G.R. No. 211098 - Dissenting Opinion

G.R. No. 211098, The Wellex Group, Inc. Vs. Sheriff Edgardo A. Urieta of the Sandiganbayan Security and Sheriff Services, et al., April 20. 2016
♦ Decision, Perez [J]
♦ Dissenting Opinion, Leonen [J]

THE WELLEX GROUP, INC., Petitioner,
vs.
SHERIFF EDGARDO A. URIETA OF THE SANDIGANBAYAN SECURITY AND SHERIFF SERVICES, THE SANDIGANBA YAN SECURITY AND SHERIFF SERVICES, AND BDO UNIBANK, INC. (FORMERLY EQUITABLE PCI BANK, INC.), Respondents.

I dissent. Third-party claims involving properties forfeited consequent to a conviction for plunder must be filed before the Sandiganbayan, regardless of the civil nature of such claims.

Before this court is a Petition for Review on Certiorari1 assailing the Order2 dated January 9, 2012 of Branch 139 and the Resolution3 dated January 15, 2014 of Branch 132, both of the Regional Trial Court of Makati City. On the ground of lack of cause of action, the trial court dismissed petitioner the Wellex Group, Inc.'s Complaint for recovery of possession of 450,000,000 shares of stock in Waterfront Philippines, Inc. (Waterfront shares).4 The shares of stock were forfeited in favor of the state as a consequence of Former President Joseph Estrada's (Former President Estrada) conviction for plunder.5

Equitable-PCI Bank and a certain Jose Velarde (Velarde) entered into an Investment Management Agreement.6 The bank agreed to manage Velarde's assets, investing them and taking possession of the profits and losses on Velarde's behalf.7 The agreement likewise allowed the bank to grant loans using the funds under investment management, subject to applicable regulations.8

On February 4, 2000, Investment Management Agreement (IMA) Account No. 101-78056-1 was opened under Velarde's name.9 Apart from the IMA account, Velarde maintained a savings account in Equitable-PCI Bank with account number 0160-62501-5.10

On the same day that Velarde opened his IMA account, the Wellex Group, Inc. loaned ₱500,000,000.00 from Equitable-PCI Bank, payable in six (6) months.11 As security for the loan, the Wellex Group, Inc. mortgaged 450,000,000 of its Waterfront shares.12

On August 2, 2000, a loan extension was granted to the Wellex Group, Inc. and its President, William Gatchalian, mortgaged 300,000,000 of his own Waterfront shares as additional security for the loan.13

In the meantime, on April 4, 2001, Former President Estrada was charged with plunder before the Sandiganbayan.14 The Information was amended on April 18, 200115 to add, among others, "Jose Velarde" as one of Former President Estrada's alleged aliases.16 According to the Amended Information, Former President Estrada allegedly compelled the Government Service Insurance System and the Social Security System to purchase shares of stock from Belle Corporation, resulting in his earning a total of P189,700,000.00 in commissions.17 This amount was allegedly deposited in his "Jose Velarde" accounts in Equitable PCI-Bank.18

During trial, the prosecution proved Former President Estrada's ownership of the Velarde accounts in Equitable-PCI Bank.20 As for Former President Estrada, he admitted to signing bank documents as Jose Velarde to fund the Wellex Group, Inc.'s ₱500,000,000.00 loan.21 Specifically, he admitted to signing as Jose Velarde copies of the Investment Management Agreement as well as a debit-credit instruction to allow the transfer of ₱500,000,000.00 from the savings account to the IMA account.22

While the plunder case was still pending resolution, Equitable-PCI Bank merged with Banco de Oro in 2007, with the surviving bank being Banco de Oro.23

Through the Decision dated September 12, 2007, the Sandiganbayan convicted Former President Estrada of plunder.24 The Sandiganbayan ordered the ₱189,000,000.00 deposited in the Velarde accounts, inclusive of interests and income earned, forfeited in favor of government.25 The dispositive portion of the September 12, 2007 Decision partly provides:

However, Former President Estrada was pardoned by Former President Gloria Macapagal Arroyo on October 25, 2007.27 The pardon expressly stipulated that:

The forfeitures imposed by the Sandiganbayan remain in force and in full, including all writs and processes issued by the Sandiganbayan in pursuance hereof, except for the bank account(s) he owned before his tenure as President.28 (Citation omitted)

