G.R. No. 146555 - Cordova vs. Reyes, Daway, Lim, Bernardo, Lindo, Rosales Law Offices

In 1977 and 1978, petitioner Jose C. Cordova purchased certificates of stock of Celebrity Sports Plaza Incorporated (CSPI) and shares of other corporations from Philippine Underwriters Finance Corporation (Philfinance).
He received confirmation of sale, and the CSPI shares were physically delivered by Philfinance to custodian banks—initially Filmanbank (later Pilipinas Bank) and Philtrust Bank—to hold on his behalf.

On June 18, 1981, the Securities and Exchange Commission (SEC) placed Philfinance under receivership.
Thereafter, private respondents Reyes Daway Lim Bernardo Lindo Rosales Law Offices and Atty. Wendell Coronel were appointed as liquidators.

In 1991, without petitioner’s knowledge, consent, or SEC authority, the liquidators withdrew the CSPI shares from the custodian banks.
On May 27, 1996, they sold the shares to Northeast Corporation, commingling the proceeds into Philfinance's general funds.
Petitioner learned of the unauthorized sale on September 10, 1996.

Petitioner complained to the liquidators, who ignored him, prompting a formal complaint filed on May 6, 1997, in the SEC receivership proceedings, seeking return of the shares.
On April 18, 1997, the SEC approved a 15% rate of recovery for Philfinance’s creditors and investors.
On May 13, 1997, the liquidators started settling claims from Philfinance’s assets.
On April 14, 1998, the SEC dismissed petitioner’s complaint but reversed this on September 24, 1999, granting petitioner’s claim.
The SEC acknowledged petitioner as owner of the CSPI shares by virtue of the confirmation of sale (deemed a deed of assignment), but since the shares were sold and proceeds commingled, petitioner’s status was converted to that of an ordinary creditor for the shares’ value.
The SEC ordered payment of P5,062,500 (15% recovery) plus legal interest from the date of unauthorized sale.
On October 27, 1999, the SEC clarified its order, deleting the interest award to avoid unfairness to other creditors.

The Court of Appeals (CA) affirmed the SEC ruling: petitioner owned the CSPI shares, but the shares were no longer recoverable as they had already been sold and proceeds commingled.
The CA interpreted the SEC’s clarificatory order as harmonizing the decision, affirming payment without interest.
Petitioner’s motion for reconsideration was denied, leading to the present petition.

Whether petitioner should be considered a preferred (secured) creditor of Philfinance.
Whether petitioner can recover the full value of his CSPI shares or only 15% thereof like ordinary creditors.
Whether petitioner is entitled to legal interest.

Is petitioner a preferred (secured) creditor of Philfinance by virtue of the unauthorized withdrawal and sale of his shares during receivership?
Is petitioner entitled to recover the full monetary value of his CSPI shares or only the 15% recovery rate granted to ordinary creditors?
Is petitioner entitled to legal interest on the monetary value of the shares from the time of unauthorized sale until full payment?