of Inspection --------------------------------------------------- 25
4.4 Prior Disclosure of Inspection Standards --------------------------------- 25
4.5 Professional Checklists and Procedures ----------------------------------- 27
4.6 Prompt Notification of Results --------------------------------------------- 28
4.7 Qualified Inspectors ----------------------------------------------------------- 28
4.8 Balanced Approach ------------------------------------------------------------ 28
5. Establishing Business Friendly Inspections ----------------------------------------- 31
5.1 Amending Local Ordinances ------------------------------------------------- 31
5.2 Streamlining Current Procedures ------------------------------------------- 32
5.3 Institutional Development Measures --------------------------------------- 36
5.4 Rationalization of Inspection Fees ------------------------------------------ 37
5.5 Automating the Inspection System ----------------------------------------- 40
5.6 Disseminating Relevant Information ---------------------------------------- 42
CONTENTS Continued
Appendix A: Legal Basis for Business Inspections
Appendix B: Inspection Ordinance Template
Appendix C: Unified Inspection Checklist Template
IllustrationsFiguresFigure 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
ExhibitsExhibit 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
TablesTable 1: Proposed Inspector Qualifications -------------------------------------------- 29
ACRONYMS
ARTA Anti-Red Tape ActBFP Bureau of Fire ProtectionBO Building OfficialsBP Building PermitBPLO Business Permits and Licensing OfficeBR Business RegistrationC/MPDO City/Municipal Planning and Development OfficeCDP Comprehensive Development PlansCLUP Comprehensive Land Use PlanDENR Department of Environment and Natural ResourcesDILG Department of Interior and Local GovernmentDOH Department of HealthDOLE Department of Labor and EmploymentDOTC Department of Transportation and CommunicationsDPWH Department of Public Works and HighwayseBPLS Electronic Business Permits and Licensing SystemECC Environmental Compliance CertificateEHS Environmental Health ServiceEMB Environmental Management BureauFALAR Fire and Life Safety Assessment ReportFSC Fire Safety ClearanceFSIC Fire Safety Inspection CertificateGIS Geographic Information SystemHLURB Housing and Land Use Regulator BoardIRR Implementing Rules and RegulationsJIT Joint Inspection TeamLGC Local Government CodeLGU Local Government UnitsLUP Land Use PlansMP Mayor's PermitNPCC National Pollution Control CommissionNWACPC National Water and Air Control Pollution CommissionOBO Office of the Building OfficialOP Occupancy PermitPD Presidential DecreePIN Property Index NumberRA Republic ActTOR Terms of ReferenceTWG Technical Working Group
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ACKNOWLEDGEMENTS
Managed for USAID/Philippines by Nathan Associates Inc., LINC-EG—Local Implementation ofNational Competitiveness for Economic Growth—is 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 inimproving subnational systems for business permitting and licensing. Consultants Rachel Folloscoand Noel Macalalad conducted extensive research with national and local government officialsat workshops, seminars, and one-on-one meetings. We thank the officials for their advice andsupport. Undersecretary Zenaida Maglaya of the Department of Trade and Industry (DTI) andUndersecretary Austere Panadero of the Department of the Interior and Local Government(DILG) were particularly generous with their time. This guide would not have been possiblewithout their reviews, recommendations, and validation of research findings. The guide alsobenefited greatly from analysis and editorial review by Mikela Trigilio and Alid Camara of NathanAssociates Inc.
The contents are the sole responsibility of the authors and do not necessarily reflect theopinion of the Government of the Philippines or USAID.
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MESSAGE FROMTHE DEPARTMENT OF THE INTERIORAND LOCAL GOVERNMENT
The Department of the Interior and Local Government is pleased to be a partner of USAIDthrough the Local Implementation of National Competitiveness for Economic Growth (LINC-EG) 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 ingovernment 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 safetyand general public welfare. However, the conduct of inspection and issuance of clearances, inmost instances, add to the complexity of business registration processes in the country. ThisGuidebook, therefore, is an important undertaking that complements the Department's currentproject to upscale BPLS streamlining to all cities and municipalities, as part of the government'sresolve to improve local competitiveness and spur local economic development.
This Guidebook is significant since it is the first time that the procedures of local inspectionshave been documents guideposts for an effective and business-friendly local inspection systemthat will promote investments are provided. The streamlining reforms in the guidebook arequite comprehensive, covering the legal, institutional and procedural aspects of inspections,including a template inspection regulation that the local governments can use. The Departmentis confident that this guidebook will pave the way for more effective and efficient businessregistration services for businessmen at par with our ASEAN neighbors.
Responding to the call of President Benigno S. Aquino III for good governance, we at theDepartment will continue to partner with the USAID in assisting our local governments inimproving the investment climate in their localities and promote local economic developmentthat will create much needed jobs and reduce poverty.Mabuhay!
Jesse M. RobredoSecretary, Department of the Interior and Local GovernmentsRepublic of the Philippines
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MESSAGE FROMTHE DEPARTMENT OF TRADE & INDUSTRY
We commend the Department of the Interior and Local Government (DILG) and the UnitedStates Agency for International Development (USAID) through the Local Implementation ofNational Competitiveness for Economic Growth (L1NC-EG) project for producing thisdocument.
As a partner of the DILG in the Nationwide Streamlining of Business Permits and LicensingSystem (BPLS), the Department of Trade and Industry (DTI) is committed to pursue the goal ofstreamlining all business-related permitting processes.
The tedious procedures involved in complying with the inspection requirements of both thenational and local governments have long been considered by many private business groups asmajor deterrents to the competitiveness of the Philippine business environment. The Guidebookis therefore a welcome initiative that would support OTI's resolve to address the long processingtime and lack of transparency associated with inspection processes.
The recommendations in the Guidebook will also assist the OTI, through the ConstructionIndustry authority of the Philippines (CIAP), in reviewing the current procedures in securingbuilding as well as occupancy permits.
Our partners in the business community welcome the Guidebook, which provides guidepostswhich 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 sectorduring the inspection process, recommending for instance the use of checklists and venues forsettling disputes, among others. Indeed, the document is an important and innovative governanceproject that business chambers will benefit from.
As a major proponent of business registration reforms geared towards promoting the country'scompetitiveness, we at the Department will continue to partner with the OILG and USAIO inassisting our local governments in transforming their localities into business-friendly hubs thatcan attract investments and create much needed employment opportunities for our people.
Mabuhay!
Gregory L. DomingoSecretary, Department of Trade & IndustryRepublic of the Philippines
FOREWORD
USAID has supported Philippine local governments in improving the administration of businesspermits and licenses since 2005, particularly in Mindanao. Through partnerships with the WorldBank’s International Finance Corporation and the German government, this support has beenscaled 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 issuingbusiness regulatory clearances. Streamlined and automated registration procedures are alsoincreasingly accepted as a means to reduce opportunities for informal payments and as part ofthe overall anticorruption effort in the Philippines.
In July 2010, USAID/LINC-EG supported a landmark effort of the national government toestablish better service standards for business permitting and license systems (BPLS), such asunified registration forms, limits on processing times, and simpler payment procedures. USAID’stechnical assistance to local governments in adopting these standards revealed that businessinspections also need to be reformed. LGUs and businesses both identified the lack of a clearlegal 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 onthe legal aspects of business inspections and rules backing local government practices andprocedures. It recognizes that local reform can be complex and that Philippine LGUs have aregulatory duty to ensure public welfare and security. It also recognizes that deterring andpunishing violations of public safety while using limited public resources efficiently requires thatregulations not be unduly difficult to comply with.
We hope that this guide will be useful to national and local policymakers as they embark on thenext wave of BPLS reform and as they seek to make the inspection system less onerous forprivate enterprises without compromising public safety.
Alid David CamaraChief of Party, LINC-EGNovember 2011
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I. INTRODUCTION
1.1 OVERVIEW
The Philippines' attractiveness as a destination for local and foreign investment has been decliningfor the past several years. One reason for this decline is the difficulty of starting a business andrenewing business permits. If the countryside is to attract enough investment to spur economicgrowth, business registration processes need to be simplified.
Part of the registration process consists of inspections that aim to verify that a business has metregulatory requirements. These requirements ensure that public interest and social welfare areprotected. The clearance or permit issued after an inspection assures the authority and thepublic 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 proceduresor steps, and add time and complexity to the registration process. Any effort to simplify thoseprocesses should begin with the simplification of inspections to make them more investor-friendly. Such an effort raises a question about balance—how to simplify the business inspectionswithout compromising public health and safety. Local governments are closest to businesses andtheir 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 microbusinesses that do not have the resources necessary to cope with cumbersome regulations.Following these recommendations will allow an LGU to balance its local economic developmentobjectives with its responsibility to safeguard and promote public welfare. The guide is writtenfrom a legal and regulatory perspective so LGUs may more readily comply with requirementsand regulations for proper inspections.
1.3 COVERAGE
The guidance herein focuses on business registration inspections, and is based on the findings ofa 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 differentinspection 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, andDavao. Davao City was subjected to a closer scrutiny. In this document, LGU primarily refers tocities studied.
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1 Section 16 of the Local Government Code of 1991.
2. THE INSPECTION SYSTEM IN THE PHILIPPINES
The Local Government Code (LGC) of 1991 states that inspections are conducted primarily toverify and ensure compliance with rules and regulations adopted to promote and safeguardpublic welfare, including health, safety, and the enhancement of the right of the people to abalanced ecology. 1 Any effort to simplify the business registration process should thereaftertake into account the purpose and goals of inspections without summarily dismissing them. Amore rational method should be adopted for determining when inspections can be dismissedand 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 the4inspection as reasonable and business-friendly as possible.
Business inspection in the Philippines is mandated under several laws for various purposes, andis 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 ofbusiness permits. However, while most mandatory business inspections are required for businessregistration (BR-linked inspections), a few inspections are still enforced and undertakenindependent 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 localzoning ordinance.
• Fire Inspections, which are expressly required for the issuance of a business permitunder the Fire Code of the Philippines of 2008.
• Health and Sanitation Inspections, which are usually required locally to secure a businesspermit even though the Code on Sanitation of the Philippines (Sanitation Code) statesthat 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 thenature of their business, for example, inspections conducted by the Department ofTransportation and Communications (DOTC) on Motor Vehicle Private Emission TestingCenters before accrediting these enterprises.
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NBR-linked inspections include the following
• Building Inspections, which are conducted by building officials (BOs) or their authorizedrepresentatives in compliance with the National Building Code of the Philippines (BuildingCode), and includes plumbing, electrical, and mechanical inspections. These inspectionsare required for building and occupancy permits. The Implementing Rules of the BuildingCode (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 businessregistration requirements by LGUs, or they are applied indiscriminately to all businesses ratherthan those that specifically require the inspection. The most common examples of this are theHealth and Sanitation Inspections, which should apply only to businesses that could risk publichealth, and Building Inspections, which should be applied to the building owners rather than thebusinesses operating within.