With this development, the Sandiganbayan ordered the issuance of a writ of execution to implement parts of the September 12, 2007 Decision not covered by the pardon. The Writ of Execution was issued against Former President Estrada on November 5, 2007.30

Former President Estrada moved to quash the Writ of Execution, arguing that the Writ expanded the scope of the properties ordered forfeited.31 The Office of the Special Prosecutor opposed the Motion to Quash and asserted that the Writ of Execution did not vary the terms of the September 12, 2007 Decision.32

In the Resolution dated January 28 2008, the Sandiganbayan partially granted the Motion to Quash. It qualified the scope of the Writ of Execution to include only those that form part of Former President Estrada's ill-gotten wealth.33 Thus, the Sandiganbayan issued an Amended Writ of Execution34 on February 19, 2008, particularly alluding to the Waterfront shares as properties forfeited in favor of government.35 The Amended Writ of Execution partly provides:

Sheriff Edgardo A. Urieta (Sheriff Urieta) of the Sandiganbayan was commanded to implement the Writ of Execution. In his Sheriffs Progress Report submitted on February 22, 2008, Sheriff Urieta stated that Velarde's IMA account was under the Bureau of Internal Revenue's constructive distraint. Therefore, the bank could not deliver to the Sandiganbayan the assets under the IMA account.37

Banco De Oro confirmed Sheriff Urieta's Report.38 In the Manifestation39 dated April 18, 2008, Banco de Oro stated that the assets under the IMA account remained intact but were under constructive distraint.40

Banco de Oro likewise informed the Sandiganbayan that the Wellex Group, Inc. had earlier requested the retrieval of its Waterfront shares.41 In its Letter42 dated January 21, 2008, the Wellex Group, Inc. said that it directly paid the owner of the IMA account, thus extinguishing its loan obligation to the bank.43 The Letter dated January 21, 2008 partly states:

It appears that interest payments on the loan were made for a certain period but these payments stopped at some point in time. Inquiries resulted in our view that coincident to the stoppage of interest payments, principal payment of the obligation was made by or on behalf of the borrower, not to your bank as investment manager, but instead directly to the owner of the account. THE WELLEX GROUP, INC. is presently interested in retrieving the shares given as security for the loan obligation which apparently has been extinguished.44

To settle the conflicting claims to the Waterfront shares, the Sandiganbayan scheduled a hearing on May 16, 2008.45 The Bureau of Internal Revenue, Banco de Oro, and the Wellex Group, Inc. were heard on their respective positions and were thereafter ordered to file their respective memoranda.46 The Bureau of Internal Revenue filed a Memorandum and Banco de Oro a Submission. However, the Wllex Group, Inc. filed none.47

The Sandiganbayan emphasized the Wellex Group, Inc.'s failure to file a memorandum on its claim to the Waterfront shares.48 The court likewise cited Banco de Oro's Certification that the bank had not yet received any payment from the Wellex Group, Inc. for its ₱500,000,000.00 loan.49

With respect to the Bureau of Internal Revenue, the Sandiganbayan acknowledged the validity of the Bureau's claim over the assets under the IMA account.50 However, it noted that the Bureau had not yet issued a formal assessment to Former President Estrada; hence, the Bureau's claim was not yet final.51

The September 12, 2007 Decision, the Sandiganbayan continued, was already final and executory. Thus, the Sandiganbayan ruled that the assets under the IMA account were ripe for forfeiture.52

In the Resolution53 dated September 24, 2008, the Sandiganbayan directed Sheriff Urieta to issue another Notice to Deliver to Banco de Oro for the bank to remit to the court the assets under the IMA account.54 The Resolution dated September 24, 2008 states, in part:

The Wellex Group, Inc. filed a Petition/Motion for Reconsideration56 praying that the Waterfront shares be excluded from the forfeiture order.57 The Motion was denied in the Resolution58 dated April 2, 2009.

