Azolla Farms v.

CA 142
GR No. 138085, 11 November 2014, Austria-Martinez, J.
Chris N • Law 125 – Civil Procedure
Topic: Amended and Supplemental Pleadings – Amendments to conform to evidence

Petitioners-plaintiffs: Azolla Farms; Azolla Pres. Yuseco

Respondents-defendant: Court of Appeals; Savings Bank
Nature of the case: Appeal by certiorari (Rule 45)
Original action: Complaint for damages

After defendant rested its case, plaintiff filed a Motion to Admit Amended Complaint to conform
the issues to the evidence presented by defendants. Trial court granted; CA reversed. SC held that
the amendment was pursuant to Sec. 5, Rule 10, which gives the trial court discretion to allow
amendments of pleadings to conform to the evidence presented, as if they had been pleaded. If
objection to the amendment is made, the party objecting must satisfy the court that the admission
would prejudice him.

FACTS
 Azolla Farms obtained loans from Savings Bank for its participation in the National
Azolla Production Program.
o Azolla President Yuseco executed 3 promissory notes, which were secured by
mortgages over Yuseco’s residential house, as well as his shares of stock in
 Azolla Farms.
 The Azolla project collapsed. Azolla blamed Savings Bank for the delay in the release of
 the money.
  Azolla filed a complaint for damages against Savings Bank.
 During trial, defendant Savings Bank presented its witness Venturina, who testified in
relation to the invalidity and illegality of the foreclosure on Yuseco’s real property, as well
 as of the incompleteness and invalidity of the consideration of the said mortgage.
 After defendant Savings Bank rested its case, plaintiff Azolla filed a Motion to Admit
Amended Complaint. The amendment added the following allegations:
o That defendant Bank, in unilaterally reducing the agreed amount, and in unreasonably
delaying the release of the loan, novated the promissory notes and the real
 mortgages.
  Trial court admitted the amended complaint.
 CA reversed.

ISSUES & HOLDING

 Should the amended complaint be amended? – Yes, it should be admitted.

RATIO
 Amended complaint should be admitted, pursuant to Sec. 5, Rule 10.
 o Sec. 5, Rule 10 envisions 2 scenarios:
 (1) When evidence is introduced on an issue not alleged in the pleadings,
 and no objection was interjected; and
 (2) When evidence is offered on an issue not alleged in the pleadings but
an objection was interpolated.
o In cases where an objection is made, the court may nevertheless admit the
evidence where the adverse party fails to satisfy the court that the admission
would prejudice him in maintaining his defense. The court may grant him
continuance to enable him to meet the new situation.
o In this case, it was Azolla’s belief that Savings Bank’s evidence justified the
amendment. The trial court agreed. On this score, it should be noted that courts are
given the discretion to allow amendments to pleadings to conform to the evidence.
o In fact, in Bank of America v American Realty: (note: this seems to be obiter,
because in Azolla, there was in fact an amendment)
 “If the facts shown entitled plaintiff to relief other than that asked for, no
amendment to the complaint was necessary, especially where
 defendant had himself raised the issue.”
 “Amendment is also unnecessary when only clerical error or non
 substantial matters are involved.”
 “Rule on amendment need not be applied rigidly, particularly where
no surprise or prejudice is caused.”

DISPOSITIVE
Admit amendment.