WHAT IS EXAMINATION?
Additional readings: CAO 1-2002- Providing for
 Is the Bureau’s procedure of inspecting
the goods by either intrusive or non-
intrusive, or both.
 Inspection of a shipment by officials to
verify if the nature, value, classification,
origin and other particulars conform
with those of the items declared by the
importer.
SEC. 419, CMTA: EXAMINATION OF GOODS
 WHEN: It is conducted only after
lodgement.
 GENERAL RULE: The Bureau may
examine the goods in the presence of
the declarant or an authorized
representative.
 EXCEPTION: Exceptional circumstance,
Valid and Justifiable Grounds
 Taking of samples only when needed
and as minimal as possible.
HOW IT IS CONDUCTED? (SEC. 420, CMTA)
1.) NON-INTRUSIVE EXAMINATION- inspection
that does not require opening, unearthing or
otherwise exposing the object in the location
where it is housed, installed or used.
Ex. X-rays, Magna Scale Weighing, Gamma Ray
Imaging, etc.
2.) PHYSICAL EXAMINATION- On the other
hand, requires the opening of the means of
transport to inspect the goods thoroughly
contained therein.
how will the examination of his goods be
the use of X-ray Machine as an alternative to
actual physical examination to further speed up
the examination of shipments and the
movement of cargoes in the Bureau of Customs
1. IT IS DIRECTED BY THE COMMISSIONER
ON ACCOUNT OF A DEROGATORY
INFORMATION
Situation #1:
Commissioner Rey received a derogatory
information that the shipment of Mr. Kula Fu,
the importer, was undervalued for he submitted
an invoice which do not reflect the Price Actually
Paid or Payable. Can the Commissioner order the
examination of goods?
2. The goods are subject to an Alert Order
issued by competent authority.
Situation #2: District collector of Port of
Manila ordered the physical
examination of Mr. Kong’s shipment of
1x40 STC: Dangerous cargo and
subsequently issued the alert order, will
the examination of goods be valid?
3. THE GOODS ARE ELECTRONICALLY
SELECTED FOR PHYSICAL
EXAMINATION.
Situation #3: Computer-aided risk
management tool of the Bureau of
Customs, selected the shipment of Mr.
Tolentino which is undergoing clearance,
conducted?
4. There are issues and controversies
surrounding the goods declaration and
the import clearance process
Situation #4: Importation of different
animals arrived at MICP and the Bureau
had an information that a certain
shipment of live animals contained
dutiable goods concealed on the
hide(skin) of the sheep. Can the customs
subject such animals to physical
examination?
5. The importer or declarant requests for
the examination of the goods.
Situation #5
Petron corporation, the largest oil
refining company in the philippines,
imported oil through an oil tanker vessel.
Said shipment undergone load port
survey and it was stated there that such
shipment contains GW of 318,000 MT.
Due to instability of the vessel, the
importer requested for the examination
for he believes that the actual GW
landed on the port was not consistent
with that of declared in the LPS. Thereby,
reduces the taxes payable on such
goods. Can the importer do that?
SITUATION#1:
An importation from Thailand arrived at
MICP, could the customs official conduct
immediately an examination of such goods?
(Pursuant to Sec. 419)
SITUATION #2:
A shipment of 1x20 STC: Plastic Resins from
China imported by K&J Company, arrived at Port
of Manila on May 10, 2019. The Commissioner
received general allegation that the said
shipment was misdeclared. Can the
Commissioner order the examination of goods to
determine whether or not it is subject to fines or
penalties under the CMTA? (Pursuant to Sec.
420,a)
Sec. 421. Duties of Customs Officer Tasked to
Examine the Imported Goods
• A. Determine whether the packages for
examination and their contents are in
accordance with the goods declaration,
invoice and other pertinent documents;
• B. Take samples of the imported goods
for examination or laboratory analysis
when necessary;
• C. Issue a receipt for a sample taken and
retained during examination; and
• D. Report whether the goods have been
correctly declared as to value, quantity,
measurement, weight, tariff
classification and not imported contrary
to law
SEC. 422. CUSTOMS EXPENSES CONSTITUTING
CHARGES ON GOODS VS. SEC. 1111 (5th par.)
• Cost of examination shall be for the
account of the importer or exporter. In
connection, when goods are selected for
red lane selectivity, it is important that
prior to the release of the said shipment,
goods have been examined and the
costs have been paid for it constitutes as
a lien on such goods.
• Costs of the physical inspection shall be
borne by the Bureau. However, if it
results to additional duties and taxes,
then the cost shall be paid by the owner
before he can obtain the release of said
goods.
SEC. 1111. ALERT ORDERS
• THESE ARE WRITTEN ORDERS ISSUED BY
CUSTOMS OFFICERS AS AUTHORIZED BY
THE COMMISSIONER ON THE BASIS OF
DEROGATORY INFORMATION
REGARDING POSSIBLE NON-
COMPLIANCE WITH THIS ACT.
• NOTE: Bureau shall create a central
clearing house for alert orders and shall
submit reports quarterly on the status
thereof. (Add’l readings: CMO 6-2019)
An alert order may be issued only after
lodgment of the goods declaration and prior to
release of goods from customs custody.
ALERT ORDER PROCESS:
1. LODGEMENT OF GOODS DECLARATION
2. DEROGATORY INFORMATION
3. ALERT ORDER IS ISSUED (notify the
commissioner within 24 hrs)
4. SUSPENSION OF THE PROCESSING OF
THE GOODS DECLARATION and
CONDUCT OF PHYSICAL AND NON-
INTRUSIVE EXAMINATION (within 48
hrs)
5. If may positive sa conduct of physical
and non-intrusive examination issuance
of WSD
IF NEGATIVE: CONTINUANCE OF THE PROCESING
OF GOODS DECLARATION
WITHIN 48 OR 24 HRS (P)
AUTHORITY TO ISSUE ALERT & HOLD ORDERS:
1. Commissioner;
2. District Collector;
3. Deputy Commissioner, Intelligence
Group;