On April 20, 2009, Sheriff Urieta issued the Notice to Deliver,59 with which Banco de Oro complied. Banco de Oro delivered to Sheriff Urieta the assets under the IMA account, including the Waterfront shares.1aшphi160

The Wellex Group, Inc. filed an Urgent Ex-Parte Motion for Clarification of the Resolution dated 02 April 200961 arguing that the Waterfront shares do not form part of the forfeited IMA account.62 In the Resolution63 dated April 23, 2009, the Sandiganbayan merely noted the Urgent Ex-Parte Motion without action.

Alleging grave abuse of discretion on the part of Sandiganbayan,64 the Wellex Group, Inc. filed before this Court a Petition for Certiorari on June 22, 2009.65 The Wellex Group, Inc. maintained that the Sandiganbayan expanded the scope of its September 12, 2007 Decision when it included the Waterfront shares in the forfeiture order.66

The Petition, docketed as G.R. No. 187951, was dismissed by this Court in the Decision dated June 25, 2012.67 On the premises that (a) the beneficial owner of the forfeited Velarde accounts was Former President Estrada;68 (b) that the ₱500,000,000.00 loaned to the Wellex Group, Inc. came from the Velarde IMA account;69 and that (c) the Wellex Group, Inc. mortgaged 450,000,000.00 of its Waterfront shares as security for the loan,70 this Court held in The Wellex Group, Inc. v. Sandiganbayan71 that the Waterfront shares were among Former President Estrada's assets, which were forfeited in favor of government.72

Since the loan was sourced from Former President Estrada's IMA account, this Court held that the ₱500,000,000.00 receivable from the Wellex Group, Inc. as well as the 450,000,000 Waterfront shares became assets of the IMA account.73 Considering that the IMA account wa,s forfeited in favor of government, the assets of the IMA account "follow the fate of the trust account and are forfeited as well."74

However, this Court stated that the loan contract remained valid, thus subrogating the government to the rights of the IMA account over its assets, including the Waterfront shares.75 This Court further noted that the Wellex Group, Inc. waived its right to assail this finding of fact before the Sandiganbayan when it failed to file a memorandum as required during the May 16, 2008 hearing.76

According to this Court, the Wellex Group, Inc. failed to prove its claim that it had directly paid its loan.77 This Court likewise observed that the Wellex Group, Inc. never revealed the identity of its alleged principal or creditor to whom it paid the ₱500,000,000.00.78 Thus, its claim of payment remained "highly doubtful."79

The Decision in The Wellex Group, Inc. v. Sandiganbayan became final and executory.

Meanwhile, on May 6, 2009—one month before the Wellex Group, Inc. filed its Petition for Certiorari before this Court on June 22, 2009—the Wellex Group, Inc. filed before the Regional Trial Court of Makati a Complaint80 for Recovery of Possession, Delivery of Stock Certificates, and Injunction with Application for Temporary Restraining Order and or Writ of Preliminary Injunction. Hence, the Wellex Group, Inc. filed before this Court a separate civil action in addition to the Complaint filed before the Regional Trial Court of Makati.

Impleaded as defendants in the Complaint for recovery of possession were Sheriff Urieta, the Sandiganbayan Security and Sheriff Services, and Banco de Oro.81 The Wellex Group, Inc. made the following allegations in its Complaint:

The application for temporary restraining order was heard on May 12, 2009.83 During the hearing, Sheriff Urieta agreed to postpone the public sale scheduled on May 15, 2009 until the trial court resolved whether or not to grant the provisional remedies prayed for by the Wellex Group, Inc.84

On May 18, 2009, Banco de Oro filed a Motion to Dismiss/Opposition to the Application for a Writ of Preliminary Injunction85 based on four (4) grounds. First, the principle of hierarchy of courts allegedly barred the Regional Trial Court of Makati City from restraining the Sandiganbayan, a superior court, from implementing its September 12, 2007 Plunder Decision.86 Second, the Wellex Group, Inc. allegedly committed forum shopping by filing a case that raised the issue of ownership of the Waterfront shares, an issue that had been earlier raised before the Sandiganbayan.87 Third, litis pendentia barred the Complaint for recovery of possession because the Sandiganbayan still had to implement the Writ of Execution in the plunder case.88 Lastly, the Complaint allegedly failed to state a cause of action against Banco de Oro because the bank had already delivered to the Sandiganbayan the possession of the Waterfront shares.89

For their part, Sheriff Urieta and the Sandiganbayan Security and Sheriff Services filed their Motion to Dismiss90 on June 15, 2009, arguing lack of jurisdiction on the part of the trial court.

