Plaintiff is a partnership organized and existing under the laws of Great Britain, with a resident attorney-in-fact in the Philippine Islands.

The defendant is a domestic  partnership doing business in the City of Manila, and it is alleged that it is represented in London, England,  by a duly  appointed agent and attorney-in-fact.

Plaintiff claims that  under a written contract executed about April 1,  1921, known in  the record as Exhibit A, it bought from the defendant 500  bales of Manila hemp grade J at 40  pounds less  1 per cent, equivalent, in Philippine currency, to P364.66, per ton of 20 cwt. net landed weight. That pursuant to the contract, on May 31,1921, the defendant  shipped  in  two  parcels from Manila  to London,  for delivery  to plaintiff,  the 500 bales of  Manila hemp grade JDC/J, freight  and f. p. a. insurance for the account of the defendant, which hemp upon being weighed in London, and  deducting the tare, as  provided for in the contract, amounted to 1182 cwt. 2 qtrs. 10 pounds equivalent to 59.13 tons of  20 cwt.  net  weight, and after deducting freight,  commission,  and insurance, as  the  contract  provides,  it  had an invoice value of  1872  pounds 6s 4d, equivalent to P17,241.48, Philippine currency.   That at the time of the shipment,  defendant drew  upon plaintiff for P18,417.27, which draft the plaintiff paid by means of a letter of credit,  thus leaving a balance  due and owing the plaintiff of P1,175.79.  That upon the arrival of the hemp in London, it  was found that it  was not in merchantable condition, and was not so when it  was shipped from Manila. Therefore,  arbitration was had  under  the provisions of clause 9 of the contract at a cost of P218.17 for the account of the defendant, which arbitration resulted in an allowance to plaintiff of a reduction in the price of P13,150.04, which arbitration and  its findings were approved and  accepted by the defendant.  That after the shipment, defendant did not,  without undue delay, provide plaintiff with  Government graders' certificates  for  the hemp, and by reason thereof, plaintiff was obliged to lighter and store 250 bales of it pending the arrival of the Government graders'  certificates at a  cost of  P135.37.   That by reason  of such acts, the defendant became indebted to  the plaintiff in the sum of P14,461.20, no part of which has been paid, except the sum of P11,687.87,  which was  the net value of 450 bales of Manila hemp  grade J shipped  by defendant to plaintiff during July, 1921, leaving a balance then  due and owing  from defendant to  plaintiff,  on  its first cause of action, of P2,539.09, for which demand has been made and payment refused.

Like allegations are made in a second cause of action, in which plaintiff  claims P722.53, and  in the third cause of action, for which it claims P3,526.71, and in the fourth cause of action  P3,673.09.

For  answer the defendant made a general and specific denial of all of the material allegations made in the complaint.

After the  evidence  was  taken upon  such issues, the lower court rendered judgment for the defendant, to which the plaintiff duly excepted  and filed a  motion for a new trial, which was overruled.

The plaintiff appeals and assigns  the following errors:

"I. The  trial court erred  in that,  after finding  that Messrs. H. E. Marchant and Francis  Adams, during all the times material to the issues in this case, had been agents of the defendant in London for the purpose of selling and disposing of its hemp, the nature, character, and scope of such agency not  appearing  to have been limited, the  trial court held that plaintiff  was  obliged  to show such agency to have  included within its scope matters  necessary and incidental to the selling and disposing of defendant's hemp in London.

"II.  The trial court erred" in holding that the plaintiff was  bound  to  show before the court what evidence  was before the arbitrators when they made up  the award;  that the action of the arbitrators was not binding upon the court and that the court  was not  bound to  assume that such action  was legal and  just.

"III. The trial court erred in finding, in its final decision, that plaintiff was a British  Corporation.

"IV. The trial  court erred in finding  in its final decision that it had sustained objections to certain portions of the deposition of the witness William Ernest Sibley, offered by plaintiff and couched in the following words:

" 'When the said  500 bales arrived  in London,  the plaintiffs  found that the hemp was not in sound, dry condition in accordance with the clause 9 of the said contract  (Exhibit W. E. S. 1).   The arbitration which was duly held, resulted  in  an award  being made by the arbitrators appointed by the plaintiffs  and defendants,  respectively, in the plaintiffs'  favor, whereby an allowance was  made to the plaintiffs  on the price  of the said 500 bales, &c.' B. E. 49.

"V.  The trial court erred in finding that  there was not sufficient  evidence  before the court to  sustain the allegations of plaintiff.

"VI. The trial court erred  in deciding the issues in the case in favor of the defendant and against the plaintiff."

JOHNS, J.:

This action is founded upon an alleged written contract which the plaintiff claims was executed in London on April 1, 1921, by and between it and the defendant, acting by and through its authorized agent, and an alleged copy of which is in the record, and purports to have been executed by H. Marchant, now deceased, who was then in London, and who, the defendant admits in its own testimony, was at that time the London agent of the defendant in the selling of its hemp.

