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 (principal) and Fidelity (surety) 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 Supreme Court’s Second Division lacked jurisdiction because the “amount in controversy” exceeded P10,000, which under the Administrative Code of 1917 required a hearing by the full court (en banc).
5. The full court denied the motion for reconsideration. After the judgment was certified to the CFI and an execution order was issued by Sheriff Jose Casimiro, Macondray and Fidelity filed this original petition for Prohibition with the Supreme Court to stop the execution. They argued that the Second Division’s judgment was null and void for lack of jurisdiction.
6. The respondents demurred to the petition.

ISSUE

Whether the Supreme Court’s Second Division had jurisdiction to decide the appealed case, considering that the total judgment amount (principal, interest, and costs) eventually exceeded P10,000.

RULING

NO, the Second Division validly exercised jurisdiction. The petition for prohibition is dismissed.

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 in division) is assessed based on the obligation as stated in the complaint at the time it is filed in the trial court, not the amount that may accumulate by the time of the Supreme Court’s decision.

2. Exclusion of Costs: Costs are not included in calculating the jurisdictional amount. The incidence and amount of costs are contingent on the outcome of the litigation and are unknown at the filing of the complaint.

3. Inclusion of Interest Claimed in the Complaint: While the Administrative Code of 1917 was silent on whether interest should be included, the Court ruled that interest specifically claimed in the complaint should be added to the principal to determine the “amount in controversy.” At the time the complaint was filed, the amount claimed was P10,775.30 (principal plus interest from that date). This total was less than P10,000 over the jurisdictional threshold requiring an en banc hearing.

4. Jurisdiction, Once Attached, is Not Lost: The Court held that jurisdiction, once properly acquired by a division of the Supreme Court upon appeal, is not ousted merely because subsequent accrual of interest increases the total judgment amount beyond P10,000. A case cannot be within a division’s competency one day and beyond it the next.

5. The Cross-Complaint Did Not Alter Jurisdiction: The cross-complaint filed by Macondray was merely defensive and ancillary to the main action. It did not state an independent cause of action for an amount exceeding P10,000. Furthermore, the appellants failed to comply with the required procedure (submitting an affidavit under the Court’s rules) to show that the cross-complaint itself involved an amount exceeding the jurisdictional limit, which would have warranted en banc consideration.

CONCLUSION: The demurrer was sustained. The Second Division had validly acquired jurisdiction over the appeal. The defect in the petition for prohibition was incurable, leading to its dismissal with costs against the petitioners.