In opposition91 to the Motions to Dismiss, the Wellex Group, Inc. argued that the Complaint filed was for injunction and recovery of possession, actions that are well within the Regional Trial Court's jurisdiction.92 It added that the Sandiganbayan could not have passed upon with finality the issue of who retains title to the Waterfront shares because the Sandiganbayan is a court of limited jurisdiction, and the Wellex Group, Inc. was not a party to Former President Estrada's plunder case.93

Resolving the Motion to Dismiss, the trial court agreed with Banco de Oro and Sheriff Urieta that it had no jurisdiction over the subject matter of the Wellex Group, Inc.'s Complaint.94 It yielded to the authority of the Sandiganbayan, stating that the anti-graft court had already passed upon the subject matter of the Wellex Group, Inc.'s Complaint as well as the ultimate relief sought.95 The trial court refused to enjoin the public sale of the Waterfront shares for it would "result in the review of the findings of the Sandiganbayan in the [plunder] case,"96 "amounting] to an indirect circumvention of the prohibition against interference by a non-superior court."97

The trial court likewise ruled that the Wellex Group, Inc. had no cause of action against Banco de Oro.98 It held that Banco de Oro correctly delivered the Waterfront shares to the Sandiganbayan under "the lawful order and process of the Sandiganbayan in the [plunder] case."99

Declaring the application for issuance of temporary restraining order and writ of preliminary injunction moot and academic, Branch 139 of the Regional Trial Court, Makati City dismissed the Complaint in the Order dated January 9, 2012.100 The dispositive portion of the January 9, 2012 Order reads:

On February 10, 2012, the Wellex Group, Inc. moved for reconsideration.102 It emphasized that it was not a party to the plunder case; thus, the Sandiganbayan could not have validly adjudicated with finality the issue of ownership of the Waterfront shares.103 As a third-party claimant, the Wellex Group, Inc. argued that it had a cause of action for recovery of possession104—an action under the Regional Trial Court's jurisdiction.105

On April 5, 2013, the Wellex Group, Inc. moved for the voluntary inhibition of Presiding Judge Benjamin T. Pozon (Judge Pozon). 106 According to the Wellex Group, Inc., it lost confidence in Judge Pozon's ability to impartially decide the case considering the long period that the Motion for Reconsideration remained unresolved.107 Banco de Oro opposed the Motion for Voluntary Inhibition.108

Nevertheless, in the Order109 dated June 5, 2013, Judge Pozon granted the Motion and inhibited from hearing the case "to maintain the public confidence in the Courts and in [o]rder to preserve its integrity."110

From Branch 139 of the Regional Trial Court of Makati City, the case was re-raffled to Branch 132 presided by Judge Rommel O. Baybay.111 In the Order112 dated August 16, 2013, the trial court deemed the Motion for Reconsideration submitted for resolution.

Still, the trial court refused to proceed with the Complaint for recovery of possession in deference to the authority of the Sandiganbayan.113 The trial court denied the Motion for Reconsideration in the Resolution114 dated January 15, 2014.

On February 20, 2014, the Wellex Group, Inc. directly filed before this Court a Motion for Extension of Time115 to File Petition for Review on Certiorari, impleading Sheriff Urieta, the Sandiganbayan Security and Sheriff Services, and Banco de Oro as respondents.116 With leave of court,117 Banco de Oro filed a Motion to Dismiss and Opposition Ad Cautelam118 arguing that this Court may not take cognizance of the Petition because it necessarily raises questions of fact.119

This Court granted the Motion for Extension of Time to File Petition for Review on Certiorari120 and noted the Motion to Dismiss and Opposition Ad Cautelam.121 The Wellex Group, Inc. eventually filed its Petition for Review on Certiorari, on which Banco de Oro commented.122 Sheriff Urieta and the Sandiganbayan Security and Sheriff Services, through the Office of the Solicitor General, subsequently manifested to this Court that they were adopting Banco de Oro's Comment as their Comment.123

