PART 1.

Explain the conditions for the examination of imported goods of CMTA, Sec. 420 (a- e)

Physical examination of the goods shall be conducted when:

(a) it is directed by the Commissioner on account of a derogatory information;

(b) the goods are subject to an Alert Order issued by competent authority;

(c) the goods are electronically selected for physical examination;

(d) there are issues and controversies surrounding the goods declaration and the import clearance process; or

(e) the importer or declarant requests for the examination of the goods.The Commissioner may exempt from physical examination the goods of authorized economic operators or of those provided for under any existing trade facilitation program of the Bureau.

Physical examination, when required, shall be conducted in an expeditious manner.

PART 2.

Who are the parties in the bill of lading? Identify their role.

On July 19, 1990, Cardia Limited (CARDIA) shipped on board the vessel M/V Pakarti Tiga at Shanghai Port China, 8, 260 metric tons or 165,200 bags of Grey Portland Cement to be discharged at the Port of Manila and delivered to its consignee, Heindrich Trading Corp. (HEINDRICH). The subject shipment was insured with respondents, FGU Insurance Corp. (FGU) and Pioneer Insurance and Surety Corp. (PIONEER), against all risks under Marine Open Policy No. 062890275 for the amount of P18,048,421.00. P.T. Pakarti Tata (PAKARTI) owns the subject vessel that it chartered to Shinwa Kaiun Kaisha Ltd. (SHINWA). Representing itself as owner of the vessel, SHINWA entered into a charter party contract with Sky International, Inc. (SKY), an agent of Kee Yeh Maritime Co. (KEE YEH), which further chartered it to Regency Express Lines S.A. (REGENCY). Thus, it was REGENCY that directly dealt with consignee HEINDRICH, and accordingly, issued Clean Bill of Lading. On July 23, 1990, the vessel arrived at the Port of Manila and the shipment was discharged. However, upon inspection of HEINDRICH and petitioner Ace Navigation Co., Inc. (ACENAV), agent of CARDIA, it was found that out of the 165,200 bags of cement, 43,905 bags were in bad order and condition. Unable to collect the sustained damages in the amount of P1,423,454.60 from the shipper, CARDIA, and the charterer, REGENCY, the respondents, as co-insurers of the cargo, each paid the consignee, HEINDRICH, the amounts of P427,036.40 and P284,690.94, respectively, and consequently became subrogated to all the rights and causes of action accruing to HEINDRICH. On August 8, 1991, respondents filed a complaint for damages against the following defendants: "REGENCY EXPRESS LINES, S.A./UNKNOWN CHARTERER OF THE VESSEL 'PAKARTI TIGA'/UNKNOWN OWNER and/or DEMIFE (sic) CHARTERER OF THE VESSEL 'PAKARTI TIGA', SKY INTERNATIONAL, INC. and/or ACE NAVIGATION COMPANY, INC." Maintaining that it was not a party to the bill of lading, ACENAV asserts that it cannot be held liable for the damages sought to be collected by the respondents. It also alleged that since its principal, CARDIA, was not impleaded as a party-defendant/respondent in the instant suit, no liability can therefore attach to it as a mere agent.