Improving the Business

Enterprise Inspection System:

RECOMMENDATIONS

Background of the Project

Purpose: Identify needed reforms to reduce the cost
of doing business and improve the competitiveness of
LGUS

Focus: Inspection System

Legal Basis ordinance or law
Procedure manner, requirements, forms,
frequency
Fees reasonableness and basis

Inspections
I.

Business registration-linked (BR linked)

Inspections
Commencement
Renewal

II.

Non-BR linked Inspections (NBR)

Construction

BR-linked Inspections
Zoning

Fire
Health and Sanitation

Building
Radial Distance

Summary of Findings
Different Inspection Models
Pre-business Inspection
Post-business Permit Inspection
Hybrid Inspection Systems
Legal Basis
Conflicts and lack of local ordinance
Fees
Bases used differ
No logical relation
Duplication of fees or imposition of similar fees

Summary of Findings
Duplicate Inspections

Dispensable Inspections
Lack of clear basis for categorization of businesses for the

purpose of determining whether or not they will be

subjected to actual inspection
Procedure for Inspection

Prior Notice not always given

Checklists not always provided and used
Immediate and categorical report of findings not assured
Clear procedure to contest adverse findings not always provided

RECOMMENDATIONS
Coverage:
1. Process Improvements
2. Statutory/Legal
3. Institutional Development Measures
4. Fee Rationalization
5. Streamlining

Process Improvement
Timing of Inspections

Prior disclosure of inspection standards

Prior notice of inspection

Use of inspection checklist

Prompt notification of results
Clear remedies with specific timeframes

Legal Basis
Fire Code Amendments

Building Code Amendments

Issuance of Appropriate Ordinances

Institutional Development
Qualification of Inspectors

Provision of facilities

Vehicles for inspection

Use of computerized system/automation
Linking of data bases across the various LGU sections conducting
inspections

Development of Inspection Manuals/Manual of

Operations
Setting up a Dispute Resolution Mechanism (particularly
to address disputes on adverse findings, imposition of
penalties, etc.)
Information dissemination

Fee Rationalization
Benchmarking
type

of business
classification of the LGU
location of LGU
Basis for benchmarking
Total fees
Types of fees
Amount of fee per type of fee
*Assistance of DILG may be indispensable*

Fee Rationalization
Factors to be Considered in Imposition of Fees

Cost to conduct inspection

Risk profile of the business
Size of the business
Revenue, number of clients, number of staff, area of
business premises
Other relevant consideration such as
Impact of the business to the general
public/environment

Streamlining
Elimination of duplicate inspection

Elimination of unnecessary inspection (and

corresponding elimination of the related inspection

fee)

Risk-based inspection
Adoption of formal criteria for determining risk classification
of various businesses for each type of risk
Joint inspection teams

Implementation

National Level

I.

Statutory amendment
Nationwide benchmarking

II. Local Level

A. Short Term
B. Medium Term
C. Long Term

Implementation: National Level

Benchmarking Project

Data gathering
Data summary
Data analysis
Reporting and Recommendation
Dissemination and Operationalization

Statutory/IRR Amendments

Amendments to the Fire Code

Classification of businesses according to risk classification
Elimination of firs inspection within one (1) year from the issuance of
an Occupancy Permit unless renovations were made
Assessment and collection of Fire Code-related fees through the LGUs
but subject to strict remittance deadlines and appropriate
consequences in case of late remittance
Timing of fire inspection

Implementation: National Level

Amendment to the Building Code IRR

Annual inspection: scope/rationalization of fees
Annual building inspection vs. per occupant inspection
Timing of inspection

Amendment of the Local Government Code

Provided for staggered schedule for renewal of business licenses
Allow the adoption of risk-based classification of business
To serve as basis for elimination of certain inspections
To serve as basis for risk-based fees

Sanitary Code

Staggered expiration of Sanitary Permits (instead of simultaneous

termination on 31 December of each year)

Implementation: LGU Level

Requisite: Profiling of registered business to enable the LGU
to know how to prioritize activities during implementation stage
Short Term (1-2 years)
1. Development of checklists and forms
2. Address the manner of conducting inspections

3.
4.
5.

adoption og an inspection ordinance

Information dissemination
Elimination of duplicate or unnecessary inspection
Fee evaluation

a. to eliminate duplicate or similar fees

b. match the description of the fees with the actual purpose of the
fees
c. align with available benchmarks

Implementation by the LGUs

Short Term to Medium Term (includes

implementation in phases which will take up to 4

years to complete)

Requisite: Development of a criteria to be used in

assessing risk (for each type of risk)
a. Adoption of risk-based fees
b. Adoption of risk-based inspection
c.

Revision of ordinances to reflect the foregoing