G.R. No. 29604 , July 21, 1928
MACONDRAY & COMPANY, INC., and FIDELITY & SURETY COMPANY OF THE PHILIPPINE ISLANDS, petitioners, vs. THE YANGTSZE INSURANCE ASSN., LTD., and JOSE CASIMIRO, as Sheriff, ex officio, of the City of Manila, respondents.

FACTS

1. Yangtsze Insurance Association, Ltd. filed a complaint in the Court of First Instance (CFI) of Manila against Macondray & Company, Inc. and Fidelity & Surety Company to recover P10,775.30, plus interest from the filing date and costs.
2. The CFI rendered judgment in favor of Yangtsze, ordering Macondray and Fidelity to pay P7,737.03 with legal interest from December 9, 1922, and costs. The CFI also dismissed Macondray’s cross-complaint.
3. The defendants appealed to the Supreme Court. The case was heard and decided by the Second Division, which affirmed the CFI judgment in full.
4. The defendants filed a motion for reconsideration, arguing for the first time that the amount in controversy exceeded P10,000, thus placing it beyond the jurisdiction of a Division of the Supreme Court under Section 138 of the Administrative Code of 1917. The full court denied the motion.
5. After the judgment became final and an execution was issued by the sheriff, Macondray and Fidelity filed this original petition for Prohibition with the Supreme Court (en banc). They sought to enjoin the execution, contending that the Second Division’s judgment was null and void for lack of jurisdiction. They argued that the total judgment amount (principal, interest, and costs) exceeded P10,000, and that the cross-complaint also involved an amount over P10,000.
6. The respondents demurred to the petition.

ISSUE

Was the Second Division of the Supreme Court without jurisdiction to decide the main appeal in *Yangtsze Insurance Assn., Ltd. vs. Macondray & Co., et al.* (G.R. No. 28103) because the “amount in controversy” exceeded P10,000, thereby requiring adjudication by the Supreme Court en banc under Section 138 of the Administrative Code of 1917?

RULING

NO. The Second Division validly exercised jurisdiction over the appeal.

1. Jurisdiction is Determined at the Commencement of the Action: The “amount in controversy” for determining the Supreme Court’s jurisdiction (whether en banc or division) is ascertained at the time the complaint is filed in the court of origin, not at the time of the Supreme Court’s decision. The amount claimed in the complaint was P10,775.30.

2. Interest and Costs are Excluded from the Jurisdictional Amount:
* Costs are never included in calculating the jurisdictional amount, as they are incidental and their amount is unknown until the litigation ends.
* Interest is also excluded. While the statute (Sec. 138) is silent on interest, the Court noted that laws defining jurisdiction for lower courts (CFI and justice of the peace courts) expressly exclude interest. The Court adopted the same principle for determining its own jurisdiction. Furthermore, it has been the Court’s consistent practice to exclude interest for this purpose.

3. Application to the Case: The principal amount claimed in the complaint was P10,775.30. Excluding interest and costs, this amount is what determines jurisdiction. Therefore, the “amount in controversy” was not in excess of P10,000. The fact that accrued interest later increased the total judgment award beyond P10,000 is irrelevant, as jurisdiction, once vested, is not lost by subsequent events.

4. The Cross-Complaint Does Not Alter Jurisdiction: The petitioners’ argument that their cross-complaint involved an amount over P10,000 is untenable. The cross-complaint was merely defensive (seeking to nullify the obligation sued upon) and did not state an independent cause of action for a sum exceeding the court’s jurisdiction. Moreover, the CFI’s judgment of dismissal did not show that the cross-complaint involved over P10,000. Under the rules, it was the appellants’ (petitioners’) burden to file an affidavit proving such excess to invoke en banc jurisdiction, which they failed to do.

CONCLUSION: The demurrer was sustained. The petition for prohibition was dismissed for lack of merit. The Second Division’s judgment was valid and enforceable.