Banking Board of Ecuador

RESOLUTION No. JB-2015-3337

THE BANKING BOARD

CONSIDERING:

THAT by Resolution No. JB-2015-3226 of January 14, 2015, the Banking Board resolved: “REJECT the claim contained in the review appeal filed by Mr. Antonio Acosta Espinosa, Acting President of Banco del Pichincha C.A.; and, consequently, CONFIRM the letter No. INSFPR-D1-2014-0602 of April 2, 2014, by which the National Superintendent of the Private Financial Sector, at that time, rejected the request for reconsideration and ratified the administrative act contained in letter No. INSFPR-D1-2014-0176 of January 28, 2014, by which the appellant was fined the amount of USD $1,000.00, for failing to comply with what was established by the Banking Board through Resolution No. JB-2013-2422 of March 1, 2013,” fundamentally for the following considerations:

“(...)

THAT by letter No. INSFPR-D1-2014-0176 of January 28, 2014, the National Superintendent of the Private Financial Sector, at that time, sanctioned Mr. Antonio Acosta Espinosa, Legal Representative of Banco del Pichincha C.A., with a fine of US $1,000.00 for non-compliance with the provision contained in Resolution No. JB-2013-2422 of March 1, 2013, by which it was ordered that the financial entity pay the amounts claimed by the company PROADMA CIA. LTDA.;

THAT through letter No. INSFPR-D1-2014-0602 of April 2, 2014, the National Superintendent of the Private Financial Sector, at that time, addressed the request for reconsideration filed by Mr. Antonio Acosta Espinosa, Legal Representative of Banco del Pichincha C.A., against the administrative act contained in letter No. INSFPR-D1-2014-0176 of January 28, 2014; and concluded that:

“(...)

Given that compliance with legal provisions is imperative, that is to say, notwithstanding that Banco Pichincha C.A. had filed a lawsuit in the District Court No. 1 of Administrative Litigation regarding the provision contained in Resolution No. JB-2013-2422 of March 1, 2013, it must comply with what was ordered by said collegiate body in the administrative act by which it resolved the request for reconsideration.

From the analysis carried out on the letter containing the request for reconsideration under review, it is determined that the factual and legal grounds thereof do not refute the reasons that gave rise to the imposition of the fine in reference. In virtue of the foregoing, this office rejects the request for reconsideration filed, and ratifies the content of letter No. INSFPR-D1-2014-0176 of January 28, 2014.”;

THAT through communication entered in the Superintendence of Banks and Insurance on April 11, 2014, Mr. Antonio Acosta Espinosa, Acting President of Banco del Pichincha C.A., with the professional sponsorship of Dr. Pablo Cadena Merlo, filed before the Banking Board the review appeal against the administrative act contained in letter No. INSFPR-D1-2014-0602 of April 2, 2014;

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THAT the arguments of the appellant, principally state the following:

• That the financial entity has requested the Superintendence of Banks and Insurance to refrain from continuing to hear the case under review, as it has been submitted to the ordinary justice, this mainly because among the attributions of the Superintendent of Banks and the Banking Board, referred to in articles 180 and 175 of the Organic Law of Institutions of the Financial System, there is none that refers to the power to order the return of values;
• That article 134 of the Organic Law of Institutions of the Financial System, erroneously referred to in the appealed letter as the basis for imposing the sanction, establishes fines for when laws or regulations governing the functioning of the financial institution are infringed, or when instructions issued by the Superintendence are contravened, so that the type detailed for the application of a sanction does not fit the fact that occurred, that is, there has been no non-compliance with laws or regulations by the financial institution and instructions issued by the Superintendence have not been contravened; and,
• That the financial institution, by resorting to ordinary justice, is not disobeying the orders of the control organism; simply the financial institution is exercising a right established in the law, suing before the judges of the Administrative Litigation Tribunal to have the resolution issued by the collegiate body declared void, since said administrative act was not issued in accordance with the law as we have mentioned and consequently unjustly harms the bank;

THAT the review appeal was accepted for processing by Lic. Pablo Cobo Luna, Secretary of the Banking Board, through letter No. JB-2014-885 of April 16, 2014;

THAT article 213 of the Constitution of the Republic provides: “Art. 213.- The superintendencies are technical bodies for surveillance, auditing, intervention, and control of economic, social, and environmental activities, and of the services provided by public and private entities, with the purpose that these activities and services be subject to the legal framework and attend to the general interest. The superintendencies will act ex officio or upon citizen request. The specific faculties of the superintendencies and the areas requiring the control, auditing, and surveillance of each of them will be determined according to the law. (...)”;

THAT under the auspices of what is provided in article 213 of the supreme charter, the superintendencies are technical bodies for surveillance, auditing, intervention, and control of economic, social, and environmental activities, and of the services provided by public and private entities, with the purpose that these activities and services be subject to the legal framework and attend to the general interest;

THAT letter d) of article 175 and letter j) of article 180 of the Organic Law of Institutions of the Financial System provide: “Art. 175.- The following are the attributions of the Banking Board: (...)

