Jose C. Cordova v. Reyes Daway Lim Bernardo Lindo Rosales Law Offices

Summary

Jose Cordova owned stock certificates of Celebrity Sports Plaza Incorporated purchased from Philippine Underwriters Finance Corporation, held by custodian banks. When Philfinance went into SEC receivership, court-appointed liquidators illegally withdrew and sold Cordova's shares without his consent or SEC authority, commingling the proceeds with company assets. The Supreme Court held that since Cordova's specific shares were converted to generic money and commingled with other assets, he became an ordinary creditor entitled only to pro rata distribution at the 15% recovery rate established for all creditors, rather than a preferred creditor. The Court also ruled he was not entitled to legal interest since the obligation did not constitute a loan or forbearance of money, and there was no delay in payment. The decision establishes important precedent on creditor classification in corporate liquidation proceedings when specific assets are converted to generic property.