2.1 ZONING INSPECTIONS
Zoning is mandated in the LGC. At the policy level, the LGC empowers local governments toset reasonable limits and restraints on the use of property in their territorial jurisdictions. TheLGC also states that LGUs need to comply with all of these “restraints and limits” in a zoningordinance, 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 government’s ComprehensiveLand 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 fromthe rural and urban development sciences. Most LGUs also prepare city/municipal ComprehensiveDevelopment Plans (CDP), a strategic plan that states priorities and the basis for theirdevelopment 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 nationalauthority to review, evaluate, and approve or disapprove CLUPs of LGUs.
Under EO 72, the HLURB is also empowered to prescribe standards and guidelines in thepreparation of land use plans, monitor the implementation of such plans, and adjudicate andsettle disputes among LGUs over their CLUPs and zoning programs. EO 72 likewise prescribes
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Figure 2-1Zoning Inspection Process Flow
the mechanism for the development of the CLUP. It designates the City/Municipal DevelopmentCouncil 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 ismanaged by the City/Municipal Planning and Development Office (C/MPDO).
Businesses applying for a permit to operate, sometimes referred to as a “Mayor’s Permit”(hereafter referred to as a business permit) are required to check first with the C/MPDO tosee if the proposed business is permitted in the area it plans to operate in Figure 2-1 shows thetypical process followed in securing a zoning clearance.
One of the requirements for a business permit is a sketch of the location of the business. Thisallows 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 establishmenton the zoning map of the city/municipality. After ascertaining the location, s/he notes thepermissible use based on the zoning ordinance and checks if the proposed enterprise is allowedin the area. The use of roads as zonal boundaries enables the zoning officer to accuratelydetermine location, as construction seldom traverses across roads. If it is allowed, a zoningclearance 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 than5 to 15 minutes. However, the need for onsite visits often severely delays the process. An actual
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2 Memorandum Circular No. 2010 – 67 dated July 26, 2010 no longer requires the preparation of FALAR as a supporting document in the issuance ofa Fire Safety Inspection Certificate.
onsite visit may be conducted if it is found that the proposed location is near or at the boundarybetween two zones. This is true for most ambiguous cases, although there are some notableexceptions, such as the SM Megamall in Mandaluyong City, where construction crossed a roadand even linked two buildings over the road.
In cases when the application is denied, most cities/municipalities allow the applicant to file amotion for reconsideration. This requires the council, the Mayor (Vice Mayor), and the PlanningOffice to deliberate on the appeal. To resolve the appeal, the Planning Office usually inspects thesite, checks the development in the area by noting the types and number of establishments, thescale of the investment, and other city/municipality-specific considerations. If the area proves tohave 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 tozoning 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, andoperation of a building or a building space regardless of its final use. The policy objective of theFire Code is the advancement of public welfare and the protection of the environment whilepromoting the professionalization of the fire service.
The Fire Code (and the Implementing Rules and Regulations of the Fire Code) lays down acomprehensive plan that includes provisions for self-funding and capacity building for the Bureauof Fire Protection (BFP). The Fire Code has a section devoted to the reorganization of the BFPthat describes the needed competence and qualifications for fire safety professionals. It alsoprovides for improvements in the remuneration of BFP personnel that facilitates the hiring andretention of highly-trained individuals.
The Fire Code IRRs detail the certification/clearances that attest to the safety of a building ora space within a building. These include the following:
• Fire and Life Safety Assessment Report (FALAR). A FALAR2 is designed to be the primarysource of information on fire safety. There are three types. FALAR1 and FALAR2 arerequired for new buildings according to the Fire Code IRRs. FALAR 3 is the statementof the “fire safety” of a building as a result of the design and construction review, andthe annual building inspection process. FALARs 1 and 2 are supposed to be prepared by
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Figure 2-2Fire Safety Inspection Process Flow
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 theproposed building design complies with the guidelines set forth in the Fire Code.
— FALAR2 is issued alongside the occupancy permit and attests that the finalconstruction complies with the guidelines set forth in the Fire Code.
— FALAR3 is signed by the building administrator upon the regular annual fire safetyinspection and certifies the safety and the condition of the building after the annualfire inspection.
• Fire Safety Inspection Certificate . The FSIC is released by the BFP after an applicant’scompliance with the requirements of the FALARs. The Fire Code categorically providesthat the FSIC is a pre-requisite for the issuance of a business or mayor’s permit andother 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 andprocesses.
The FSIC is the only clearance that is specifically required prior to the release of a businesspermit. Some observers have pointed out that the BFP inspection procedure for the issuance ofthis certification causes delay in the issuance of a business permit. The typical fire inspectionprocess is illustrated below:
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2.3 HEALTH AND SANITATION INSPECTIONS
The policy objective behind the conduct of health and sanitation inspections (henceforth referredto as sanitation inspections) is the protection and promotion of public health. Sanitationinspections are generally required periodically and in certain instances, such as in the case offood establishments, more frequently than once a year.
The Department of Health is the primary agency tasked with enforcing the Sanitation Codeand the Secretary is authorized to develop the Implementing Rules and Regulations (or SanitationCode IRRs). S/he is represented at the local level by the Local Health Officer. The City/MunicipalHealth and Sanitation Department conducts inspections both before and after the issuance ofa business permit.
The focus of the health and sanitation inspection varies depending on the stage at which it isconducted. In pre-business permit inspections (such as plumbing) or in inspections conductedduring construction for the issuance of the occupancy permit, the focus is the consistency ofthe sanitation design and plumbing plans with the specifications prescribed in the SanitationCode. These inspections are highly technical and focus on plumbing installations and othersanitation facilities, depending on the type of business. The common causes for delay during thepre-inspection stage are design-related. In such cases, the design engineers usually just amendthe design to address the issues.
This is in contrast to sanitation and health inspections related to business registration, whichordinarily seek to confirm that the employees have health certificates and that the businessimplements the sanitation practices relevant to its type of business. These inspections aretypically conducted for high-risk businesses that require safety inspections prior to the issuanceof a business permit. For businesses with low sanitation/health risks, inspection, if any, is doneafter the business permit is issued. High-risk businesses such as food establishments are notonly required to undergo inspection prior to business permit issuance, but are also required tobe 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 theenterprise's employees, which is used as a proxy for the size of the establishment. The sanitationinspection process is illustrated in Figure 2-3.
2.4 BUILDING INSPECTIONS
Building inspections are mandated under the Building Code for the issuance of building andoccupancy 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 permitattests that a constructed/renovated building is suitable for its intended use and conforms tothe applicable provisions of the Building Code, and certifies that the building/renovation isready for immediate occupancy.
The Building Code provides a framework for the use of minimum standards and requirementsthat guide, control, and regulate the structure's location, design, quality of materials, construction,use, occupancy and building maintenance, and other systems and installations. These standardsand requirements must be applied in designing the building plan and requires the expertise ofseveral licensed professionals, such as architects and engineers. A typical plan consists of severalsections 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 isassessed before the building permit is issued. It is also the basis for the inspections that areconducted during construction to ensure that safety-compliant specifications are followed.
The administration and enforcement of the Building Code is the responsibility of the Departmentof Public Works and Highways (DPWH) through its representatives and counterparts in theOffice of the Building Official (OBO)4. The LGC amended the Building Code to state that thecity/municipal engineer shall be concurrently the Building Official. The OBO enforces the Building
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3 The fire code now requires a separate design for fire protection, which must be signed by a licensed fire safety practitioner.4 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 ofthe local government unit concerned, of good moral character, and a licensed civil engineer. He must have acquired experience in the practice ofhis 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.
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The appointment of an engineer shall be mandatory for the provincial, city and municipal governments. The city and municipal engineer shall also actas the local building official.
Code in two stages: (1) the issuance of the building permit, and (2) the issuance of the occupancypermit. The securing of the building and occupancy permits is often mistakenly thought of as anintegral part of the business permit and licensing process. The Building Code seems to suggestthat this is a separate and distinct regulatory process in itself. The inspection process is shownin Figure 2-4.
Stage 1–Application for a Building/Renovation Permit
An applicant must first secure two clearances before he or she can file an application for abuilding permit:
• Barangay Clearance. Securing a barangay clearance is not explicitly required by the BuildingCode for the filing of an application for a building permit. However, almost all LGUsrequire it to ascertain the location of the building and the sentiment of the affectedcommunity regarding the presence of the proposed building in its area.
• Zoning Clearance . Zoning clearances ensure that the LGUs can manage and control theprescribed reasonable limits and restraints on the use of property within their territorialjurisdiction.
Once both clearances are secured, the applicant for a building/renovation permit is required tosubmit 5-6 copies of the building/renovation plans.
Different units in the OBO correspond to various technical/engineering disciplines and aretasked to review the submitted design plans. The assessments these units conduct ensure thatapplicable design standards were followed by the design professional. The OBO also ensuresthat all the plans are properly signed by qualified and licensed individuals and that the planscomply with Building Code specifications. The OBO also coordinates with the Bureau of FireProtection (BFP), which conducts an independent technical assessment of the building in theformulation of the Fire and Life Safety Assessment Report (FALAR). It is only when all of theserequirements are satisfied that the building permit is issued.
During specific stages of construction, the Building Official (BO) or his representatives conducttechnical inspections based on the submitted construction schedule. These inspections aredesigned to ensure that the submitted plans are being followed and that changes in the plansare still compliant with Building Code standards and are appropriately noted in the construction
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Figu
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uild
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5 Section 306 of the Building Code.6 Section 701 of the Building Code classifies buildings according to their use or the character of its occupancy: Group A - Residential Dwellings; GroupB - 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.
log book. Deviation from the approved plans may be grounds to revoke or suspend the buildingpermit that has been issued, particularly if the actual construction ceases to comply with therequirements of the Building Code. 5
The time required to complete the assessment depends on the size of the construction orrenovation. The Building Code specifies that the business permit be issued within 15 days frompayment of fees for Group A-J6 and 30 days for other groups of applicants. The common causeof delay in the inspection process is the extent of work involved in assessing design plans. Anaverage-sized 10-storey building will typically have hundreds of design pages for review. Disputesin the use of design standards occasionally occur, but these are usually immediately resolved bythe submission of a new design reflecting the correction of the design flaw.
Stage 2–Application for an Occupancy Permit
At the end of the construction/renovation period, the contractor is required to submit sixcopies of the as-built plans, including a construction log book that is duly signed by the responsibleengineers and architects. The OBO assessing officer then checks for plan modifications anddetermines if these are within the applicable design standards. The assessment also includes areview 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 actualconstruction/renovation. The whole construction, including all the variations between the originaldesigns 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 inaccordance with the submitted plan, and that the actual construction/renovation is compliantwith the appropriate provision of the Building Code.
As with the assessment for the building permit, the time required to complete the assessmentfor the occupancy permit depends on the size of the construction or renovation. The typicalassessment time for an average-sized structure is one to two weeks. Deviations from thesubmitted plan are the common cause of delay in the occupancy permit assessment. In mostcases, the design professional is required to submit a design computation that justifies thechange. When the application for deviation is denied, the applicant is required to submit newdesign computations, signed for by a responsible licensed professional.