In its Petition for Review on Certiorari, the Wellex Group, Inc. maintains that the Regional Trial Court of Makati City had jurisdiction over its Complaint for recovery of possession.124 Considering that it is not a party to the plunder case, the Wellex Group, Inc. insists that it is a third-party claimant whose title to the Waterfront shares could not have been adjudicated with finality by the Sandiganbayan.125 It further argues that it properly availed itself of a reivindicatory action before the regular courts to recover the possession of the Waterfront shares.126

In its Comment,127 Banco de Oro prays for the summary dismissal of the Petition for Review on Certiorari.128 According to Banco de Oro, the Petition for Review on Certiorari requires re-litigating the issue of whether the Wellex Group, Inc. had already paid its loan obligation, a matter already resolved in the negative by the Sandiganbayan in its September 12, 2007 Decision. This issue, Banco de Oro argues, is a factual issue that this Court cannot pass upon when resolving a petition for review on certiorari.129

On the issue of jurisdiction, Banco de Oro contends that the trial court correctly dismissed the Complaint for recovery of possession in deference to the authority of the Sandiganbayan. Banco de Oro maintains that resolving the Complaint for recovery of possession would require a review of the findings of the Sandiganbayan in its September 12, 2007 Decision, specifically, that Former President Estrada owned the forfeited IMA account, and that the Waterfront shares were among the IMA account's assets. Banco de Oro argues that had the trial court taken cognizance of the Complaint, it would have interfered with the execution of the Sandiganbayan's Decision in the plunder case.130

Banco de Oro adds that the Wellex Group, Inc. committed forum shopping by filing its Complaint for recovery of possession before the Regional Trial Court of Makati City. It argues that Wellex Group, Inc. earlier filed a third-party claim before the Sandiganbayan when it filed the Petition/Motion for Reconsideration praying for the exclusion of the Waterfront shares from the forfeiture order. This third-party claim incorporated in the Petition/Motion for Reconsideration was denied by the Sandiganbayan in the Resolution dated April 2, 2009. The Wellex Group, Inc. cannot be allowed to re-file a third-party claim, this time before the regular courts.131

The issue for this court's resolution is whether the Regional Trial Court of Makati City had jurisdiction to hear, try, and decide petitioner Wellex Group, Inc.'s Complaint for recovery of possession and injunction.

According to the ponencia, it is "beyond cavil"132 that the 450,000,000 Waterfront shares belonged to the IMA account and, therefore, were among the assets forfeited in favor of government pursuant to this Court's Decision in The Wellex Group, Inc. v. Sandiganbayan.133 In addition, the ponencia reiterated that the IMA account acquired the Waterfront shares as security for petitioner's ₱500,000,000.00 loan—a loan that, as this Court likewise found in The Wellex Group, Inc. v. Sandiganbayan, was funded by money sourced from the IMA account.134

Based on these premises, the ponencia stated that government through the Sandiganbayan cannot "unilaterally"135 sell the Waterfront shares at public auction without first demanding from petitioner payment for its ₱500,000,000.00 loan.136 The ponencia said that only upon petitioner's failure to pay despite demand could government either foreclose the chattel mortgage over the Waterfront shares or institute "the appropriate action for collection"137 against petitioner; otherwise, the government would violate Article 2088138 of the Civil Code, which prohibits pactum commissorium.139

On the merits, the ponencia held that the Regional Trial Court of Makati had jurisdiction over petitioner's Complaint because it was "purely civil in nature."140 The Sandiganbayan, the ponencia said, may not take cognizance of petitioner's third-party claim since the anti-graft court "only [has] a special or limited jurisdiction."141 As further explained by the ponencia:

While this Court has time and again affirmed that the Sandiganbayan has jurisdiction over the civil aspect of criminal cases, as conferred to it by law, the case before the trial court does not involve the civil aspect of [the plunder case]. The same has nothing to do with the ownership of the IMA Account and/or any of its financial assets, which, as stated above, has been adjudged forfeited in favor of the State. In contrast, the said case is an ordinary civil case entailing the propriety of the actions of a creditor in proceeding against the security for its loan, which necessitates the application of the provisions of the Civil Code, therefore falling under the exclusive jurisdiction of the Regional Trial Courts.142 (Citations omitted)

After "commend [ing] the trial court for acting cautiously and exercising prudence in applying the principle of hierarchy of courts[,]"143 the ponencia nevertheless granted the Petition and remanded the case to the trial court for further proceedings.144 The dispositive portion of the ponencia reads:

I do not agree with the ponencia. The trial court correctly dismissed petitioner's Complaint for recovery of possession. The trial court had no jurisdiction to take cognizance of the Complaint.

