Is it advisable to publish a paper in a Journal Issue edited by my PhD Supervisor? Or is it better to try to publish it somewhere else?
It's not surprising this might happen. That your advisor is on the board (or equivalent) for a journal you might submit to is a situation often encountered. If you want to make sure no conflicts exist, ask your advisor to recuse himself from all decisions regarding your particular contribution. He might already have planned to, given the obvious conflict.