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2.5 RADIAL DISTANCE INSPECTIONS
The radial distance that should be observed between certain types of establishments is partlyprovided for by the Sanitation Code, particularly the Sanitation Code IRRs. 7 Chapter V, Section8.1 of the Sanitation Code IRR recognizes the prerogative of LGUs to adopt zoning ordinancesprescribing where various types of businesses may be located. However, if there are no zoninglaws or ordinances, the Sanitation Code IRRs give the local health officer the responsibility, andthus the discretion to determine the suitability of the location of a particular business. There isno categorical directive under the Sanitation Code for this arrangement.
Only businesses that are specifically required by ordinances or the Sanitation Code and its IRRsto be within certain distances from other types of establishments need to go through a radialdistance inspection. This inspection generally includes a site inspection to verify the actuallocation of the business permit applicant’s proposed premises. The typical process for radialinspection is presented in Figure 2-5.
Figure 2-5Radial Distance Inspection Process Flow
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7 The Sanitation Code IRR, unlike most IRRs of laws, is not contained in one document but consists of several issuances, each implementing a chapterof 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 AndOccupations; 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 isrequired to officially measure the radial distance of the applicant’s establishment. The CityEngineering Office issues a certificate of the official distance measurement between theestablishment and key institutions in the area. This serves as basis for the BPLO to decidewhether 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 (seeFigure 2-6). A business permit, which does not include a temporary authority to operate, isreleased only after the business establishment complies with all applicable regulatoryrequirements. 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 discourageprivate investment and business registrations. There are three noted variations in the pre-business permit inspection process; (1) inspections are conducted as pre-registration activities;(2) inspections are conducted upon receipt of business permit application; and (3) inspectionsare conducted upon proof of payment.
Post-Business Permit Inspection
Under this model, the compliance requirements are deferred to a later date in favor of gettingthe investor in to legally operate as quickly as possible. This is distinctly opposed to the procedureunder the Pre-Business Permit Inspection Model, where businesses are not allowed to renewtheir permits unless they have complied with all the regulatory requirements. At the operationallevel, LGUs following this model have opted to provide business establishments with a graceperiod for complying with all the regulatory requirements. This grace period ranges from asshort 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 inthis process: (1) temporary business permits after showing proof of payment, followed byofficial 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 statedrequirements.
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Hybrid System
To address observed weaknesses in the inspection models, some LGUs practice “calibratedrestrictions” and use building risk categories. Low risk establishments are allowed to go throughthe registration process unhampered. In some cities, these establishments are no longer inspectedand can get their permits within 24 hours of applying. The process, however, becomes stricter asthe perceived level of risk posed by the business establishment increases. This process offerssome flexibility to LGUs, particularly for small and medium enterprises. However, this approachmay make the inspections process cumbersome and lengthy for large businesses deemed to berisky or semi-risky.
The success of the hybrid model (see Figure 2-8), depends mainly on the accuracy of thecategorization of businesses according to the level of risk they pose to the public and theenvironment. There is some debate regarding how to categorize businesses into separate riskcategories. For example, the city environment office requested that the car wash business becategorized as high risk, as the oil, soap and other chemicals used in it are potential threats tothe environment. The BFP requested that mobile vendors using open flame stoves be classifiedas a high-risk business, despite its small size and minimal capitalization.
There are several techniques for risk-based categorization, but set rules for classifying businessrisks do not yet exist. What is evident is that there is a need for consensus. A single riskcategory for all types of risks may not be justified or reasonable (e.g., a business may pose asignificant fire risk but practically no sanitation risk, making a single classification for purposes ofboth types of inspections inappropriate). Best practice likewise dictates that the criteria usedto evaluate the level of risk posed by a business for a particular type of risk should be specificallyidentified, and if necessary, assigned varying weights. For example, a business that poses a firerisk could be judged based upon the nature of the materials handled, the use of a fire/combustion-prone process, and the number of people exposed to the risk at any given time. Widely acceptedtechnical practices for risk evaluation in each sector should be relied upon when possible.
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3. PROCESS IMPROVEMENTS
3.1 ZONING INSPECTIONS
Some LGUs have made improvements that speed up the processing of applications for zoningclearances. 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 oflocating the proposed location accurately by providing a reference point for the zoningofficer. However, it adds to the expenses already incurred by the investor.
• Using Property Index Numbers. The Property Index Number is a unique number thatidentifies a parcel of land based on the tax map of a city or municipality. It is issued bythe Real Property Office, also known as the Assessor's Office. Knowing this numbermakes 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 itpossible to trace payments of property and other relevant taxes, thus saving an investorfrom some inconvenience. There is a growing trend among LGUs to require propertytax clearance prior to the renewal of a business permit. An online system will save ataxpayer the trouble of going to the Assessor’s Office to get a tax clearance.
• Using a Geographic Information System Map. The property number is best used with ageographical information system (GIS). A GIS is a database that can store pictures andtext as a point in a map. This makes the GIS map an intelligent representation of cityresources. Many LGUs use a GIS map to integrate data and information among officesin the city. The maps can be used in both the business registration inspection andassessment processes, while also ensuring accuracy in determining zoning classifications.
Exhibit 3-1Pre-Assessed Zoning in Singapore———————————————————————————————————One model that may be considered as best practice and could thus be emulated is the Singaporemodel where all spaces (e.g. land, a building, or a space within a building) in a locality are pre-assessed. 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 pre-tagged 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 zoningregulations.————————————————————————————————————
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 fireinspections due to a lack of manpower and resources. For businesses, the basic challenge isdetermining and understanding the requirements to pass fire safety inspections. This confusioncan include items as fundamental as the correct number and type of fire extinguishers requiredfor their premises.
Some LGUs and the BFP have taken initiatives to better cope with the limitations faced by theBFP in conducting inspections, without foregoing inspections altogether. Some of these measuresinclude the following:
• Post-application inspections and issuance of a temporary permit to operate which, ineffect, allows the LGUs and the BFP to buy time to conduct necessary inspections. InDavao City, for example, the Temporary Authority to Operate that it issues gives thepermit applicant and the business inspection teams an additional 30 working days toconduct the inspection and complete the business renewal process.
• Pre-application inspections in order to comply with the express mandate of the FireCode for business permit applicants to secure an FSIC before they can get a businesspermit. In certain LGUs, such as Davao City, the BFP have conducted fire safety inspectionsahead of the business permit renewal period. The results of the inspections madeduring the year serve as basis for the issuance of the FSIC for use in the subsequentyear’s business permit renewal application.
Other process enhancements require a change in the law and the Fire Code IRRs. These arediscussed 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 withrisk-based categorization of businesses. Low-risk businesses, although exempt from regularinspections, may not be excused from the other basic requirement, such as the need for employeesto secure health certificates. However, there is no need for an actual inspection to ensure thatemployees have health certificates. Compliance with this requirement can be checked by askingthe new/renewed business permit applicant to provide a list of employees, which can be checkedagainst the database containing the names of holders of health certificates and their respectiveemployers. This assumes that the application form for a health certificate requires the disclosureof the name of the applicant’s employer.
3.4 BUILDING INSPECTIONS
It is clear that the assessments conducted for the issuance of building and occupancy permitsare comprehensive, involving each aspect of construction. Thus, to require building-relatedinspections to be conducted again during the initial business permitting process would beunnecessary if the building will be used for exactly the same purpose as declared during thebuilding permitting stage. The following measures are recommended to improve the processingof applications for building and occupancy permits:
• Building and Occupancy Permits Database. Some LGUs make use of a database of allconstructed and renovated facilities to minimize the need for site inspections. Theavailability of such a database enables the BPLO to directly check for inspection clearancesthat have recently been issued. This renders it unnecessary to conduct new inspectionsor seek confirmation from the OBO/LGU’s engineer. Significant investments ininformation technology may enable an LGU to maintain and update information onbuildings in their locality, including the history of renovation for a particular building.GIS systems are particularly useful in matching locations with permit data. Naga Cityrelies 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 legalbasis for annual building inspections, a risk-based classification of businesses should beestablished. Under a risk-based system, low risk businesses will have less onerousinspection requirements. The practice of some LGUs that have dismissed building-related inspections for business premises measuring 50 square meters or less may havesome 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 toimplement a business-friendly process, despite more stringent regulatory requirements.
• Elimination of Building Inspections for New Businesses. The technical clearances neededfor building-related approvals can be lengthy, and in fact, unnecessary for some newbusinesses. The findings of the Regulatory Simplification Project of the Ateneo Schoolof Government and the International Finance Corporation noted that 80 percent to90 percent of new businesses required some form of construction/renovation. Thismeans that the majority of the new business premises have just undergone a thoroughinspection during construction/renovation. The BPLO could do without the buildinginspections if that can be sufficiently treated as a separate set of procedures. Thismeasure is now being practiced in some cities that require just copies of the occupancypermit 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 theinternet, a detailed database of the location of registered businesses in the LGU, and local mapsthat reflect the provisions of the LGU's zoning regulations. These resources enable the LGU tocheck compliance with prescribed radial distances through desk checking, removing the needto conduct onsite inspections. Alternatively, a business establishment that is subject to radialdistance constraints may be required to complete a questionnaire demonstrating its adherenceto 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 applicationto 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 thePhilippines. It is an approach to conducting actual inspections regardless of the regulatory orpolicy directive. The JIT method referred to in this publication is one where all regulatoryinspection offices, through their respective representatives, conduct a coordinated inspectionof the business premises of an applicant. Instead of separate visits by each of the offices requiredto 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 andrenewed 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 givenbudget, manpower, and other constraints involved in coordinating across departments to fielda JIT for a high number of business establishments. During the regulatory simplification upgradeof the IFC, the Quezon City Simplification Project Team8 expressed reservation that a JIT maynot be feasible given the number of registered business, the physical size of the city, and theprevalent traffic in Metro Manila. The team also indicated that adopting a JIT process willnecessarily require more inspectors.
Other cities claim that lack of manpower prevents them from shifting to the JIT scheme. Thiswas observed in some cities where there is a noticeable imbalance in the number of inspectorsbetween the BPLO and BFP, with the former having more. Until it is able to increase recruitingefforts, 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, creatinginefficiencies in the process. Advocates of JIT point out that JIT is best done by zone, thus, thosewho are finished with their inspection with one business can move on to the next businessestablishment while the others are finishing up with their inspection, all within a particular areaor zone. In the end, JIT has both advantages and disadvantages. The most important determinantfor success of the JIT method is buy-in from the LGU as a whole. The LGU must be willing andable to do whatever is necessary to ensure the success of a JIT, including the hiring of additionalinspectors for offices lacking manpower. Further details on how to establish JITs are included inSection 5.3.