Third-party claims are inevitable in proceedings involving forfeiture. To conceal the true nature of a property as unlawfully acquired, a public officer may have transferred to third persons the title to the property. The transferees—whether they are dummies, nominees, agents, subordinates, business associates, or innocent purchasers for value—may challenge the inclusion of their properties under their title and argue that the properties legitimately belong to them.146

Petitioner argues that its Complaint for recovery of possession of the Waterfront shares is in the nature of a third-party claim.147 Also known as terceria, a third-party claim is the remedy available to persons other than the judgment obligor who claim title to or the right to possess the property levied.

Under Rule 39, Section 16 of the Rules of Court, a third-party claim must be filed before the court issuing the writ of execution. The reason is that a court, once it acquires jurisdiction, retains this jurisdiction until it enforces and executes its decision. Consistent with the doctrine of adherence of jurisdiction, Rule 39, Section 16 provides:

Proceeding from these premises, any third-party claim involving property forfeited pursuant to a plunder decision must be filed before the Sandiganbayan, this despite the fact that third-party claim involves issues of ownership or possession—matters that are considered civil in nature.

Aware that third-party claims involving forfeited properties may involve questions of ownership or possession, the legislature nevertheless vested in the Sandiganbayan jurisdiction over prosecutions for plunder,148 the penalty for which includes the forfeiture of all the assets of the accused which are found to be ill-gotten.149 "This is line with the purpose behind the creation of the Sandiganbayan as an anti-graft court—to address the urgent problem of dishonesty in public service."150 This is precisely why the Sandiganbayan is a court of special jurisdiction: it is primarily a criminal court, but with jurisdiction over certain civil proceedings.

Hence, the argument that a third-party claim is civil in nature and may not be taken cognizance of by the Sandiganbayan is incorrect.151 Those who claim ownership or possession of properties forfeited by virtue of a plunder decision must intervene in the proceedings before the Sandiganbayan. Not only is this consistent with the doctrine of adherence of jurisdiction; it also prevents splitting of jurisdiction and multiplicity of suits.152

It has been settled in The Wellex Group, Inc. v. Sandiganbayan that the Waterfront shares form part of the assets forfeited in favor of the state as a consequence of Former President Estrada's conviction for plunder. In the Amended Writ of Execution dated February 19, 2008, the Sandiganbayan in the plunder case categorically ordered the implementing sheriff to:

issue notices of levy and/or garnishment to any person who is in possession of any and all form of assets that is traceable or form part of the amounts or property which have been ordered forfeited by this court, including but not limited to the accounts receivables and assets found at Banco de Oro . . . consisting of ... Waterfront shares aggregating 750,000,000 shares[.]153

The court that issued the assailed Writ of Execution was the Sandiganbayan. The Sandiganbayan, not the Regional Trial Court, is the court with jurisdiction to take cognizance of petitioner's third party claim.

Consequently, the Regional Trial Court has no jurisdiction over petitioner's Complaint for recovery of possession of the Waterfront shares.

The trial court has no jurisdiction to issue a temporary restraining order or a writ of preliminary injunction against an order of the Sandiganbayan. Corollary to the doctrine of non-interference, which prohibits co-equal courts from interfering with each other's orders or judgments,154 inferior courts cannot interfere with the orders and judgments of superior courts.

The Regional Trial Court is a lower court as opposed to the Sandiganbayan. Under Section 4 155 of Republic Act No. 7975, the Sandiganbayan exercises "exclusive appellate jurisdiction over final judgments, resolutions or orders of regional trial courts[.]" Section 7156 of Presidential Decree No. 1606 provides that the "[decisions and final orders of the Sandiganbayan shall be appealable to the Supreme Court[.]"

Since the Sandiganbayan is a superior court, the Regional Trial Court has no jurisdiction to issue a temporary restraining order or a writ of injunction against the Sandiganbayan's orders and decisions. Applied to this case, the Regional Trial Court of Makati City had no jurisdiction to issue a temporary restraining order or a writ of preliminary injunction to prevent the sale of properties forfeited by virtue of Former President Estrada's conviction for plunder.