In the very nature of things, an agent cannot sell hemp in a foreign country without making some kind of a contract, and if he had power to sell, it would carry with it the authority to make and enter into  the usual and customary contract for its sale.

As we analyze  the  evidence,  Marchant was the London agent of the defendant, and in the ordinary course of business, executed the contract known in the record as Exhibit A, for and on behalf of the defendant, as its agent,  and as its act and deed, and, for such reason, the defendant is bound by the contract.  This is confirmed by the further fact that the defendant undertook to carry out and perform the terms and provisions of the contract, and, by and under its terms, to ship and deliver the hemp, drew the draft, and took and accepted the money for its payment.

We are clearly  of the opinion that the contract in question is valid and  binding  upon the defendant,  and that Marchant, as the  agent of the defendant, not only had the authority to  make and enter into it for and  on behalf of the defendant,  but as a matter of fact the contract was legally ratified  and approved by the subsequent acts  and conduct of the defendant.   It is very apparent that the contract was executed in the ordinary course of business, and that in executing it, Marchant was acting within the scope of his  authority as  the agent  of the defendant.  It will also be noted that under its terms and provisions, the defendant was to deliver the hemp  in London.

Clause 18 of the contract provides:

"Arbitration. Any dispute arising out of this Contract, or in any way relating to it or to its construction or fulfilment, shall be referred to Arbitration in accordance with the  By-Laws  of the Manila  Hemp Association  endorsed hereon, which  shall  be deemed  to form  part of this Contract."

Clause 4 of the By-Laws of the Manila Hemp Association provides:

"All questions and matters referred to arbitration pursuant to the annexed contract shall be referred to the arbitration of two Members or qualified Nominees or Associate Members  of the  Manila  Hemp Association, buyer and seller each nominating one, and in  case such arbitrators are unable to  agree,  then  to an umpire  who shall be  appointed by the said arbitrators; but in the event of their not appointing an umpire before proceeding with the reference and within one week of  the  date of their own appointment, then to  an umpire  who shall be appointed, at the request of either of the parties to  the  dispute, by  the Chairman,  Vice-Chairman or acting Chairman for the time being of the Manila Hemp Association."

Provision is  then  made for  the manner of proceeding should either party fail to appoint an  arbitrator, and  for an appeal on certain  specified conditions.

Clause 5 of the By-Laws provides:

"Awards by Arbitrators shall be made  out on tho official form issued by the  Association, and shall be valid, notwithstanding both arbitrators have not signed the same at the same time and in  the presence  of each other." And clause 8 provides that:

"Appeals to the Committee of the Association may be heard before a meeting of all or any four  or more of the Members of such Committee."

Clause 11 provides:

"The evidence and proceedings upon arbitrations or appeals may be taken in a mercantile way, without regarding legal technicalities respecting evidence."

Clause 12 provides:

"Awards  of the  Committee on  appeals  shall be signed either by the Chairman, Vice-Chairman, or acting Chairman of the Association for the time being."

Plaintiff alleges that on  the  arrival in  London of the hemp in question, it was not in sound merchantable condition, and that it was not of the grade specified in the contract.  For  such reason, it demanded an arbitration under the provisions of the contract.  That an arbitration was had, and that it made findings as alleged in the complaint, and that the defendant, through its London agent, accepted and ratified the award of the arbitrators, and in legal effect, plaintiff seeks to recover from the defendant on the findings and the award made by the arbitrators.

It is clear that under the contract, and  upon the  proof in the record, plaintiff was legally entitled to an  arbitration. It is equally clear that, if an arbitration was had and held in the manner  and form provided  by the contract, and that the arbitrators made findings, and based thereon made the award, as plaintiff alleges, plaintiff in this action would be entitled to recover from the defendant the amount found due and owing by the arbitrators, subject only to the legal right, and under a proper plea, of the defendant to defend upon  the ground of fraud or mistake in the arbitration. But in an action to recover founded upon the award of the arbitrators,  the  plaintiff must both allege and prove, by competent evidence,  that the defendant had notice of the motion of the plaintiff to arbitrate;  that the  arbitrators were selected in the manner and form as provided for  in the By-Laws of  the Manila Hemp Association;  that the arbitrators met and performed their duties,  and made and presented their findings, based upon which,  they made and signed their award; and that the defendant was either legally  a party to the arbitration or  that  it ratified and approved the arbitration after it was made.  Upon all of such questions, there is a failure of proof.  There is no competent evidence that arbitrators were  ever selected, as the By-Laws provides, who they were, or that they ever met in the discharge of their duties, or  of the time and place  of  their meeting, or who was  present.  Neither is there any  competent evidence that  the  arbitrators ever made or  signed any findings.   Neither is there any competent evidence that the defendant was ever notified of the proposed arbitration, or that it took part in it, or that it ever ratified or approved the  alleged  findings.  The proof of an arbitration should conform to the  spirit and intent of the By-Laws of the Manila  Hemp Association.

