Korea Technologies Co., Ltd. vs. Hon. Alberto Lerma

G.R. No. 143581

Petitioner Korean Technologies Co., Inc. (KOGIES) and respondent Pacific General Steel Manufacturing Inc. (PGSMC) executed a Contract whereby KOGIES would set up an LPG Cylinder Manufacturing Plant for respondent.

PGSMC cancelled the contract on the ground that KOGIES had altered the quantity and lowered the quality of the machineries and equipment it delivered. KOGIES opposed informing the latter that PGSMC could not unilaterally rescind their contract nor dismantle and transfer the machineries and equipment on mere imagined violations by petitioner.

Petitioner then instituted an Application for Arbitration before the Korean Commercial Arbitration Board (KCAB) in Seoul, Korea pursuant to Art. 15 of the Contract as amended, and filed an action for Specific Performance against respondent before the RTC.

Private respondent filed its Answer with Compulsory Counterclaim asserting that it had the full right to dismantle and transfer the machineries and equipment because it had paid for them in full as stipulated in the contract. KOGIES filed a motion to dismiss respondent’s counterclaims arguing that when PGSMC filed the counterclaims, it should have paid docket fees and filed a certificate of non-forum shopping, and that its failure to do so was a fatal defect.

The RTC dismissed the petitioner’s motion to dismiss respondent’s counterclaims as these counterclaims fell within the requisites of compulsory counterclaims.

Whether payment of docket fees and certificate of non-forum shopping were required in the respondent’s Answer with counterclaim?

NO. The counterclaims of PGSMC were incorporated in its Answer with Compulsory Counterclaim in accordance with Section 8 of Rule 11, 1997 Revised Rules of Civil Procedure, the rule that was effective at the time the Answer with Counterclaim was filed. Sec. 8 on existing counterclaim or cross-claim states, “A compulsory counterclaim or a cross-claim that a defending party has at the time he files his answer shall be contained therein.”

As to the failure to submit a certificate of forum shopping, PGSMC’s Answer is not an initiatory pleading which requires a certification against forum shopping under Sec. 524 of Rule 7, 1997 Revised Rules of Civil Procedure. It is a responsive pleading, hence, the courts a quo did not commit reversible error in denying KOGIES’ motion to dismiss PGSMC’s compulsory counterclaims. At the time PGSMC filed its Answer incorporating its counterclaims against KOGIES, it was not liable to pay filing fees for said counterclaims being compulsory in nature.

NOTE: Effective August 16, 2004 under Sec. 7, Rule 141, as amended by A.M. No. 04-2-04-SC, docket fees are now required to be paid in compulsory counterclaim or cross-claims.

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