Apart from lack of jurisdiction, the trial court correctly dismissed petitioner's Complaint on the ground of forum shopping.

As pointed out by Banco de Oro, petitioner had earlier intervened in the proceedings before the Sandiganbayan.157 Petitioner first assailed the inclusion of the Waterfront shares in the forfeiture order in the Petition/Motion for Reconsideration dated October 11, 2008,158 which the Sandiganbayan denied in the Resolution dated April 2, 2009.

The second time petitioner intervened was when it filed before the Sandiganbayan the Urgent Ex-Parte Motion for Clarification of the Resolution dated 02 April 2009. Petitioner maintained that the Waterfront shares were not assets of the Velarde IMA account, thus:

Petitioner made the same contention in its Complaint for recovery of possession before the Regional Trial Court of Makati:

15.4. The [Waterfront shares of stock] have never been foreclosed and, as such, the ownership thereof still pertains to plaintiff. In other words, the subject shares do not form part of the IMA Account and may not be validly levied upon.160 (Emphasis supplied)

From the foregoing, petitioner raised before the Regional Trial Court of Makati City and the Sandiganbayan the same issue of whether the Waterfront shares formed part of the IMA account forfeited in favor of the state.

This is clearly forum shopping. Petitioner "repetitively availfed] [itself] of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending in or already resolved adversely by some other court."161

Moreover, petitioner committed willful and deliberate forum shopping. Petitioner falsely declared in the Certification against Forum Shopping attached to its Complaint for recovery of possession that "[it] has not... commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals, or any other tribunal or agency."162 It did not state in the Certification against Forum Shopping that it had earlier filed a claim before the Sandiganbayan involving the same issue of ownership of the Waterfront shares.

Under Rule 7, Section 5 of the Rules of Court, forum shopping is a ground for dismissal of a complaint.163 The trial court correctly dismissed petitioner's Complaint for recovery of possession.

Lastly, selling the Waterfront shares at public auction would not amount to a circumvention of the prohibition on pactum commissorium.

A pactum commissorium is a stipulation in a deed of mortgage, allowing the creditor to automatically appropriate or dispose of the property mortgaged in case the debtor fails to comply with his or her obligation under the principal contract. It is prohibited under Article 2088164 of the Civil Code and is null and void.

Here, there was no automatic appropriation of the property mortgaged. When the IMA account and all of its assets were declared forfeited, this Court in The Wellex Group, Inc. v. Sandiganbayan recognized the validity of the loan agreement between petitioner and Banco de Oro, in effect recognizing petitioner's title to the Waterfront shares it mortgaged to Banco de Oro.

However, petitioner's ₱500,000,000.00 loan remained unpaid. Even before the forfeiture of the assets of the IMA account, petitioner had defaulted in its loan obligation to Banco de Oro. Banco de Oro served several demand letters165 on petitioner, regardless of the stipulation in the Promissory Note and Chattel Mortgage that the amount payable shall "become immediately due and payable without demand or notice"166 in case petitioner fails to pay the loaned amount. Petitioner ignored all these demand letters.

That petitioner already paid the loan to Jaime Dichaves, the alleged principal of the IMA account, is not supported by the record. It is also immaterial. In order to extinguish an obligation, "[p]ayment [must] be made to the person in whose favor the obligation has been constituted, or his successor in interest, or any person authorized to receive [payment]."167 Jaime Dichaves is none of these, for as this Court ruled in The Wellex Group, Inc. v. Sandiganbayan, Former President Estrada is the principal of the Velarde IMA account.

Even if payment may be made to a third person, the payment must redound to the benefit of the creditor in order to extinguish the obligation.168 It has not been shown that Banco de Oro was benefited in any way when petitioner allegedly paid the loan to Jaime Dichaves.

Having subrogated Banco de Oro in its rights as petitioner's creditor, the state acquired the right to foreclose the property and sell the Waterfront shares at public auction. The state did not acquire the title to the Waterfront shares and is only selling the Waterfront shares at public auction as a necessary consequence of the forfeiture of the IMA account and its assets.

The proper remedy of petitioner is to pay its loan to the state. Only then would it be entitled to the possession of the Waterfront shares.