Cordova v. Reyes Daway Lim Bernardo Lindo Rosales Law Offices
REITERATIONFacts
1. The Antecedents: Petitioner Jose C. Cordova purchased shares of stock in various corporations, including Celebrity Sports Plaza Incorporated (CSPI), from Philippine Underwriters Finance Corporation (Philfinance) in 1977 and 1978. These shares were held by custodian banks for his benefit. In 1981, Philfinance was placed under receivership, and private respondents were appointed as liquidators. 2. Procedural History: In 1991, the liquidators, without petitioner's knowledge or SEC authority, withdrew and subsequently sold the CSPI shares, commingling the proceeds with Philfinance's assets. Petitioner discovered this in September 1996 and filed a complaint with the SEC in May 1997. The SEC initially dismissed the claim but later granted it, ordering the liquidators to pay petitioner P5,062,500, representing 15% of the shares' value, as he was deemed an ordinary creditor. A clarificatory order deleted the award of legal interest. The Court of Appeals affirmed the SEC's decision, leading to the present petition. 3. The Petition: This is a petition for review on certiorari under Rule 45 of the Rules of Court. Petitioner raises three issues: whether he should be considered a preferred or secured creditor, whether he can recover the full value of his shares or only 15%, and whether he is entitled to legal interest. He argues he is a preferred creditor due to the illegal withdrawal and sale of his shares, citing Article 2241(2) of the Civil Code. He also contends he is entitled to legal interest.
Issue(s)
Whether petitioner should be considered as a preferred (and secured) creditor of Philfinance. Whether petitioner can recover the full value of his CSPI shares or merely 15% thereof like all other ordinary creditors of Philfinance. Whether petitioner is entitled to legal interest.
Ruling
The petition is DENIED. The Supreme Court affirmed the Court of Appeals' decision, holding that petitioner is an ordinary creditor and not entitled to legal interest.
Ratio Decidendi
On whether petitioner should be considered as a preferred (and secured) creditor: The Court ruled in the affirmative that petitioner became a creditor of Philfinance. However, it clarified that his claim was for the monetary value of the shares, which, after being sold and commingled with Philfinance's assets, became generic property. The Court distinguished this from claims involving specific movable property. Article 2241 of the Civil Code, which petitioner invoked, applies only to specific movable property. Since petitioner's claim was for payment of money, which is generic, he did not fall under the provisions for preferred creditors. Therefore, he was deemed an ordinary creditor under Article 2245 of the Civil Code. On whether petitioner can recover the full value of his CSPI shares or merely 15% thereof: The Court affirmed the SEC and CA's findings that the recovery of the actual CSPI shares was impossible due to their sale and the commingling of proceeds with Philfinance's assets. Petitioner's claim was thus converted into a monetary claim. As an ordinary creditor, he was subject to the same rate of recovery as other creditors and investors of Philfinance, which was approved at 15%. The Court emphasized the principle of equality among creditors in liquidation proceedings, stating that no one should be given preference. The assets under receivership are in custodia legis and exempt from further claims or executions, reinforcing the need for orderly distribution. On whether petitioner is entitled to legal interest: The Court denied petitioner's claim for legal interest. Applying the guidelines in Eastern Shipping Lines, Inc. v. CA, the Court found that the obligation to pay petitioner was not a loan or forbearance of money, thus not subject to the 12% per annum rate from default. It also ruled that the 6% per annum rate for damages was not applicable as there was no delay in the payment of a sum of money, especially since petitioner had already received the 15% recovery amount. Awarding interest would have given him an unfair advantage over other claimants, contrary to the principle of pari passu distribution among ordinary creditors.
Main Doctrine
When specific movable properties, such as shares of stock, are illegally sold by liquidators without authority and their proceeds commingled with the assets of the corporation under receivership, the owner's claim is converted into that of an ordinary creditor for the monetary value of the shares, and recovery is limited to the approved rate of recovery for all creditors, without entitlement to legal interest.