FACTS:

In 1977 and 1978, the petitioner, Jose C. Cordova, purchased certificates of stock of Celebrity Sports Plaza Incorporated (CSPI) from Philippine Underwriters Finance Corporation (Philfinance). The CSPI shares were delivered by Philfinance to custodian banks on behalf of the petitioner.

In 1981, Philfinance was placed under receivership by the Securities and Exchange Commission (SEC), and private respondents were appointed as liquidators. Without the knowledge and consent of the petitioner and without authority from the SEC, the private respondents withdrew the CSPI shares and sold them to Northeast Corporation in 1991.

The petitioner learned about the unauthorized sale in 1996 and subsequently filed a complaint with the SEC, seeking the return of the CSPI shares. Initially, the SEC dismissed the petition, but later on, it granted the petitioner's claims and ordered the private respondents to compensate the petitioner for the value of the CSPI shares. However, the SEC clarified its order and deleted the award of legal interest.

The Court of Appeals affirmed the decision of the SEC, considering the petitioner as an ordinary creditor of Philfinance.

In response, the petitioner filed a petition with the Supreme Court, raising several issues related to his status as a preferred creditor, the amount of recovery he is entitled to, and the entitlement to legal interest.

ISSUES:

1. Whether petitioner should be considered as a preferred (and secured) creditor of Philfinance;

2. Whether petitioner can recover the full value of his CSPI shares or merely 15% thereof like all other ordinary creditors of Philfinance;

3. Whether petitioner is entitled to legal interest.

RULING:

1. Petitioner should be considered as an ordinary creditor of Philfinance. The Court ruled that since the CSPI shares were sold without the knowledge and consent of petitioner and without authority from the SEC, petitioner's status was converted into that of an ordinary creditor for the value of such shares.

2. Petitioner can only recover 15% of the monetary value of his CSPI shares like all other ordinary creditors of Philfinance. The Court held that the return of petitioner's CSPI shares was impossible as they had already been sold and the proceeds commingled with the other assets of Philfinance. Petitioner's recovery was limited to the amount allowed for ordinary creditors.

3. Petitioner is not entitled to legal interest. The SEC clarified in its order that it did not intend to award interest to petitioner as this would be unfair to the other claimants.

PRINCIPLES:

• When shares have been sold and the proceeds commingled with the other assets, the shareholder's status is converted into that of an ordinary creditor for the value of the shares.

• In receivership or liquidation proceedings, all creditors should be treated equally and stand on equal footing.

• The assets of an institution under receivership or liquidation are exempt from any order, garnishment, levy, attachment, or execution.