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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 inspectionswithout a legal basis are likely to be arbitrary. The conduct of the business inspection can beprescribed and authorized under a national law, a local law, or both. The inspection processshould have clear policy objectives and a way to safeguard these objectives. The legal bases forbusiness inspections are summarized in Appendix A. The lack of a legal basis at a national leveldoes not indefinitely impede the conduct of business inspections at the LGU level. If an inspectiondoes not have any statutory basis in national law LGUs can readily have the legislative assemblyconsider 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 theircorresponding fees may not be imposed in order to raise revenue. In the exercise of its authorityto set fees, it should be clear that fees are separate and distinct from taxes. In this regard, thediscussion of the case decide by the Supreme Court is instructive (see Exhibit 4-1). Details onhow 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 timethe application is submitted, or by separate written notice. Prior notice is important so thatbusiness owners may exercise their right to be assisted by the appropriate professionals, suchas an engineer, during the inspection. This will help business establishments comply with inspectionrequirements, prevent misunderstandings with the inspecting authority, and more immediatelyremedy negative findings. Notifications also allow the business establishment to analyze theirschedule 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 eachinspection. The checklist should be completed during the inspection and a copy left with theowner of the business establishment or his or her representative. Checklists
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• Standardize the inspection process, minimize subjectivity from its conduct, and limitthe discretion of the inspector;
• Ensure the observance of a minimum standard of quality standard in the conduct of theinspection, such that the quality of the inspection does not depend solely on theinspector’s individual level of competence and thoroughness.
• Spare establishments surprises and ensure transparency because they allow post-inspection verification and thus the filing of protest against findings.
EXHIBIT 4-1Supreme Court Ruling on License Fee————————————————————————————————————It is often loosely used to include levies for revenue as well as levies for regulatory purposes suchthat license fees are frequently called taxes although license fee is a legal concept distinguishablefrom 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 impositionis a tax; but if regulation is the primary purpose, the fact that incidentally revenue is also obtaineddoes not make the imposition a tax.
To be considered a license fee, the imposition questioned must relate to an occupation or activitythat so engages the public interest in health, morals, safety and development as to require regulationfor the protection and promotion of such public interest; the imposition must also bear a reasonablerelation to the probable expenses of regulation, taking into account not only the costs of directregulation but also its incidental consequences as well. When an activity, occupation or professionis of such a character that inspection or supervision by public officials is reasonably necessary forthe safeguarding and furtherance of public health, morals and safety, or the general welfare, thelegislature may provide that such inspection or supervision or other form of regulation shall becarried 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 chargesufficient to cover the cost of the inspection or supervision has been paid. Accordingly, a charge ofa fixed sum which bears no relation at all to the cost of inspection and regulation may be held tobe 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 parametersused during inspections to evaluate compliance. The checklist should be completed during theinspection, and the evaluation parameters should apply uniformly to similar businesses. If thechecklist is not customized to the types of business, then the inspector needs to indicate whichitems in the checklist are not applicable to a particular business. The minimum information thatshould appear on the completed checklist includes (1) the name of the inspector and his/herposition together with his/her signature; (2) the time and date of the inspection; and (3) anaffirmative statement where the business owner or his authorized representative acknowledgesthe conduct of the inspection, receipt of a copy of the inspection report, and a verifies that s/hehas a clear understanding of any negative findings and what measures must be taken to ensurecompliance.
The Fire Code IRRs already include checklists for the inspection of various types of businesseswhile the IRRs of the various chapters of the Sanitation Code include detailed lists of whatneeds to be checked in the course of an inspection. These lists can readily be reorganized andconverted into standard checklists. A sample checklist for sanitation inspection is provided inAppendix C. In addition, the following procedures should be observed during inspections:
• Inspections should be efficiently conducted and completed within a reasonable periodof time without undue delay.
• Except when justified, no more than two inspectors from the same inspectorate groupshould conduct the actual inspection.
• Inspectors should present an identification card from his/ her office and an originalcopy of the Mission Order or another competent proof of authority, unless the priornotice already includes these details.
• Inspections should be conducted in the presence of a representative of the businessestablishment, preferably a person who is knowledgeable about the relevantcircumstances and can properly relay the comments and findings of the inspectors tothe owners of the establishment.
• One checklist should be used and completed in the course of the inspection, includingall negative findings, comments, and recommended courses of action for their ownreference and that of the business owner.
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• The checklist should record the reasons why a business establishment is or is notcompliant with each criteria through an indicator detailing the level of compliance.
• Findings should be explained to the representative of the business establishment and, ifnecessary, clarifications/explanation should be sought from him or her.
• A copy of the completed checklist, signed and dated by the inspector, should be leftwith the representative of the business establishment. The copy retained by the inspectorshould be signed by the representative to verify his or her receipt of a copy of thechecklist.
• If possible, the checklist should also indicate the proposed timeframe for remedying anegative finding, and when the business applicant can expect another inspection. Thebusiness applicant should be informed of how he or she may go about contacting theinspector 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 issuedno later than one day after the inspection. If there is a negative finding, it should be made clearwhat 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 andresults in the non-issuance of the permit/clearance applied for; or (3) the negative finding willresult in a fine or other penalties for the continued failure of the applicant to correct orremedy 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 canappeal the decision. Further details on how to implement an appeals process is include inSection 0.
4.7 QUALIFIED INSPECTORS
Inspections for the issuance of new and renewed business permits are technical and should beconducted by professionals with commensurate education and training. Basic technicalqualifications 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'sdesire to improve its business friendliness and its need to protect public welfare and the local
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Table 4-1Proposed Inspector Qualifications
environment. The local economy improves due to the influx of new investments or expansionof 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 publicwelfare and the local environment at risk. Every new business generates waste that goes intothe landfill, contributes to pollution, uses natural resources, and creates other forms ofenvironmental pressure.
It cannot be emphasized enough that this delicate balance between the need to enhance localeconomic development and the need to protect public welfare and the local environment mustbe maintained in order to create a sustainable practice. This balance is maintained by, amongother factors, the inspection processes that the local governments implement, provided thatthe 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 businesscommunity and the local government. This requires a common understanding among allstakeholders 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 stillneed to be amended to improve the policy environment, LGUs may take measures on theirown to improve regulation in their jurisdictions, particularly regulation of registration andinspections. The basic restrictions on this authority are the mandatory provisions of law, whichLGUs cannot defy and which no ordinance issued by them may contradict.
Many LGUs have not passed detailed inspection ordinances even though a significant number ofinspection issues can be addressed by such ordinances. Ideally, these ordinances should providethe legal basis for the prescribed inspection, purpose of the inspection, method for conductinginspections, applicable penalties for noncompliance, method for applying penalties, and recoursefor applicants who do not pass inspections, among others. Appendix B is a template for a localordinances concerning health and sanitation inspections. This template, which can be modifiedfor other types of inspections, follows the best practices for effective inspections discussedabove and reflects other recommendations presented in this chapter.
• Repeal of Duplicative Fire Inspection Fees. LGUs are advised to repeal ordinances thatrequire fire inspection fees above and beyond those collected by the BFP, unless it isproven that their fire marshals are separate and distinct from those of the BFP, and thatthese personnel enforce other legal requirements based on a legal basis or authorityother than the Fire Code.
• Appropriate Application of Fees. To reduce confusion, LGUs may revisit their ordinancesthat categorically prescribe “inspection” fees and assess whether it is best to refer tothese fees in a more general way as "regulatory” fees. LGUs are not always able toinspect all registration applicants for all required inspections, yet they still charge thecorresponding fees. This being the case, LGUs may not continue to charge inspectionfees 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, suchas “Environmental Protection/Supervision Fee” and “Environmental Protection OfficeAccreditation 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 andmakes them suspect duplication. Fees should be distinct and what is being paid forshould 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 theirrespective jurisdictions is seriously restricted by resource limitations—inadequate manpowerand finances. These constraints are compounded during the legally mandated business renewalperiod, which is restricted to a mere three weeks each year (January 1–21). LGUs need tostreamline current inspection procedures in order to service all business renewals in therestricted period.
As a matter of reform a combination of the following options may be considered, and to someextent are already being observed in several LGUs: (1) total elimination of unnecessaryinspections, (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 forindividual establishments located in shared premises, such as commercial buildings andmalls.9 The inspection requirements are already covered by the annual building inspectionprescribed under the Building Code IRRs. Omitting these inspections eliminatesduplicative inspections and fees. In this case, the annual building inspection fee may becharged directly to the building owner, who will then allocate fees among tenantsaccordingly.
• Renewal Sanitation Inspections. The annual sanitation inspection of business premisesmay be dismissed as a prerequisite for business permit renewal in the case of businessesthat are not subject to such inspection under the Sanitation Code, although an initialsanitation permit is still required for new businesses.
• Zoning and Radial Distance Inspections. Inspection for purposes of zoning and radialdistance clearance may be eliminated completely, particularly in the following instances:
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9 Davao City practices this method.
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— When the business is clearly within the area authorized for such purpose based onthe provisions of the LGU’s zoning ordinance and various zoning maps;
— Business permit renewals when there is no change in the address of the businessestablishment;
— 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 issuedfor the building; and
— The business permit applicant owns the building; has just secured an occupancypermit not more than one year prior to the date of application for a businesspermit; and the business is consistent with the declared purpose or use of thebuilding 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 byvarious businesses and then provide an inspection prioritization scheme on that basis. This issimilar 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 followingmanner:
• Create and/or adopt formal criteria for assessing risk and defining the applicableregulatory 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 eachtype of inspection and the consequences/regulatory parameters of the risk levelclassification that a business has been given.10
These recommendations are also applicable to categorization businesses by size. The numberof inspections that new business permit applicants are subjected to, and the resulting high costof registration has discouraged small businesses from formalizing their businesses by securingthe needed permits. LGUs seeking to lure new businesses, particularly smaller ones, may set a
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10 Based on information provided in an interview of paralegals doing business registration work, while Quezon City applies a risk-based classificationallowing 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 simplifiedbusiness registration procedures. See Section 5.4 for more details on implementing a risk-based system and how it may impact fee setting.
Staggered Inspections
LGUs may find it feasible and preferable to integrate the building, occupancy, fire and businesspermitting processes by requiring that all building inspections be conducted during theconstruction of the business venture. If corrections or alterations to the structure are necessaryto comply with regulatory requirements, it would be more cost-effective to remedy perceivedproblems at this stage, rather than after the completion of construction. Under this scheme, alltechnical inspections during the business permitting process will be redundant, creating asignificantly streamlined registration procedure as shown in Figure 5-1. This scheme could reducethe typical business permitting process to just two steps.
Fire, health and sanitation, and other building-specific inspections are best conducted duringthe construction phase. Occupancy inspections would be the only building-specific inspectionsthat would take place after construction. Any deviation from the intended declared use shouldautomatically mean that the applicant will be required to apply for a building permit. This processis clearly spelled out in the Building Code as “change of use.” To synchronize the buildingbusiness permit processes, the building permit application would include the purpose of thestructure being constructed. If the structure is being constructed for business purposes, thenthe BPLO should be notified during the construction stage. This procedure links the two processesand makes the building inspection less redundant.
For inspections that need to be conducted after the business has opened, LGUs should focuson “operation-oriented” rather than “asset-oriented” inspections. Asset-specific inspectionsare 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 inspectionis 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 withspecifications such as size and capacity, could be checked in the course of an asset-specific
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11 Sole proprietors generally indicate an arbitrary amount of capital investment in their application forms. This is because their personal properties areoften not seen as distinct assets, therefore they do not strictly account for the assets of their business and their personal funds separately, unlike in thecase 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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inspection. However, whether or not the waste disposal area or facility is actually being usedand maintained as required is a matter that is best ascertained in the course of an operation-oriented 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 inspectionwill 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 limitedbusiness renewal period from January 1st through 20th of each year. Relevant LGU departmentscould conduct inspections throughout the year, on a staggered basis, so long as certifications ofinspections are valid for one year following issuance.
