GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), PETITIONER, VS. THE HONORABLE SANDIGANBAYAN (SECOND DIVISION), PHILIPPINE VILLAGE HOTEL, INC. (PVHI), REBECCO E. PANLILIO, AND HONORA…

On June 1, 1988, the Government Service Insurance System (GSIS,
for brevity), filed this petition for certiorari under Rule 65 of the
Revised Rules of Court praying
for injunctive relief to stop the public respondent, the Sandiganbayan,
from enforcing a temporary restraining order (TRO), dated May 15, 1988, issued
by that court, directing the GSIS “to cease and desist from proceeding with
the scheduled foreclosure sale of real estate and personal properties owned by
the Philippine Village Hotel,
Inc. on May 25, 1988 and on June 1, 1988.”^[1]

The records show that on September 18, 1972, the Philippine
Village Hotel, Inc. (PVHI, for short) obtained a loan from the GSIS in the sum
of P22 million, “which was increased to P30 million plus P6.5
million.”^[2]
As security therefor, PVHI delivered to GSIS certain
“machineries, equipment, vehicles, furnitures
(sic) and fixtures, etc.”^[3]
by way of real estate and chattel mortgages.

On June 6, 1986,
the Philippine Commission on Good Government (PCGG, for short) issued a writ of
sequestration by virtue of which the Commission levied on “all assets, properties, records and documents”^[4] of the PVHI. 
On July 23, 1987, the Republic of the Philippines commenced in the Sandiganbayan
an action for reconveyance and damages, among other
things, against inter alia, PVHI President Rebecco Panlilio,
and his wife, Erlinda Panlilio,
docketed as Civil Case No. 0014 (PCGG Case No. 0015).

On April 23, 1987,
the GSIS executed separate applications for extrajudicial foreclosure of real
property and chattel mortgages securing PVHI’s abovestated obligation,
with the city sheriff of Pasay City.  On
the same date, then PCGG Secretary Ramon Diaz forwarded to Feliciano Belmonte, Jr., GSIS President and General Manager, a
letter, clearing foreclosure.^[5]

On May 24, 1988,
Rebecco Panlilio filed a
motion to enjoin foreclosure with the Sandiganbayan,
on the ground, primarily, that the properties subject of foreclosure were in
the custody of the “Anti-Graft Court”,
and allegedly, beyond the control of PVHI’s
creditors.

On May 15, 1988, the Sandiganbayan issued its challenged resolution.

Hence, the instant petition.

Pending further proceedings, the Sandiganbayan, on July 19, 1988, issued a resolution,
denying Panlilio’s motion to enjoin foreclosure and
dissolving the TRO of May 15, 1988.  The Sandiganbayan
relied on the PCGG’s clearance, dated April
23, 1987, giving the
GSIS the go-signal to pursue foreclosure.

As a consequence thereof, the GSIS scheduled foreclosure on August 25, 1988.

On August 19, 1988,
however, the PVHI filed a complaint docketed as Civil Case No. 88-45876 of the
Regional Trial Court of Manila (Sergio
Mabunay, presiding judge, Branch 24, the other public
respondent herein) alleging, in the main,
that its mortgage obligations to the GSIS had been extinguished
and that accordingly, foreclosure was unwarranted.

On August 24, 1988,
Judge Mabunay issued a temporary restraining order
(TRO).

Promptly, the GSIS filed with the Court a supplemental petition
alleging that the judge, in issuing a temporary restraining order (TRO), had
gravely abused his discretion.

On October 11, 1988,
Judge Mabunay issued a writ of preliminary
injunction.

On the same date, the Court issued a temporary restraining order
(TRO), “ordering the respondent Judge Sergio D. Mabunay,
Regional Trial Court, Branch 24, Manila to CEASE and DESIST from further
proceeding with Civil Case No. 88-45876, entitled ‘Philippine Village Hotel,
Inc. vs. Government Service Insurance
System (GSIS), et al.,’ more particularly from issuing any
injunction against the foreclosure sale by petitioner GSIS of the Philippine
Village and its contents, which has
been re-scheduled for October
13, 1988.”^[6] On October 12, 1988, we set aside His Honor’s order of October
11, 1988, “thus
maintaining the Temproary Restraining Order issued by
the Supreme Court on October 11, 1988.”

On October 13, 1988,
PVHI and Panlilio moved for the reconsideration of our
twin Resolutions and for the lifting of the TRO issued by the Court on October 11, 1988.  On
the same date, we denied their urgent motion.

Thereafter, PVHI and Panlilio
commented, and the GSIS replied.  In its
reply, the latter accused both PVHI and Panlilio of
“forum-shopping”.