Under  the By-Laws, for certain specified  reasons, either party has a legal right  to an  arbitration,  and each person has a legal right to select his  own arbitrator,  and it is the duty of the person desiring an arbitration to notify the adverse party, so that he can select his own arbitrator and be present or represented in the arbitration, if  he sees fit to do so.  After  the arbitrators have been  selected and a hearing is held and the investigation made, it is then the duty of the arbitrators to make  their findings, based upon  Which they make their award, which should be in writing.  The only competent  evidence of all of such matters is the finding and  award  which is made  by the arbitrators.  In other words, where a person  seeks  to recover a judgment upon the findings and award of arbitrators, he must  both allege and prove that all of the conditions precedent, and that the necessary legal  steps  were taken to have  an  arbitration, and submit to the  court  either the original or an authenticated copy of  the  findings  and the award of the arbitrators, or in the absence of such preliminary proof, he  must  both  allege and  prove  that the findings and award of  the arbitrators have been  ratified and approved by the adverse party.

There  is no evidence of any one of those  facts in the record.   It is true that  the witness Sibley on behalf of the plaintiff testified that:  "The defendants, by  their duly authorized attorney,  Francis Adams, accepted and approved of the award."  That is not proof of any fact.  It is nothing more than the legal opinion of the witness.  The question as to whether the defendant "accepted and approved of the award" is one for the court to determine from the actual facts as to how, when and in what manner the  defendant "accepted and approved of the award."  What was said and done, by whom it was said, and when and to whom it was  said,  and if it was in writing, the writing should be produced.   Upon the proof of the actual facts, it would then be for the court, and not for the witness, to say whether or not the defendant  "accepted and approved of the award."

In the final analysis, where, as in this case, the plaintiff seeks to recover upon  the findings and the award of arbitrators,  before it can recover, it must  both  allege and prove a substantial compliance with all of the material provisions of the By-Laws of the Manila Hemp Association, and  without such  proof, it is not entitled to a judgment upon the findings and award of the arbitrators.

If it be  a fact that the alleged findings and award of the arbitrators was made in a substantial compliance with such "By-Laws," and competent proof of that fact is  submitted to the court, plaintiff would then be entitled to judgment as prayed for in its complaint.  In such a case, the award of the arbitrators could  only be modified or set aside for a mistake apparent  on the face of the record, or upon the ground of fraud in the arbitration, both of which must be alleged in a proper plea and proven as any other fact, which could not be done under a general denial.

Upon a  mistake of fact, Corpus Juris, volume 5, p. 182, says:

  "Although an award cannot be avoided on account of a wrong conclusion, drawn by the arbitrators from the facts before them, which conclusion amounts to a mere mistake of judgment, a  plain misconception of the facts submitted, by reason of which it is made to appear that the arbitrators must have rendered a different decision had they proceeded in view of the true state of facts, about the existence of which  there could be no reasonable question, may constitute a  ground for avoiding the award.  *  *   * "

Upon the question of fraud, on page 187, the author says:

"It is ground for setting aside an award that it was obtained  by the fraud, imposition,  or other undue means employed  by a party to the arbitration, or his agent,   *  *  *" And again on page 189:

"Fraud, corruption, or misconduct of the arbitrators is ground for setting aside the award, especially where one of the  parties participates therein.  And, for obvious reasons, it has been held that the  rule applies, although the submission provides that the award  shall not be subject to exception or appeal, or shall be final or conclusive.  *  * * "

As to the operation and effect of an award on the merits, the same author, on page 160,  says:

"As  between the parties and their privies, an award is entitled to that respect which  is due to the judgment of a court of last resort.   It is in fact a  final adjudication by a court of the parties' own choice, and, until impeached upon sufficient grounds  in an  appropriate proceeding, an award  which is regular on its face  is conclusive  upon the merits of the controversy submitted, and it is not for the courts  to otherwise inquire whether the determination was right or wrong, for the purpose of interfering with it.   The court possesses no general supervisory power over awards, and if  arbitrators keep within their jurisdiction their award will not be set aside because they have erred in judgment either  upon the facts or the law.  *  *  *   It is the general rule that a valid award operates to merge and extinguish  all  claims embraced in the  submission.  Thereafter the submission and award furnish the only basis  by which the rights of  the parties can be determined,  *   *   *."

This case  involves the application and  construction of the By-Laws  of the Manila  Hemp  Association,  is important to the hemp industry, and is one of first impression in this court.

In the interest of justice, and so that the case may be tried and decided upon its actual merits, the judgment of the lower court is reversed,  and the case is remanded, with leave to the plaintiff to submit competent evidence of the arbitration and the findings and award of the arbitrators, and  that  the arbitration  was made in a substantial compliance with the By-Laws of the Manila Hemp Association, and with leave to the defendant, in its discretion, to amend its answer, and to both allege and prove that the arbitration was fraudulent or that the arbitrators made a mistake, which  is apparent on the face of the record.   Neither party to recover costs.  So ordered.

Avanceña, C. J., Street, Malcolm, Villamor, Ostrand, Romualdez, and Villa-Real, JJ.,  concur.