G.R. No. 195176 - The Insular Life Assurance Co., Ltd. vs. Khu

A special civil action for certiorari was filed by Metropolitan Bank and Trust Company (Metrobank), acting as successor-in-interest of Asian Bank Corporation, to challenge resolutions rendered by the Sandiganbayan in Civil Case No. 0004.
The challenged resolutions, dated June 25, 2004, and July 13, 2005, granted the Republic of the Philippines a motion for separate trial regarding its claim against Asian Bank.

On July 17, 1987, the Republic initiated a complaint in the Sandiganbayan for reversion, reconveyance, restitution, accounting, and damages against several defendants, including the Marcoses and their associates, aimed at recovering allegedly ill-gotten wealth.
Among the assets involved were two parcels of commercial land located in Quezon City, originally owned by Spouses Andres V. Genito, Jr. and Ludivina L. Genito, and covered by specific Transfer Certificates of Title.

On February 5, 2001, the Republic moved to amend its complaint to implead Asian Bank as an additional defendant, following Asian Bank’s assertion of ownership based on separate titles and possession through writ of possession issued by the RTC.
As evidence was being presented against the original defendants, the Republic moved to have Asian Bank undergo a separate trial.
Asian Bank (later Metrobank) argued that it should be allowed to confront and test the testimony and documentary exhibits already adduced against the original defendants before being tried separately, lest its right to a fair trial be compromised.

The Republic maintained that the cause of action against Asian Bank was distinct from that against the other defendants, emphasizing the issue of whether Asian Bank had actual or constructive knowledge regarding the properties being under recovery.
Asian Bank countered that the issue of its alleged bad faith was intimately tied to the overall question of whether the properties constituted ill-gotten wealth and that a separate trial would deprive it of the opportunity to rebut prior evidence.
On June 25, 2004, the Sandiganbayan granted the Republic’s motion for separate trial against Asian Bank, reasoning that the issue was distinct and that the later inclusion of Asian Bank did not necessitate the revisiting of the evidence already presented.
The subsequent motion for reconsideration by Asian Bank was denied in a resolution dated July 13, 2005.

Metrobank contended that the ordering of a separate trial against it would deprive it of due process, as it would be compelled to address evidence already presented without the opportunity to test or challenge it.
It also argued that the evidence relevant to Asian Bank’s bad faith was closely linked to the evidence concerning the original defendants and that a separate trial would unfairly prejudice its defenses regarding its title and ownership.
Metrobank further challenged the jurisdiction of the Sandiganbayan over its claim, asserting that as an innocent purchaser for value, it should not be subjected to a separate trial predicated on issues that did not directly involve its conduct in the accumulation of wealth.

The Republic advanced that the Sandiganbayan had exclusive original jurisdiction over cases involving the recovery of ill-gotten wealth under Executive Orders and relevant statutes.
Despite not alleging that Asian Bank was directly involved in the accumulation of ill-gotten wealth, the amended complaint imputed to it a cause of action based on bad faith in acquiring properties subject to sequestration and custodial constraints.
The issue on jurisdiction became a focal point due to the incidental nature of Metrobank’s claim in relation to the ill-gotten wealth of the original defendants, with the Sandiganbayan asserting authority over all such interrelated matters.

Whether the Sandiganbayan erred in granting a separate trial against Asian Bank (Metrobank) considering that doing so would infringe upon its right to be heard and confront evidence already adduced against the original defendants.
Whether holding the separate trial effectively deprived Metrobank of due process by isolating issues that were intrinsically connected to the main cause of action involving the recovery of ill-gotten wealth.

Whether the only issue with respect to Asian Bank should be confined to ascertaining if there was evidence to show that it acquired the properties in bad faith.
Whether the determination of the character of the properties as ill-gotten wealth, central to the proceedings against the other defendants, should also encompass the trial against Asian Bank.

Whether the Court properly exercised jurisdiction over the claim against Asian Bank, given that Metrobank contends it was merely a transferee in good faith and should not fall within the ambit of cases involving ill-gotten wealth.
Whether the Sandiganbayan’s exclusive original jurisdiction extends to both the principal cause of action and incidental or related claims, including that against Asian Bank.