On January 31, 1989,
the Court issued a Resolution, directing “Spouses Panlilio,
private respondents in this case, to SHOW CAUSE, within ten (10) days from
notice, why no disciplinary action should be taken against them for
forum-shopping.”^[7]

On March 9, 1989,
the Panlilios filed their compliance.  On April
21, 1989, the counsel for both PVHI and Panlilio
filed similar compliances.

On August 10, 1989, this Court issued a Resolution, ordering
furthermore the law partners, Castillo, Laman, Tan,
and Pantaleon, counsel for PVHI and Panlilio, to show cause why they should not be administratively dealt with for
forum-shopping.  On September
11, 1989, Attys.
Noel Laman, Ancheta Tan,
and Polo Pantaleon filed a compliance.

On October 12, 1989, GSIS filed a motion to cite PVHI and Panlilio in contempt, informing the Court that as a result
of this Court’s Resolutions of October 11 and 12, 1988, the properties in controversy had been sold on
foreclosure and that the GSIS itself was the highest bidder, and that it had
sought a writ of possession with the Regional Trial Court (RTC) of Pasay City (LRC Case No. 3079).  It also informed the Court that PVHI and Panlilio had also petitioned the RTC to have the sale
annulled.  The latter allegedly denied
the petition (for annulment of the
writ) and failing there, the private respondents allegedly went to the
Court of Appeals (CA-G.R. SP No. 20336), which, however, also issued a denial.

On October 27, 1989,
we issued a Resolution directing the law firm of Ponce Enrile,
Cayetano, Reyes, and Manalastas
to show cause why they should not be held in contempt for forum-shopping.

On December 13, 1989,
Atty. Gregorio Castillo filed his compliance with the Resolution of the Court
of August 10, 1989.

On May 9, 1990, Ponce Enrile, etc., in
compliance with our October 27, 1989 Resolution, informed the Court that on
March 26, 1990, the Sandiganbayan had approved a
compromise agreement between the parties, founded on the settlement of all of
the PCGG’s claims against PVHI and Rebecco Panlilio.  On August 30, 1990, however, the GSIS
informed the Court that the said compromise agreement had been in fact
disapproved by the Commission on Audit and the Office of the President, as a
consequence of which, it had pursued steps to take possession of the properties
by means of the writ of possession, and
which, however, PVHI and the Panlilios had sought to
defeat with yet another complaint in the RTC (Civil Case No. 90-52276, Napoleon
Flojo, presiding judge), in the nature of a suit on
the compromise agreement in question.

The matters before the Court are twofold:  (1) on the merits, whether or not the
respondent Sandiganbayan, in issuing the TRO of May 15, 1988 is guilty of a grave
abuse of discretion to warrant certiorari;
and (2) whether or not the private respondents and/or their counsel have resorted
to forum-shopping.

On the first, the issue has become moot and academic, the TRO in
question having been lifted as a result of the Sandiganbayan’s
resolution of July 19, 1988.  It is well-established that the Court does
not decide moot cases.^[8]

However, the Court is aware that the matter has since led to a
series of legal entanglements between the parties in various forums–for which
GSIS now charges the Panlilios with
forum-shopping–and the Court is afraid that unless the final word is said
and the parties’ bickerings put to a stop, the question is likely to fester at the
expense of the orderly administration of justice.  Hence, we resolved to give due course to this
petition.

We have held that “forum-shopping” exists
“whenever, as a result of an adverse opinion in one forum, a party seeks a
favorable opinion (other than by appeal on certiorari) in another.”^[9]
However, as we held in another case, “[b]oth
actions [must] involve the same transactions, the same essential facts and
circumstances.”^[10]
The question, therefore, for purposes
hereof, is:  Did PVHI’s twin
actions (in the Sandiganbayan and before Judge Mabunay, Branch 24, RTC, Manila, the two public respondents herein) involve
“the same transactions, the same essential facts and circumstances”?

In his motion before the Sandiganbayan,
Rebecco Panlilio alleged:

3. There is no question that the instant action for reconveyance, reversion, accounting, restitution and
damages is an action in rem which involves determination of title to or ownership
of the properties listed in Annex “A” of the complaint, some of which are included in the
notices of foreclosure sale issued by deputy sheriff Tijones.  The said properties are in custodia legis and subject to the
exclusive jurisdiction of this Honorable Court.^[11]

In its suit brought
with the Regional Trial Court, Branch 24, PVHI claimed:

21. As of 30 June 1986,
plaintiff remitted to GSIS P98,924,227.80 in payment of its mortgage obligations. 
A portion of the amount, or P5,129,939.50, was used to redeem and
service debenture notes issued by plaintiff in favor of GSIS.  If GSIS had correctly applied the payments
remitted by plaintiff from 15
December 1972 to 30 June
1980, plaintiff’s original mortgage obligation of P36,500,000.00
including interests and penalties, should have been substantially settled if
not totally extinguished.^[12]

Under the circumstances, the Court is not minded to hold PVHI, or
Rebecco Panlilio, or their
counsel, in contempt, as prayed
for, on account of forum-shopping.

