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    Cordova V Reyes

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    Cherlene Tan
    This case involved a petitioner who bought stock certificates from a corporation that later went into receivership. The liquidators withdrew the petitioner's stock shares from the bank and sold them without authorization, including the proceeds in the corporation's funds. The petitioner argued he was a preferred creditor due to the misappropriation of his shares, entitling him to the full value. However, the court found that once the shares were sold and the proceeds commingled with other corporate funds, the money became generic property rather than specific. As an ordinary creditor, the petitioner was only entitled to recover 15% of his claim pro rata with other creditors.

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    Cordova V Reyes

    Uploaded by

    Cherlene Tan
    522 views2 pages
    This case involved a petitioner who bought stock certificates from a corporation that later went into receivership. The liquidators withdrew the petitioner's stock shares from the bank and sold them without authorization, including the proceeds in the corporation's funds. The petitioner argued he was a preferred creditor due to the misappropriation of his shares, entitling him to the full value. However, the court found that once the shares were sold and the proceeds commingled with other corporate funds, the money became generic property rather than specific. As an ordinary creditor, the petitioner was only entitled to recover 15% of his claim pro rata with other creditors.

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    cordova v reyes

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    This case involved a petitioner who bought stock certificates from a corporation that later went into receivership. The liquidators withdrew the petitioner's stock shares from the bank and sold them without authorization, including the proceeds in the corporation's funds. The petitioner argued he was a preferred creditor due to the misappropriation of his shares, entitling him to the full value. However, the court found that once the shares were sold and the proceeds commingled with other corporate funds, the money became generic property rather than specific. As an ordinary creditor, the petitioner was only entitled to recover 15% of his claim pro rata with other creditors.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    522 views2 pages

    Cordova V Reyes

    Uploaded by

    Cherlene Tan
    This case involved a petitioner who bought stock certificates from a corporation that later went into receivership. The liquidators withdrew the petitioner's stock shares from the bank and sold them without authorization, including the proceeds in the corporation's funds. The petitioner argued he was a preferred creditor due to the misappropriation of his shares, entitling him to the full value. However, the court found that once the shares were sold and the proceeds commingled with other corporate funds, the money became generic property rather than specific. As an ordinary creditor, the petitioner was only entitled to recover 15% of his claim pro rata with other creditors.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    CORDOVA v.

    REYES DAWAY LIM BERNARDO LINDO ROSALES LAW OFFICES, (2007)


    Common Credits, Art. 2245, Art. 2251

    Facts:
    Sometime in 1977 and 1978, petitioner Jose C. Cordova bought from Philippine Underwriters Finance
    Corporation (Philfinance) certificates of stock of Celebrity Sports Plaza Incorporated (CSPI) and shares of
    stock of various other corporations.

    On June 18, 1981, Philfinance was placed under receivership by public respondent Securities and
    Exchange Commission (SEC). Thereafter, private respondents Reyes Daway Lim Bernardo Lindo Rosales
    Law Offices and Atty. Wendell Coronel (private respondents) were appointed as... liquidators.[7]
    Sometime in 1991, without the knowledge and consent of petitioner and without authority from the
    SEC, private respondents withdrew the CSPI shares from the custodian banks.[8] On May 27, 1996, they
    sold the shares to

    Northeast Corporation and included the proceeds thereof in the funds of Philfinance.

    On April 14, 1998, the SEC rendered judgment dismissing the petition. However, it reconsidered this
    decision in a resolution dated September 24, 1999 and granted the claims of petitioner.

    On October 27, 1999, the SEC issued an order clarifying its September 24, 1999 resolution. While it
    reiterated its earlier order to pay petitioner the amount of P5,062,500, it deleted the award of legal
    interest.

    The Civil Code provisions on concurrence and preference of credits are applicable to the liquidation
    proceedings.

    Issue: Was petitioner a preferred or ordinary creditor under these provisions?


    Ø Petitioner argues that he was a preferred creditor because private respondents illegally withdrew his
    shares from the custodian banks and sold them without his knowledge and consent and without
    authority from the SEC. He quotes Article 2241 (2) of the Civil Code:
    With reference to specific movable property of the debtor, the following claims or liens shall be
    preferred:
    (2) Claims arising from misappropriation, breach of trust, or malfeasance by public officials committed
    in the performance of their duties, on the movables, money or securities obtained by them;
    Ø He asserts that, as a preferred creditor, he was entitled to the entire monetary value of his shares.

    Held: Petitioner’s argument is incorrect. Article 2241 refers only to specific movable property. His claim
    was for the payment of money, which is generic property and not specific or determinate. Petitioner’s
    CSPI shares were specific or determinate movable properties. But after they were sold, the money
    raised from the sale became generic and were commingled with the cash and other assets of
    Philfinance. Unlike shares of stock, money is a generic thing. It is designated merely by its class or genus
    without any particular designation or physical segregation from all others of the same class. This means
    that once a certain amount is added to the cash balance, one can no longer pinpoint the specific amount
    included which then becomes part of a whole mass of money.

    Considering that petitioner did not fall under any of the provisions applicable to preferred creditors, he
    was deemed an ordinary creditor under Article 2245:
    Credits of any other kind or class, or by any other right or title not comprised in the four preceding
    articles, shall enjoy no preference.

    This being so, Article 2251 (2) states that:


    Common credits referred to in Article 2245 shall be paid pro rata regardless of dates.

    Like all the other ordinary creditors or claimants against Philfinance, he was entitled to a rate of
    recovery of only 15% of his money claim.

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