Facts:

The case centers on A. Chan Linte, the plaintiff and appellant, and three fire insurance companies: Law Union and Rock Insurance Co., Ltd., Tokyo Marine Insurance Co., Ltd., and The Chine Fire Insurance Co., Ltd., all defendants and appellees. A. Chan Linte was a resident adult of the Philippine Islands and owned a considerable amount of hemp, specifically 30,992.50 kilos, stored at his warehouse in Calbayog, Province of Samar. On March 25, 1916, he approached Law Union and Rock Insurance Co., Ltd., to insure the hemp against fire damage for P5,000. They issued policy No. 1,787,379, which was set to remain in effect until March 22, 1917, and was later renewed until March 22, 1919. Tragically, a fire destroyed the hemp, which was valued at P21,296.27. Upon reporting the loss to the insurance companies, the plaintiff demanded payment, but the insurers denied his claim.

Following his initial complaint, the defendants requested arbitration, as stipulated in the insurance policy. The

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Facts:

Parties and Insurance Arrangement

• Plaintiff A. Chan Linte, an adult resident of the Philippine Islands, claimed ownership of 30,992.50 kilos of hemp stored in a warehouse in Calbayog, Samar.
• Defendant insurance companies – Law Union and Rock Insurance Co., Ltd., Tokyo Marine Insurance Co., Ltd., and The Chine Fire Insurance Co., Ltd. – were duly licensed to conduct fire insurance business in the Philippines.
• On March 25, 1916, the plaintiff requested the defendant Law Union and Rock Insurance Co., Ltd. to insure his hemp against fire risk for P5,000, resulting in the issuance of policy No. 1,787,379, effective until March 22, 1917, which was renewed successively through March 22, 1919.
• The plaintiff paid a premium of P87.50 in consideration for the policy.

The Fire Incident and the Claim

• During the life of the policy, the hemp was destroyed by fire at the insured bodega.
• The plaintiff asserted that the total value of the lost hemp was P21,296.27.
• He promptly notified the defendant of the loss and demanded the full insured amount of P5,000, in compliance with all policy conditions.

Arbitration Provisions and Proceedings

• The insurance policies of Law Union and Rock Insurance Co., Ltd. and The Chine Fire Insurance Co., Ltd. contained arbitration clauses providing that any dispute regarding loss calculations should be referred to arbitration before any suit could be maintained.
• The Tokyo Marine Insurance policy contained a clause stipulating that differences regarding claims for fire loss be submitted to arbitrators “whose award, or that of their umpire, shall be conclusive.”
• Although the plaintiff initially sought recovery in court, the defendant requested arbitration in line with the policy provisions.
• By mutual consent, both parties agreed to appoint Frank B. Ingersoll as the sole arbitrator.
• The arbitrator, after reviewing the evidence:
• Issued his first finding on December 28, 1918, determining that only seven bales of hemp (of the grade “ovillo”) had been destroyed.
• Delivered a supplemental report on July 8, 1919, assigning a value of P608.34 to the destroyed hemp.
• The policies further provided that an arbitration award was a condition precedent to any suit arising under the contracts, effectively mandating arbitration before any court action.

Subsequent Court Action and Contentions

• Following arbitration and the issuance of the supplemental report, the trial court rendered judgment against each defendant for P202.78.
• The plaintiff appealed, contending that:
• The arbitration clauses were null and void as contrary to public policy.
• The arbitrator’s December 1918 decision was final in that it did not determine the value of the loss, and the supplemental report later was beyond his authority.
• The court should have awarded the full relief as prayed for in his complaint.
• The defendant argued that:
• The arbitration clauses were valid and enforceable under the terms of the contracts.
• The plaintiff’s voluntary submission to arbitration estopped him from disputing the award or its supplemental findings.
• Liability under the insurance policies should be shared equally among the three insurers, each having offered to pay one-third of the loss.

Issue:

• Whether the arbitration clause contained in the insurance policies is valid and enforceable despite the plaintiff’s contention that it is against public policy.
• Whether the plaintiff, by voluntarily agreeing to arbitration after initiating court proceedings, is estopped from challenging the arbitrator’s award.
• Whether the supplemental report rendered by the arbitrator, completing an unfinished determination of the loss, is valid and binding on the plaintiff.
• Whether the proper remedy for the plaintiff should be based on the findings of the arbitrator or if the court had independent jurisdiction to award a different sum based on the total alleged loss.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)