5.3 INSTITUTIONAL DEVELOPMENT MEASURES
From the institutional development standpoint, the following measures are recommended tomake 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/municipality’s 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 registrationprocess is the best starting point;
3. Select a Registration Model (pre-, post-, or hybrid) once an agreement on the JIT processis 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 Mayor’s Office.
6. Craft the Enhanced Inspection Ordinance (see Appendix B) and ensure its alignment withthe 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 assessthe 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 thatpermi applicants do not view imposed penalties as arbitrary, unjust, or unreasonable. The appealsprocess 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 providinga venue for the appeals process, and ensuring that disputes are resolved within a reasonabletimeframe. Ideally, the dispute resolution and appeals process should be codified in an inspectionordinance. The deadlines and consequences provided under the ARTA could be applicable inthe 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 theregulation or inspection of a business or activity.” All applicants in a given LGU are assessed andrequired to pay various inspection fees on an annual basis. However, in practice many of the feescollected only end up as net revenues for LGUs, as many inspections are never conducted dueto limited resources. This directly contradicts Philippine jurisprudence, which is replete withdecisions emphasizing the distinction between fees and taxes.13 The LGC, under its Section
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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 Cityof Manila, 101 Phil 1142; Cuunjieng v. Patstone, 42 Phil. 818; PAL v. Edu, L-41383, August 15, 1989; and Chevron Philippines, Inc. v. Bases ConversionDevelopment 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 personmay 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 recommendedthat LGUs establish a risk-based categorized system based on benchmarks in comparablelocalities. This system should be driven by transparent criteria that determine the overall costof regulations to the LGU. A rationalization of fees need not result in the diminution of aggregatefees collected by the LGU. Reforms can be implemented to ensure a reallocation of inspectionfees among business applicants according to their size and risk level without placing an undueburden on productive enterprises. In addition, lower fees for low-risk businesses may encouragesmall and medium enterprises to join the formal economy, thereby increasing revenues for theLGU through volume rather than value. LGUs should take care that the categorization systemdoes not disincentivize businesses from growing or taking income-generating risks that mayrequire additional regulations.
Risk-Based Fees
Adopting a risk-based fee structure is usually a more equitable fee-setting scheme. The cost ofregulating 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 fromthe formal establishment of risk categories based on objective, publically available criteria, andthe assessment of inspection fees based on these categories. It is recommended that businessesbe 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 inspectionfee 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 thebusiness enterprise and the type of inspection being conducted. Some businesses may be high-risk from the perspective of fire safety, but not high-risk from the perspective of health andsanitation. This would allow businesses to qualify for different risk ratings for each type ofinspection. A risk-based fee-setting scheme may be further refined by the inclusion of enterprise-specific considerations, such as past inspection results for the immediately preceding years;
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Villanueva, et al., 105 Phil. 337;Physical Therapy Organization of the Philippines Inc. v. Municipal Board of the City of Manila, 101 Phil 1142; Cuunjiengv. 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, suchas ISO accreditation. For example, a business that poses an environmental risk could demonstratethat it is ISO 14001-2004-certified,14 indicating compliance with environmental rules andregulations, 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 ofregulation. 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 ofinspections. In a Supreme Court case, it was held that the use of gross receipts as a basis forcomputing the fees due to Quezon City for regulation and supervision of the sale of foodstuffto 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 mostrelevant 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.
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14 ISO 14001:2004 specifies requirements for an environmental management system to enable an organization to develop and implement a policy andobjectives which take into account legal requirements and other requirements to which the organization subscribes, and information about significantenvironmental aspects. It applies to those environmental aspects that the organization identifies as those which it can control and those which it caninfluence. 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.
Exhibit 5-1Supreme 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 oflicense tax, does not by itself, upon the one hand, convert or render the license tax into aprohibited city tax on income. Upon the other hand, it has not been suggested that such basishas no reasonable relationship to the probable costs of regulation and supervision of the petitioner'skind of business. For, ordinarily, the higher the amount of stall rentals, the higher the aggregatevolume of foodstuffs and related items sold in petitioner's privately-owned market; and thehigher the volume of goods sold in such private market, the greater the extent and frequency ofinspection 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.
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Referencing Comparable Benchmarks
Theoretically, “fees” should be deemed reasonable if their amount is commensurate with thecost of regulation, since cost recovery or reimbursement is their primary purpose, not revenuegeneration. However, it is not always easy to readily ascertain the exact cost of regulation. Asidefrom the difficulty of determining the amount of each cost item, there is also a need to determinewhat cost items should be included in the formula. Because of these difficulties, it would begood 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 ofits fees and ensure that these remain attractive for investors. An LGU could set these fees at anequal or lower level than other LGUs, or if this is not possible, ensure that there are otheradvantages 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 beunderestimated. A computerized information system with a comprehensive database wouldenable the LGU to be much more efficient, as follows:
• Building and Occupancy Permits Database . As discussed in Section 3.4, if this informationwere readily accessible electronically, it could be a sufficient basis to justify the omissionof inspections done already in connection with the occupancy permit application.
• Access Results of Past Inspections. The results of previous inspections stored in thedatabase will enable the BPLO to make informed decisions on whether or not to waivethe inspection requirement. This is particularly true if the inspectors are required torate the level of compliance. Businesses that rate exceptionally high in a preliminaryinspection should merit a lower priority in the conduct of actual inspections.
• Zoning and Radial Distance Maps. A well-developed system and a complete databasewould readily provide the information needed to determine whether or not theproposed location of the business is acceptable. Digital maps as well as searchable textfiles of the zoning ordinance should suffice as bases for deciding to issue a zoningclearance, precluding the need for a site inspection. Likewise, depending on the level ofsophistication of the information system of the LGU, it is also possible to readily checkradial 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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• Access, Print, and Transmit Checklists. Readily access, print, or transmit applicablechecklists of requirements for the type of business of the business permit applicant, andfor each type of inspection to concerned stakeholders; and automatically print out theofficial notices and electronically send out reminders.
Figure 5-2 shows the conceptual integration schema of Mandaluyong City for interconnectingLGU departments, the BFP and the public. In this scheme, the schedule of inspection is controlledvia an interface with an electronic BPLS (eBPLS). All inspection units are interconnected and thecentral database can provide real-time status updates for the results of each inspection as wellas historical records.
The inspection system is connected via a local area network (LAN) to the Real PropertyAssessor office and property information. Budget permitting, supporting offices may be linkedto facilitate efficient collection of applicant information and faster processing of the application.Similarly, sharing of information has the potential to replace time consuming and inefficientinspections with a simple validation check of informationThe final integration schema should reference the eBPLS Baseline Design Guide, which providesan overview of technical specifications recommended for an eBPLS solution. Suggestions forplanning and managing the roll-out of an eBPLS solutions are in the eBPLS Planning andImplementation Guide. Both documents were developed by the National Computer Center incollaboration 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 promotetransparency. This information may be classified into two categories: (1) data subject to accessrestrictions and requiring password authorization; and (2) general information available to anyonewith Internet access. Information that could be published online includes the following:
• 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.
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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 businesspermits in order to enforce collection of other fees and taxes not necessarily related to businesspermit renewal
Publication in Local Newspapers
Some local newspapers are distributed for free or are sold at very reasonable prices. Thepublication rates of these local newspapers are also often reasonable. LGUs should considercirculating information about business inspection ordinances and policies through thesenewspapers. Suggested information for publication includes the following:
• Newly-prescribed inspection procedures, particularly if the LGU adopts an inspectionordinance.
• Information about the risk-based classification of businesses and the practical implicationsof 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 Citizen’s Charters
The information in Citizens’ Charters is often too general and simple. In most cases, thesecharters 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 topass the inspection. While it may be difficult to include detailed checklists for each type ofbusiness and for each type of transaction in the Citizens’ Charter, the public should at least beinformed that applicants will be required to prove compliance with a checklist of requirementsapplicable to their business, and where such checklist of requirements may be obtained.
APPENDIX A.LEGAL BASIS FOR BUSINESS INSPECTIONS
BUILDING INSPECTIONS
As briefly discussed above, building inspections should not be a requirement for securing a newor renewed business permit. The building permit is only a requirement when a person, juridicalor otherwise, erects, constructs, alters, repairs, moves, converts or demolishes any building orstructure. This permit is obtained from the assigned Building Official in the proposed location ofthe building.
There is no categorical provision in the Building Code which imposes the presentation of abuilding permit for purposes of business permit issuance, whether new or renewed, unlike theFire Safety Inspection Certificate which the Fire Code specifically mandates as a prerequisitefor business permit application and renewal purposes. There is, however, mention of an annualinspection of buildings in the IRR of the Building Code, but this inspection is with respect to thebuilding 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 ascirculars, memoranda, opinions and decisions/orders issued pursuant thereto. His actions shallalways be guided by appropriate orders/directives from the Secretary.
Have overall administrative control and/or supervision over all works pertinent to buildings/structuresin his area of responsibility and shall be charged with the processing of all permit applications andcertificates as well as the issuance of the same.
Ensure that all changes, modifications, and alterations in the design plans during the constructionphase shall not start until the modified design plan has been evaluated and the necessary amendatorypermit issued.
Undertake annual inspections of all buildings/structures and keep an up-to-date record of theirstatus.
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PLUMBING INSPECTIONS
The inspections mandated under the Plumbing Code do not and should not qualify as BR-linked Inspections as they pertain to inspection that needs to be conducted in the course ofconstruction/renovation.
HEALTH AND SANITATION INSPECTIONS
While the Sanitation Code provides for specific sanitation standards and requirements forvarious business establishments, it only explicitly requires or authorizes the conduct of sanitationinspections for a select number of business establishments. Particularly, sanitation inspectionsare only required or authorized for the following:
1. Operation of Food Establishment2. Markets3. Public swimming pools and bathing places4. 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 equipmentand 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 toconduct all related inspections as deemed necessary for the enforcement of the SanitationCode and its IRRs.
The local health officer directs the sanitation engineer/inspector to conduct the appropriateinspection, which must be carried out within seven (7) working days after receiving payment ofthe inspection fee, as set by the local ordinance. Inspections are conducted pursuant to Section478 (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, pensionhouses, and the like, in accordance with the Sanitation Code; xxx
While the sanitation inspection of all business establishments selling food or providingaccommodations appears to be a mandatory requirement under the LGC, the LGC itself andthe Rules and Regulations Implementing the LGC (“LGC IRR”) are both silent on the specificmanner and frequency of sanitation inspections. However, under Section 478 (b)(4)(vi) of theLGC, it is the LGUs’ health officer who must direct the conduct of sanitation inspections. Withthe grant of such authority to the head of the LGU’s office on health services, it would appearthat conduct of sanitation inspections is based on the procedures established by the LGU’soffice on health services.