4. Deputy Commissioner, Enforcement
Group (CMO 27-2010)
SEC. 407. Goods Declaration and Period of Filing
– The Bureau shall require the electronic
lodgement of the goods declaration.
 Goods declaration must be lodged within
fifteen (15) days from the date of
discharge of the last package from the
vessel or aircraft. The period to file the
goods declaration may, upon request, be
extended on valid grounds for another
fifteen (15) days: Provided, That the
request is made before the expiration of
the original period within which to file
the goods declaration: Provided,
however, That the period of the
lodgement of the goods declaration may
be adjusted by the Commissioner
SEC. 408. Lodgement and Amendment of Goods
Declaration. – The Bureau shall permit the
electronic lodgement of the goods declaration at
any designated customs office. The Bureau shall,
for valid reason and under terms and conditions
provided by regulation, permit the declarant to
amend the goods declaration that has already
been lodged: Provided, That the request to
amend the goods declaration, together with the
intended amendments, must be received prior
to final assessment or examination of goods.
SEC. 1400 Misdeclaration, Misclassification,
Undervaluation in Goods Declaration
Misdeclaration – as to quantity, quality,
description, weight or measurement of the
goods resulting to a discrepancy on duty and tax
to be paid between what is legally determined
upon assessment and what is declared.
Misclassification – Through insufficient or wrong
description of the goods or the use if wrong tariff
heading resulting to a discrepancy in duty and
tax to be paid between what is legally
determined upon assessment and what is
declared.
Undervaluation – When the declared value fails
to disclose in full the price actually paid or
payable or any dutiable adjustment to the price
actually paid or payable, or when an incorrect
valuation method is used or the valuation rules
are not properly observed, resulting in a
discrepancy in duty and tax to be paid between
what is legally determined as the correct value
against the declared value.
Sec. 1401 Unlawful Importation or Exportation
– any person who shall fraudulently import or
export or bring into or outside of the Philippines
any goods, or assist in so doing, contrary to law,
or shall receive, conceal, buy, sell, or in any
manner facilitate the transportation,
concealment, or sale of such goods after
importation, or shall commit technical smuggling
as defined in this Act shall be penalized.
(h) The penalty of prision mayor shall be imposed
when the crime of serious physical injuries shall
have been committed, and the penalty of
reclusion perpetua shall be imposed when the
crime of homicide shall have been committed by
reason or on the occasion of the unlawful
importation.
Contrabands – Any property that it is illegal to
produce or possess.
Selectivity System
Selectivity – is the selection of either
declarations or shipments for documentary
and/or physical examination based on certain
criteria or profiles made by the Risk
Management Office of BOC.
Selectivity System – contains controls necessary
to classify the processing of declarations and
direct them to the appropriate processing
channels:
 GREEN – released without further
inspection;
 YELLOW – document check only; or
 RED – documentary check and physical
examination.
WHEN DOES SMUGGLING BEGINS?
Smuggling begins when there is importation
which did not enter through a customs office at a
port of entry.
Smuggling (Sec. 102, cmta)
 Refers to the fraudulent act of
importing any goods into the
Philippines, or the act of assisting in
receiving. Concealing, buying, selling
disposing or transporting such goods,
with full knowledge that the same has
been fraudulently imported, or the
fraudulent exportation of goods.
Example:
Toby, the owner of a store located in Binondo
and a seller of mobile phones (Iphone ) is a
regular purchaser of mobile phones of his friend
Bitoy from Quiapo. He noticed that it is twice
cheaper than that of phones which is sold at SM,
not knowing that the goods are smuggled goods.
His goods were then confiscated and seized by
the Bureau of Customs pursuant to the powers
granted under Sec. 224 for he cannot produce
proof of payment of import duties and taxes
after 15 days from demand of evidence. Can toby
make a defense that he doesn’t have knowledge
of how it is imported if he was caught by the
Bureau of Customs?
Technical smuggling
 Refers to the act of importing goods into
the country by means of fraudulent,
falsified or erroneous declaration of the
goods to its nature, kind, quality,
 quantity or weight, for the purpose of
reducing or avoiding payment of
prescribed taxes, duties and other
charges.
Outright smuggling
 Refers to an act of importing goods into
the country without complete customs
prescribed importation documents, or
without being cleared by customs or
other regulatory government agencies,
for the purpose of evading payment of
prescribed taxes, duties and other
government charges.
Methods of smuggling:
1. Using the body
2. Using the Baggage
3. Using the mailds through parcels
4. Using Freight cargo by concealment on
the article itself or the crates
5. Using containerized shipments
6. Undeclared articles by shipping more
than the quantity declared
7. Technical smuggling

Stages of smuggling

1. ATTEMPTED

2. FRUSTRATED

3. CONSUMMATED

FORMS OF SMUGGLING:

• LARGE-SCALE SMUGGLING- when acts

contrary to customs laws involve the
importation of goods or contraband with
a determinable value of at least Five
Million Pesos (Php 5,000,000.00)

• SMUGGLING COMMITTED BY A
SYNDICATE- Smuggling by a syndicate
shall be deemed to be committed when
carried out by a group of three (3) or
more persons conspiring with one
another in carrying out the unlawful act
of smuggling.