Korea Technologies CASE DIGEST vs. Lerma - Civil Procedure - Commencement of action

Korea Technologies vs. Lerma (2008)

Facts: In 1997, KT and Pacific General Steel PGSMC executed a Contract whereby KT would set up an LPG Cylinder Manufacturing Plant for PG. PG unilaterally cancelled the contract on the ground that KT had altered the quantity and lowered the quality of the machineries and equipment it delivered.

KT opposed that PGSMC could not unilaterally rescind their contract nor dismantle and transfer the machineries and equipment on mere imagined violations. KT then filed a Complaint for Specific Performance before the RTC. PG 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. KT filed a motion to dismiss respondent’s counterclaims arguing that when PG 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.

RTC dismissed the KT’s motion to dismiss PG’s counterclaims as these counterclaims fell within the requisites of compulsory counterclaims.

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

Held: NO. The counterclaims of PG were incorporated in its Answer with Compulsory Counterclaim in accordance with Rules of Civil Procedure. 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, PG’s Answer is not an initiatory pleading which requires a certification against forum shopping under the Rules. It is a responsive pleading, hence, RTC did not commit reversible error in denying KT’s motion to dismiss PGSMC’s compulsory counterclaims. At the time PG filed its Answer incorporating its counterclaims against KT, it was not liable to pay filing fees for said counterclaims being compulsory in nature. However, 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.