Albeit the two incidents involved the same transactions, that is,
the right of the GSIS to sell or foreclose the mortgaged properties, they did
not involve the same sets of facts or circumstances.  Panlilio’s motion
with the Sandiganbayan was anchored on GSIS’s lack of authority to take hold of the assets in
question–not because PVHI owed it nothing–but because these assets were then
in the custody of the Sandiganbayan, and hence,
beyond the control of anybody else.  Of
course, PVHI was mistaken, because foreclosure was possible even if the Sandiganbayan had custody of the properties.^[13] To be sure, a foreclosure will not divest
the Sandiganbayan of its jurisdiction over those
properties, and they remain under custodia legis subject to the resolution of that court as to whether
or not they constitute so-called ill-gotten wealth.  Also,
the buyer acquires them subject
to the risk of losing them later to the real owner, should they be found to be
indeed, “ill-gotten”.  Be that
as it may, PVHI’s objection was based on contentions,
although erroneous, that foreclosure was not permissible because the Sandiganbayan had control over the properties.

On the other hand, PVHI’s suit with the
Regional Trial Court of Manila was essentially to have the obligation itself
declared extinguished, by reason of the fact that it has been paid, and that
hence, PVHI owed GSIS nothing.

It would have been different had PVHI sought a ruling from the Sandiganbayan to have that obligation declared paid, and
failing in that, gone to the Regional Trial Court on the same or similar
relief.  In that event,
“forum-shopping” would have been a bar to a Regional Trial Court
action.

The fact that PVHI had prayed for injunction (or temporary
restraining order) in both cases is of no moment.  As we said, PVHI’s
prayer for an injunctive writ with the Sandiganbayan
was sought to be directed against the GSIS for exercising a perceived want of
power on GSIS’s part over properties subject matter
of a pending PCGG case.  Its motion, on
the other hand, with the Regional Trial Court for a writ of injunction was against the very foreclosure proceeding
itself.  There can be no forum-shopping to speak of.

Anent PVHI’s motion to annul the
foreclosure sale, filed in LRC Case No. 3079 (in which the GSIS asked for a
writ of possession), the Court finds nothing objectionable in such a recourse.  Under Section 8, of Act. No. 3135, the remedy
of a party aggrieved by foreclosure is indeed, to have the sale set
aside.

Anent GSIS’s charges of forum shopping,
embodied in its manifestation dated August 30, 1990, against PVHI in connection
with Civil Case No. 90-52272, instituted to enforce the compromise agreement
(by way of specific performance) and to enjoin GSIS from taking possession of
the mortgaged assets in question and from consolidating title thereto in its
name, it is necessary for GSIS to file
a separate application for contempt, since clearly, the matter must be taken up
in a petition, not a mere manifestation.

WHEREFORE, the Court renders judgment as
follows:

1. The proceedings in Civil
Case No. 88-45876 (RTC, Manila,
Sergio Mabunay, presiding judge) are moot and
academic, foreclosure having been implemented and now a fait accompli;

2. Neither PVHI, Rebecco Panlilio, nor their counsel are guilty of forum-shopping in
connection with the said Civil Case No. 88-45876, or CA-G.R. SP No. 20336
(Court of Appeals);

3. The Temporary Restraining Order issued in the Resolution dated
October 11, 1989, enjoining Judge Sergio Mabunay from
further proceedings in Civil Case No. 88-45876 is made permanent; and

4. The prayer for contempt is DENIED.

SO ORDERED.

Fernan, C.J., Narvasa,
Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Gancayco, Padilla, Bidin, Griño-Aquino, Medialdea, and Regalado, JJ., concur.

Feliciano, J., on leave.

^[1] Rollo, 26.

^[2] Id.,
5.

^[3] Id.

^[4] Id.,
82.

^[5] See, id., 14.

^[6] Id.,
387.

^[7] Id., 528.

^[8] World-wide Insurance & Surety Co., Inc. vs.
Court of Appeals, No. L-40797, March 16, 1987, 148 SCRA 494.

^[9] Villanueva v. Adre,
No. 80863, April 27, 1989, 172 SCRA 876, 882.

^[10]
Palm Avenue Realty Development Corporation v. Philippine Commission on
Good Government No. 76296, August 31,
1987, 153 SCRA 579, 591.

^[11] Rollo, id., 24.

^[12] Id.,
311.

^[13] Note that under Article 2126 of the Civil
Code, a mortgage follows whoever is in possession of
the mortgaged property.