ZONING AND RADIAL DISTANCE INSPECTIONS
The LGC is replete with provisions explicitly granting LGUs the authority to reclassify landsand 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 passedby the sanggunian after conducting public hearings for the purpose, authorize the reclassificationof agricultural lands and provide for the manner of their utilization or disposition in the followingcases: (1) when the land ceases to be economically feasible and sound for agricultural purposes asdetermined by the Department of Agriculture or (2) where the land shall have substantially greatereconomic value for residential, commercial, or industrial purposes, as determined by the sanggunianconcerned: Provided, that such reclassification shall be limited to the following percentage of thetotal 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 agriculturallands distributed to agrarian reform beneficiaries pursuant to Republic Act NumberedSixty-six hundred fifty-seven (R.A. No. 6657). otherwise known as "The ComprehensiveAgrarian Reform Law", shall not be affected by the said reclassification and the conversionof 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 theNational Economic and Development Authority, authorize a city or municipality toreclassify 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 preparetheir respective comprehensive land use plans enacted through zoning ordinanceswhich shall be the primary and dominant bases for the future use of land resources:Provided, That the requirements for food production, human settlements, and industrialexpansion shall be taken into consideration in the preparation of such plans.
(d) Where approval by a national agency is required for reclassification, such approvalshall not be unreasonably withheld. Failure to act on a proper and complete applicationfor reclassification within three (3) months from receipt of the same shall be deemedas approval thereof.
(e) Nothing in this Section shall be construed as repealing, amending, or modifying in anymanner the provisions of R.A. No. 6657.
Section 215 states:
SECTION 215. Classes of Real, rules and regulations; establish fire limits or zones, particularly inpopulous centers; and regulate the construction, repair or modification of buildings within said firelimits 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, approveresolutions and appropriate funds for the general welfare of the city and its inhabitants pursuantto Section 16 of this Code and in the proper exercise of the corporate powers of the city asprovided 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 ofthis Code;
(ix) Enact integrated zoning ordinances in consonance with the approved comprehensiveland use plan, subject to existing laws, rules and regulations; establish fire limits orzones, particularly in populous centers; and regulate the construction, repair ormodification of buildings within said fire limits or zones in accordance with the provisionsof the Fire Code;
Section 468, in part, states:
SECTION 468. Powers, Duties, Functions and Compensation. (a) The sangguniang panlalawigan, as thelegislative body of the province, shall enact ordinances, approve resolutions and appropriate fundsfor the general welfare of the province and its inhabitants pursuant to Section 16 of this Code inthe proper exercise of the corporate powers of the province as provided for under Section 22 ofthis Code, and shall:
(2) Generate and maximize the use of resources and revenues for the development plans, programobjectives and priorities of the province as provided for under Section 18 of this Code, withparticular attention to agro-industrial development and country-wide growth and progress andrelative thereto, shall:
(vii) Review the comprehensive land use plans and zoning ordinances of component cities andmunicipalities and adopt a comprehensive provincial land use plan, subject to existinglaws; and xxx
Securing the necessary zoning clearance is only mentioned in Article 34 of the ImplementingRules and Regulations of the LGC on Eminent Domain:
ARTICLE 34. Prerequisites. — In acquiring private property for public use or purpose, LGU shall firstestablish the suitability of the property to be acquired for the use intended, then proceed to obtainfrom the proper authorities the necessary locational clearance and other requirements imposedunder existing laws, rules and regulations.
It would appear that the zoning clearance referred to above is not obtained from the LGU itselfbut from the “proper authorities”.
Occasionally the basis for zoning inspections for certain types of establishments or businessescan 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, theportion on “Markets and Abattoirs” specifically provides:
3.1.1 The market site shall be located at least 50 meters (164 feet) from schools, religiousinstitutions, public offices, funeral establishments, and other public gathering places and 25meters (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 asfollows:
SECTION 3. Burial Ground Requirements. —
3.1The following are the requirements for securing an initial clearance from the Department ofHealth 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 cemeteryin length and width and the 25-50 meter zones, the dwelling places and sources of watersupply within said zones.
3.1.5 Certification from the sanitation engineer of the Department of Health with regards to thesuitability of the land proposed to be utilized as a cemetery, as to the depth of water tableduring the dry and rainy seasons, highest flood level, direction of run-off, drainage disposal, thedistance of any dwelling house within the 25 meter zone and drilling of a well or any source ofpotable water supply within the 50 meter zone.
ENVIRONMENTAL INSPECTIONS
While the Sanitation Code contains environmental provisions for the health of workers applicableto 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 conductof environmental inspections as a separate or additional requirement prior to the operation ofa business establishment. Sec. 48 of the Sanitation Code provides:
SECTION 48. Environmental Provisions. — The environmental provisions enumerated hereunder forthe protection of the health of workers are applicable to all industrial establishments:
a. Control of atmospheric contaminants —
1. Workers shall not be exposed to atmospheric contaminants hazardous to health.
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2. Control of atmospheric contaminants shall be accomplished by methods approved bythe 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 infectiousdiseases through processing or handling of industrial products or wastes.
c. Control of possible sources of radiation hazards should be carried out under the supervision ofthe Radiation Health Officer or his authorized representative.
d. Noise — Control measures shall be provided to reduce intensity of noise sufficiently to renderit harmless to workers and to eliminate it at its source as a nuisance by following therecommendations of the local health or other government authority.
e. Illumination —
1. Adequate lighting shall be provided and distributed in all work areas in amountrequired for the type of work or seeing tasks measured by a light-meter with aminimum of glare and contrasting intensities between work and workroom.
2. Where the specific task requires more light than provided by general illumination,supplementary lighting shall be supplied.
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 materialsand reasonably free from offensive odours and dust throughout the establishment.
2. Proper control measures shall be used to reduce concentration of toxic contaminantsto allowable limits.
3. Air inlets shall be arranged, located and equipped to insure sufficient air velocity andan exhaust system which shall be located so that discharged materials shall not re-enter 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 applicabilityof (i) Republic Act No. 3931 (RA 3931), An Act Creating the National Water and Air PollutionControl Commission, (ii) its implementing rules and regulations, and (iii) Presidential DecreeNo. 480 (PD 480) dated 6 June 1974 which is a decree creating a radiation health office in theDepartment 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 ofvarious 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 andregulations 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 orimproper 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 pesticidescontaining 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, theRules and Regulations of the National Water and Air Pollution Control Commission, the provisionsof Presidential Decree No. 480 and the rules and regulations of the Radiation Health Office ofthe 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 ControlPollution Commission (NWACPC) has the duty and responsibility under Sec. 6(b)(6) “to inspectthe construction and maintenance of sewage works and industrial wastes disposal system forcompliance of the approved plans” and “to authorize its representatives to enter at all reasonabletimes 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 inspectingand investigating conditions relating to the pollution or the possible imminent pollution of anywaters 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 ordistrict engineer for the discharge of all industrial wastes and other wastes which are or may bedischarged 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 extensionor addition thereto;
(2) the increase in volume or strength of any wastes in excess of the permissive discharge specifiedunder any existing permit;
(3) the construction, installation, or operation of any industrial or commercial establishments orany extension or modification thereof or addition thereto, the operation of which would causean increase in the discharge of wastes directly into the waters or atmospheric air of thePhilippines or would otherwise alter the physical, chemical or biological properties of anywaters or atmospheric air in the Philippines or would otherwise alter the physical, chemical orbiological properties of any waters or atmospheric air of the Philippines in any manner notalready 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 reasonabletimes any property of the public dominion and private property devoted to industrial,manufacturing, processing or commercial use without doing damage, for the purpose of inspectingand investigating conditions relating to pollution or possible imminent pollution.” Later, theNPCC was abolished under Section 16 of Executive Order No. 192 (EO 192) dated 10 June1987 and its powers and its functions were integrated into or absorbed by the EnvironmentalManagement Bureau (EMB).
On the other hand, the IRR of the Chapter on Pollution of the Environment of the SanitationCode 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, foodadditives, products emitting ionizing and non-ionizing radiation and other products and by-products that may cause harm to public health” and “to projects, conditions or activities such asindustry, transport, energy, infrastructure, food, agricultural and other processes that may generatepollutants that are likely to adversely affect public health”, expressly provides under Sec. 8 thatit 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 manyadditional inspections, re-inspections and evaluations as deemed necessary for the enforcementof the provisions of the IRR.
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It must be pointed out, however, that such inspection pertains to the standard sanitation inspectionand 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 asprovided in various other IRRs of the Sanitation Code, the sanitation inspection under the IRRon Pollution of the Environment (i) must be conducted within seven (7) working days afterpayment of the inspection fee to the city/municipal treasurer concerned; (ii) entails the paymentof a sanitation inspection fee of such amount prescribed by local ordinance, (iii) requires theissuance by the municipal/city health officer or the chief of the sanitation division/section/unitof 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 theprocurement of an Environmental Compliance Certificate (ECC). This is particularly true forHealth Sensitive Projects, which are required to conduct an environmental health impactassessment as part of the Environmental Impact Statement to be submitted to the Departmentof Environment and Natural Resources (DENR). The Health Sensitive Projects shall be reviewedat the national level by the DOH Environmental Health Service (EHS) in accordance with thespecific procedure indicated in the IRR.
Under the IRR of the Chapter on Pollution of the Environment of the Sanitation Code, HealthSensitive Project is defined as “a project, whose raw materials, by products, intermediate products,finished products, waste products, and other processes during the construction, operation anddecommissioning phases will pose a significant health risk to the workers and the communitiesexposed”. Such undertakings can be classified into major development projects such as, but notlimited 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 likelogging, grazing and extraction of mangrove products, fishery projects including dikes andfishpond development projects);
3. Power Generation Operations (e.g. thermal, geothermal, hydroelectric, nuclear, and other non-traditional 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, noseparate environmental inspection is warranted since it is already covered under the health andsanitation inspection, according to the Sanitation Code. On the other hand, additionalenvironment-related clearances and permits, such as the ECC, are prescribed under nationallaws and are specifically enforced directly by the DENR rather than devolved t
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APPENDIX B.INSPECTION ORDINANCE TEMPLATE
Ordinance No. XXXSeries of 2011
AN ORDINANCE AUTHORIZING THE CONDUCT OF SANITATIONINSPECTIONS OF BUSINESS ESTABLISHMENTS WITHIN THE
TERRITORIAL JUSRISDICTION OF THE CITY OF [INSERT CITY] AS AREQUIREMENT FOR THE ISSUANCE AND RENEWAL OF A SANITATIONPERMIT AND ESTABLISHING THE PROCEDURE, REQUIREMENTS, AND
FEES FOR THE CONDUCT THEREOF
Sponsored by:XXX XXXXXXXX XXXXX
WHEREAS, the conduct of business registration-related inspections is broadly contemplatedunder Article XII, Section 6 of the 1987 Philippine Constitution which provides that “[i]ndividualsand private groups, including corporations, cooperatives, and similar collective organizations,shall have the right to own, establish, and operate economic enterprises, subject to the duty ofthe 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 itsinhabitants and for this purpose regulate any business, occupation, or practice of professionwithin its territorial jurisdiction through the issuance of permits and licenses subject to certainrequirements or conditions;
WHEREAS, the Local Government Code further authorizes each local government unit tocreate its own sources of revenue through the levy of taxes, fees, and charges subject to thelimitations 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”), dated23 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 specifiedbusinesses;
NOW, THEREFORE, be it ordained by the City Council of the City of [Insert City] in sessionassembled, that:
Section 1. Short Title - This Ordinance shall be known as the “Sanitation Inspection Ordinance of2011”.
[Please note that this Ordinance template pertains specifically to the conduct of Sanitation Inspectionsfor 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 inrelation to the issuance of a business permit. Other types of inspections may, however, require theinclusion of additional provisions which are not relevant to or necessary in relation to the conduct ofsanitation inspection.]
Section 2. Declaration of Policy – It is hereby declared the policy of the City of [Insert concernedcity] to regulate all businesses which intend to operate or are operating within its territorialjurisdiction in line with the promotion of the general welfare of its inhabitants. Toward thisend, the City shall, unless otherwise exempted or waived in accordance with the provisionsof this Ordinance, require all businesses to secure a sanitation permit prior to operationand to renew the same annually thereafter as a condition for continuing business operationswithin 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 andrenewal of sanitation permit.
[The specific law which authorizes the conduct of a specific type of inspection must be cited in theDeclaration 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 bedetermined to be exempt, or in the case of a waiver in accordance with the provisions ofthis Ordinance, the conduct of sanitation inspections as a condition for the issuance orrenewal of a sanitation permit shall be undertaken to ensure that business establishmentswhich intend to operate and are operating within the territorial jurisdiction of the Citycomply or continue to comply with sanitation and health standards for the protection andpromotion of health within the City’s territorial jurisdiction.
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[The rationale for the conduct of a specific type of inspection must be indicated. For instance, therationale for the conduct of building inspection may be for the promotion of safety within the City’sterritorial jurisdiction.]
Section 4. Definition of Terms - As used in this Ordinance, the following words or terms shall havethe meaning given to it in this section, as follows:
• Sanitation Permit – a certification in writing by the City Health Officer or in hisabsence, by the chief or head of the sanitation division/section/unit that the businessestablishment complies with existing sanitation requirements upon evaluation andconduct of sanitation inspection.
• Local Health Authority – the City Mayor who is responsible for the application orimplementation 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 businessesand 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 distinctset of terms that must be defined.]
Section 5. Coverage.– Except as may otherwise be declared exempt or waived in accordancewith the provisions of this Ordinance, the conduct of sanitation inspection shall cover allbusiness establishments within the territorial jurisdiction of the City applying for the issuanceor renewal of sanitation permit, provided, the following business establishments, regardlessof their risk-based classification, shall in no case be exempt from the conduct of sanitationinspection:
• Food Establishments; 15
• Markets and abattoirs; 16
• Public laundry; 17
• Schools; 18
• Industrial establishments; 19
____________________________
15 Covered under Chapter III of the Code on Sanitation.16 Covered under Chapter IV of the Code on Sanitation.17 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 onSanitation;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 orsignificant risks to public health and the environment.
The application for the issuance or renewal of sanitation permit shall be filed with the CityHealth Office. A valid sanitation permit shall be a prerequisite for the issuance of thebusiness permit and any renewal thereof, for businesses listed above.
[Please note that it is among the recommendations that sanitation inspections be dispensed with as arequisite for business permit renewal in the case of businesses which do not require inspections underthe Sanitation Code. Under the Code on Sanitation and its IRRs, only the business establishmentsenumerated above are subject to sanitation inspections, although there are other establishments whichare 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 withfor the issuance of sanitation permit.
The City Health Office, in consultation with relevant professional groups and industryrepresentatives, shall develop a detailed checklist of requirements for each distinct class ofbusiness or industry group. The checklist shall provide for requirements and minimumquality standards that an applicant business establishment must comply with and shall beused to ensure that there will be no arbitrariness in the parameters used in the conduct of
____________________________
20 Covered under Chapter VIII of the Code on Sanitation.21 Covered under Chapter X of the Code on Sanitation.22 Covered under Chapter XI of the Code on Sanitation.23 Covered under Chapter XII of the Code on Sanitation.24 Covered under Chapter XIII of the Code on Sanitation.25 Covered under Chapter XIV of the Code on Sanitation.26 Covered under Chapter XIX of the Code on Sanitation.27 Covered under Chapter XXI of the Code on Sanitation.28 Covered under Chapter XV of the Code on Sanitation.
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sanitation inspection and evaluating compliance by the applicant business establishment ofthe requirements for the issuance of a sanitation permit. The evaluation parameters shall beuniformly 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 sucha requirement, such as the relevant provision of the Code on Sanitation, if any. The checklistsdeveloped shall specifically consider all applicable requirements under the Code of Sanitationand its Implementing Rules and Regulations.
The checklist for the top ten (10) business classes shall be released by the City HealthOffice within one hundred twenty (120) days after the effective date of this Ordinance. Thechecklist 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 classeswithin the City shall have been released.
The checklist shall indicate the weight given to each criteria or requirement. The ratingsystem shall be indicated in such checklist.
Section 7. Adoption of Risk-based Targeting System – The City adopts a risk-based targeting systemof classification of all types of businesses in the City. The risk-based classification of a particularbusiness shall be the primary basis for determining the level of regulation that will beimposed on the business for the enforcement of the requirements under this Ordinanceincluding the Code on Sanitation and its IRRs.
Within sixty (60) days from the effective date of this Ordinance, the City Health Officeshall formulate a business classification system that would categorize all businesses in theCity in into a minimum of three (3) and a maximum of five (5) risk categories (i.e., RiskLevels 1 to 5) on the basis of a criteria which shall likewise be developed. The risk profile ofeach category shall be clearly indicated in as much detail as possible, to allow for readyclassification of businesses into the appropriate category and for clear distinction betweencategories to exist.
All establishments belonging to category with the highest risk level shall be mandatorilyinspected at least annually and should possess valid sanitation permits at the time of theirapplication for a business permit, including renewals thereof. For medium-risk businesses,the conduct of sanitation inspection prior to the issuance of sanitation permit shall bemade every other year provided there is no negative finding for the past two (2) years andits most recent compliance rating is higher than 75%. For low-risk businesses, prior conductof 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 thebusiness establishment obtains a compliance rating lower than [indicate the thresholdcompliance rating].
The City Health Office shall form a team composed of [Insert composition] and headedby 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 formulatingrisk assessment parameters. The full regulatory implications of each risk category adoptedshall likewise be as prescribed by the Sanitation Risk Evaluation Group. The formulation ofrisk assessment parameters shall be made in consultation with relevant professional groups,such as medical doctors, sanitation engineers, environmental groups, among others, in theCity and public hearings shall likewise be held prior to the finalization or adoption of suchrisk assessment parameters. The Sanitation Risk Evaluation Group shall, after consultationand hearing, finalize its recommended classifications and the criteria for risk evaluation. Thesanitation 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 consideredunder 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 theSanitation Risk Evaluation Group can justify a lower applicable risk category. Other thanthe nature of the business activity, secondary classification criteria such as but not limitedto the following shall likewise be identified and given consideration in the classification of aparticular 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, shallonly result in no more than an increase or decrease by one (1) level in the risk levelcategory of the business, as appropriate.
Section 8. Implementation of the Risk-based Classification – Upon the application for the issuanceor renewal of a sanitation permit, the applicant business establishment shall preliminarily begiven its risk category based solely on the nature of its business. Upon the conduct of asanitation inspection undertaken under this Ordinance, the risk category of the businessregistrant 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 abusiness registrant shall be evaluated not more often than once every three (3) years,unless a supervening violation, business development, or incident justifies the immediatereclassification 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 industryclassification of the business. Likewise, the risk levels may vary depending on the area of regulation. Somebusinesses may be high-risk businesses from the perspective of fire inspection but not high-risk withrespect to sanitation inspection. Thus, a business establishment may have different risk rating for eachtype 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 sanitationinspection, an applicant business establishment for the issuance or renewal of sanitationpermit must be given an inspection notice to allow the applicant to avail of the assistance ofa consultant or appropriate professional such as an engineer during the conduct of sanitationinspection 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 applicantbusiness establishment.
Section 10. Mission Order - The City Health Officer shall issue a mission order for every sanitationinspection that will be conducted by the sanitation inspector. The mission order mustcontain 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 besubject to sanitation inspection, the classification or category of the applicant businessestablishment to be inspected and the scheduled dates of sanitation inspection.
Sanitation inspection shall be conducted by the sanitation inspector designated by the CityHealth Officer. The deployment of two or more inspectors to inspect a particular businessestablishment shall be avoided unless justified under the circumstances and should be subjectto the prior approval of the City Health Officer.
The mission order must be shown to the operator of the applicant business establishmentbefore any sanitation inspection is conducted.
The owner or operator of the applicant business establishment shall report to the CityHealth Office any sanitation inspection conducted without a mission order.
Section 11. Conduct of Sanitation Inspection by Sanitation Inspector – In the conduct of sanitationinspections, the Inspection Team shall observe the following:
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• Uniform and Materials of Sanitation Inspector – During the conduct of thesanitation inspection, the sanitation inspector shall be required to wear the uniformof the City Health Office with the proper identification card. The sanitation inspectorshall also bring all the equipment and supplies needed in the sanitation inspectionsuch 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 andother materials needed in the sanitation inspection.
[This provision is specific to sanitation inspection. Other types of inspection may require the use of othermaterials during inspection.]
• Use of Checklist – The checklist shall be actually accomplished in the course ofthe sanitation inspection. In the event the checklist used by the sanitation inspectoris not customized for the specific class of business of the applicant businessestablishment subject of inspection, the sanitation inspector shall specifically indicatethe 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 conductof 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 factthat a copy of the record of inspection was provided to them.
Other findings of the sanitation inspector during the conduct of sanitation inspection shallbe 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 indicatedon the checklist. There shall be no denial of a sanitation permit on grounds other thanthose appearing on the face of the checklist.
The sanitation inspector shall prepare at least two (2) copies of the duly accomplishedchecklist. One (1) copy of the record of inspection shall be furnished to the applicantbusiness establishment for its reference upon the termination of inspection. Another copyof the record of inspection shall be encoded into the City Health Office database and thesaid hard copy of the record of inspection shall be retained by the City Health Office for aminimum period of five (5) if there are no negative findings pertaining to the concernedapplicant business establishment for the past five (5) years and ten (10) years if there arenegative findings.
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Section 12. Period to Remedy – Whenever a record of inspection indicates non-compliance withcertain items on the checklist, the sanitation inspector shall notify in writing the applicantbusiness establishment, through its owner, operator, or manager of the corrections to bemade with an indication of a reasonable period to remedy the same which period shall inno case be less than ten (10) calendar days.
The owner, operator, or manager of the applicant business establishment may request inwriting 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 forreconsideration of the action of the City Health Officer.
Section 13. Re-inspection – Upon the lapse of the period indicated by the sanitation inspector toremedy non-complying items in the checklist, the sanitation inspector shall conduct a re-inspection of the applicant business establishment. Such re-inspection must comply with allthe requirements for the conduct of sanitation inspection by the sanitation inspector asprovided under Section 11 hereof.
If upon re-inspection the sanitation inspector finds that the corrections to the non-complyingitems on the checklist have not been effected, he shall report the same to the City HealthOfficer who shall recommend to the local health authority the non-issuance of a sanitationpermit. In addition to the copy of the duly accomplished checklist used during the re-inspection reflecting the adverse findings, the applicant business establishment shall likewisebe notified in writing within three (3) days from the date of re-inspection. The sanitationpermit applicant may appeal the same in accordance with the procedure provided in thisOrdinance.
Section 14. Issuance of Sanitation Permit - If upon inspection or re-inspection, the sanitationinspector finds that the applicant business establishment has complied with all the items onthe checklist, the sanitation inspector shall recommend to the City Health Officer theissuance of a sanitation permit. The City Health Officer shall, in turn, endeavor to issue thesanitation permit within the day of receipt of a favorable recommendation and in no caselater than three (3) calendar days later.
Failure of the City Health Officer to issue a sanitation permit within ten (10) calendar daysfrom the date of application without any adverse finding from an inspection shall result inthe presumption that the applicant has been duly issued a sanitation permit and shall not bedeemed to be in violation of the sanitation permit requirement. Proof of the lapse of the10-day period shall suffice to take the place of the sanitation permit for business permitpurposes.
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Section 15. Validity of the Sanitation Permit – The sanitation permit shall be valid for a period ofone (1) year from the date of its issuance, thus it must be renewed every year thereafter inaccordance 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 withinseven (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 priornotice of the actual date of inspection.
Section 17. Frequency of Sanitation Inspections – Unless otherwise prescribed under the Code onSanitation and its IRRs, and as will be indicated on the face of the Sanitation Permit, sanitationinspection shall be conducted not more often than once a year upon application for theissuance or renewal of sanitation permit and payment of the corresponding fee. For foodestablishments, sanitation inspection shall be conducted upon application for the issuance ofsanitation permit and every six (6) months thereafter.
Section 18. Renewal of Sanitation Permit – Applications for the renewal of sanitation permit shallbe 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 dispensedwith based on specific criteria such as the absence of negative findings for a specific numberof 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 daysafter the approval of the risk-based classification and the criteria for the purpose shall adopta 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-riskbusinesses which are regularly subjected to sanitation inspection shall pay a higher sanitationinspection fees than medium-risk and low-risk businesses.
The risk-based fee-setting scheme may be further refined by the inclusion of enterprise-specific considerations, such as, the inspection results for the immediately preceding specifiednumber 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 otherrelevant factor that could directly impact the level of risk of the business. Thus, the secondarycriteria 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 sanitationinspection 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 newspaperand posted in three (3) conspicuous places in the City Hall for two (2) consecutive weeksupon their approval. Such prescribed rates shall not be changed more often than onceevery five (5) years.
The prescribed sanitation inspection fee for a particular applicant business establishmentshall be paid at the Office of the City Treasurer upon filing of an application for the issuanceor renewal of sanitation permit.
[The fee should be termed a permit fee instead of an inspection fee to enable the City to validly collecta fee notwithstanding the fact that no inspection is carried due to the fact that a business is a low-riskbusiness. Likewise to avoid the duplication of seemingly similar fees, it is recommended that the permitfee 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 designatedby the City Health Officer to conduct sanitation inspection shall have the following minimumor baseline qualifications:
[Insert list of minimum qualifications which shall include minimum educational attainment and length ofexperience.]
In order to develop the skills of sanitation inspectors and to ensure their proper conductof sanitation inspections, the City Health Office shall ensure that its sanitation inspectorsshall undergo training or re-training at least once every [___] years.
Further, as a measure to ensure impartiality in the conduct of sanitation inspections, theCity Health Office shall develop a system of rotation of sanitation inspectors such that nosanitation inspector shall be designated to conduct sanitation inspection for the samebusiness establishment for two (2) consecutive instances. Further, as a measure to avoidharassment of applicant business establishments, the City Health Office shall designate nomore than two (2) sanitation inspectors at any one time.
Section 21. Information System – To develop a more efficient, orderly and organized manner ofconducting sanitation inspections, the City Health Office shall develop a well-structured andcomprehensive computerized information system which shall, among others, contain:
• Previous results of sanitation inspection to track the level of compliance of a sanitationpermit renewal applicant.
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• Applicable checklist of requirements for the various types of business or businessclassification which can be readily accessed, printed or transmitted to the applicantbusiness 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 ascertainwhether a business permit applicant is the same person who has recently secured a building permit andoccupancy permit and whether the property subject of such permits is the same as the premisesproposed to be used for the business. If such information can be readily accessed electronically, then suchinformation can serve as sufficient basis to justify the omission of whatever inspections which have justbeen undertaken in connection with the occupancy permit application.
In relation to the issuance of a zoning certificate and locality clearance, the informationsystem should be able to readily provide information needed by a reviewing BPLO officerto 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 thepurpose of issuing a zoning or locality clearance, dispensing with the need to conduct anactual inspection for the purpose. It would also be advisable if the information system canbe used to check radial distances between different types of establishments.]
Section 22. Information Dissemination – The City Health Office shall cause the dissemination ofinformation in relation to the conduct of sanitation inspection and issuance of sanitationpermit 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 internetaccess. Among the information that the City Health Office shall generally publish online areas 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 immediatelypreceding five (5) years, including compliance ratings obtained, if applicable shall be subjectto access restrictions.
As a cost-saving measure, the City Health Office may also issue electronic notices in lieu ofhardcopy of notices regarding the conduct of inspection.
[For other types of inspection in relation to the issuance of business permit, the following informationmay be included as information to be published online subject to access restrictions:
(i) information about the business taxes paid, overdue amount, etc.; and outstanding liabilityfor real property taxes, particularly if the LGU has adopted cross-enforcementprocedures, i.e., withholding the issuance of business permits in order to enforcecollection 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 businessinspection-related ordinances and policies through local newspapers. Such information shallinclude:
• 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 issuesarising from the conduct of sanitation inspections.
[The information provided herein pertains specifically to sanitation inspection. Other information may berequired 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 printedforms and checklists before commencing the process of issuance or renewal of sanitationpermit. The City Health Office shall print separate checklists for each specific type ofbusiness 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 orrecord of inspection or re-inspection, the applicant business establishment may file a writtenappeal of such results to the local health authority who shall issue a written acknowledgementof receipt of the written appeal. The written appeal must indicate the date when the recordof inspection or re-inspection was received, the portion of the record of inspection or re-inspection 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 fromreceipt of the written appeal. The local health authority may conduct such hearings orconferences as he may deem necessary in deciding the written appeal. The applicant businessestablishment must be furnished a written copy of the decision of the local health authorityon the written appeal.
The decision of the local health authority on the written appeal of the applicant businessestablishment shall be final and executable upon the lapse of fifteen (15) days from receiptby the applicant business establishment of the decision of the City Health Officer on itswritten appeal and no motion for reconsideration is filed.
The applicant business establishment may file a motion for reconsideration of the decisionof the City Health Officer within fifteen (15) days from receipt thereof. The motion forreconsideration must indicate the date when the decision of the City Health Officer wasreceived, the portions of the said decision sought to be reconsidered, and the groundsrelied upon for such motion. The City Health Officer shall have fifteen (15) days fromreceipt of the motion for reconsideration to decide on the same. The applicant businessestablishment shall be furnished a written copy of the local health authority’s decision onthe motion for reconsideration. The decision of the local health authority on the motionfor reconsideration is final and shall be executable five (5) days from receipt of the applicantbusiness establishment of the said decision.
Section 24. Suspension of Sanitation Permit – The sanitation permit may be summarily suspendedwhenever the City Health Officer finds unsanitary or unhealthy conditions in the operationof the concerned business establishment which constitute a substantial hazard to publichealth. The concerned business establishment shall be furnished a written copy of thesummary suspension which shall indicate the grounds for summary suspension and theperiod during which the summary suspension shall be in effect.
The concerned business establishment may file a written petition to the City Health Officefor the lifting of suspension and shall be afforded a hearing within forty-eight (48) hoursfrom 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 CityHealth Officer shall be final unless amended or reversed by the City Mayor upon a requestfor reconsideration filed within fifteen (15) days from the date of receipt of the decision ofthe City Health Officer. A business owner may take appropriate judicial remedy should it beprejudiced 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 thefollowing grounds:
• Refusal of a business establishment to be subjected to subsequent sanitationinspection;
• Violation by the business establishment of any sanitation rule or regulation enforcedwithin 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 complywith the mandatory provisions of this Ordinance shall be guilty of misdemeanor and uponconviction shall be punished by imprisonment for a period not exceeding six (6) months orby a fine in an amount not exceeding One Thousand Pesos (Php1,000.00) or both dependingupon the discretion of the court.
Any person who shall interfere with or hinder, or oppose any officer in the performance ofhis duty under this Ordinance shall be guilty of a misdemeanor and shall punishable uponconviction by imprisonment for a period not exceeding six (6) months or by a fine in anamount not exceeding One Thousand Pesos (Php1,000.00) or both depending upon thediscretion of the Court.
Section 27. Transitory Provision – Within sixty (60) days from the approval of this Ordinance, theCity Health Office shall have developed the risk-based classification system as provided inSection 8 hereof, the checklist as provided in Section 7 hereof, and the information systemand other standard forms as provided in Sec. 21 hereof.
Current sanitation inspectors who do not meet the minimum or baseline qualifications asprovided 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 minimumor baseline qualifications.
[Insert other necessary transitory provisions.]
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Sec. 28. Supplementary Application – The provisions of this Ordinance shall be interpreted inharmony with the provisions of the Code on Sanitation and its applicable IRR. In case ofconflict between a mandatory provision of the Code on Sanitation and the terms of thisOrdinance, the provisions of the Code on Sanitation shall take precedence; on all othermatters, the provisions of this Ordinance shall take precedence.
Sect. 29. Repealing Clause – All ordinances, rules, and regulations issued by the SangguniangPanlungsod or other local offices or parts thereof in conflict with this Ordinance are herebyrepealed, provided that rights that are already vested upon the effectiveness of this Ordinanceshall not be impaired.
Sec. 30. Separability Clause – Should any provision or provisions of this Ordinance be declaredunconstitutional or illegal, the remaining provisions hereof not affected thereby shall remainin full force and effect.
Sec. 32. Effectiveness – This Ordinance shall take effect fifteen (15) days after the date of itspublication in a newspaper of general circulation and posting in bulletin boards in at leastthree (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: ________________________________________________ Date ofInspection: _________________________
HEALTHY EATING PLACEHEALTHY PLACES CAMPAIGN
DAVAO CITY
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74C-2
75C-3
SANITATION STANDARD RATING
Percentage Rating Sanitation Standard Color Code90 – 100% Excellent Luminous Green70 – 89% Very Satisfactory Luminous Yellow50 – 69% ` Satisfactory Luminous Red
HEALTHY EATING PLACES
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