d) Resolve administrative review appeals raised before this body; (...) “Art. 180.- The Superintendent of Banks has the following functions and attributions: (...) j) Impose administrative sanctions on the institutions under its control, when they contravene the provisions that govern them, as well as on their directors, administrators, and officials, and on credit subjects who infringe the provisions of this Law, in the cases indicated therein; (...)”;

THAT from the transcribed legal norms, it is inferred that the Superintendence of Banks, as the competent authority, has the function and attribution to ensure the stability, solidity, and correct functioning of institutions subject to its control; to supervise that they comply with the norms that govern them; and, to require that said institutions present and adopt the corresponding corrective measures when necessary;

THAT the contentious administrative action filed by the financial entity, challenging a resolution issued by the Banking Board, aims for the bank to seek the protection of its allegedly affected subjective rights, that is, the financial entity seeks an action aimed at justifying the alleged lack of legal validity of the challenged act and the manner in which it causes grievance to the plaintiff;

THAT article 76 of the Law of the Contentious Administrative Jurisdiction, which governs the contentious administrative procedure, expressly prohibits the suspension of the execution of the administrative act emanating from a competent body; this legal norm is based on the constitutional principles of legality and executability, before which the regularity of an administrative act implies that a presumption of legitimacy rests upon said legal manifestation;

THAT the author Agustín A. Gordillo, in his work “Treatise on Administrative Law; Volume III: The Administrative Act”, refers to the presumption of legitimacy of the regular administrative act and states: “(...) The presumption of legitimacy is the presumption of validity of the administrative act until its possible nullity has been declared by a competent authority. The presumption of legitimacy implies, in substance, a presumption of regularity of the act, also called presumption of legality, of validity, of juridicity, or pretension of legitimacy. The word ‘legitimacy’ should not be understood as a synonym for ‘perfection’. According to some authors, the presumption of legality comprises legitimacy and merit (...)”;

THAT article 24, of chapter II, title XVI, book I, of the Codification of Resolutions of the Superintendence of Banks and Insurance and of the Banking Board, as well as articles 19 and 20, of chapter II, title XVIII, of said Codification, mention the following: Book I, Title XVI, Chapter II: “ARTICLE 24.- The direct and immediate effects of administrative acts emanating from the Superintendence of Banks and Insurance are not suspended when

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they have been subject to challenge through the filing of appeals that must be resolved by the Banking Board...” Book I, Title XVIII, Chapter II: “ARTICLE 19.- If appeals are filed in the administrative sphere regarding the resolution of the Banking Board (...), the filing of such appeals will not suspend the execution or compliance with the challenged administrative act, as provided in article 76 of the Law of the Contentious Administrative Jurisdiction.” “ARTICLE 20.- The Superintendence of Banks and Insurance will issue the necessary instructions to apply the banking resolution mechanism.”;

THAT from the preceding analysis, it follows that administrative resolutions issued by the Banking Board will not be suspended, even if the bank has submitted this resolution to the Contentious Administrative Tribunal, and that the actions that the collegiate body may use to compel the bank to effective compliance with resolutions No. JB-2012-2297 of September 13, 2012 and No. JB-2013-2422 of March 1, 2013, fall within the competencies and attributions established in the Constitution of the Republic and the law, without prejudice to the actions the entity has undertaken in the judicial path;

THAT the facts related by the appellant do not constitute a valid argument on the basis of which the financial institution can justify non-compliance with the provisions of both the Banking Board and the Superintendence of Banks and Insurance, since the non-compliance of Banco Pichincha C.A. with what was resolved by the Banking Board in Resolution No. JB-2013-2422 of March 1, 2013, is evident; therefore, the financial institution must comply with what was ordered by the collegiate body in the different administrative acts in which the appeals filed by the bank were resolved;

THAT it is necessary to mention that the second paragraph of the Third Transitory Provision of the Organic Monetary and Financial Code, published in the Official Register No. 332 of September 12, 2014, determines that the Banking Board will continue to act until it resolves all claims, appeals, and other administrative procedures that it was hearing on the date of entry into force of this Code, within a period of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board, in which case the appeal filed by the financial institution will be resolved according to what is provided in the legal framework that was in force before the date of publication of the aforementioned code;

THAT through communication of January 29, 2015, Mr. Antonio Acosta Espinosa, Acting President of Banco Pichincha C.A., with the professional sponsorship of Drs. Gonzalo Orellana Sáenz and Pablo Cadena Merlo, filed a request for reconsideration against the administrative act contained in Resolution No. JB-2014-3226 of January 14, 2014;

THAT the Banking Board, in the session held on April 1, 2015, in accordance with the second paragraph of article 3, chapter II, title XVI, book I of the Codification of Resolutions of the Superintendence of Banks and Insurance and of the Banking Board, heard the appeal referred to in the preceding paragraph and determined that it does not comply with what is provided in the first paragraph thereof, that is, that there are no new elements of fact or law that motivate the preparation of corresponding reports, so it decided to deny it outright; and,

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IN exercise of its legal attributions,

RESOLVES:

SINGLE ARTICLE.- DENY the request for reconsideration filed by Mr. Antonio Acosta Espinosa, Acting President of Banco del Pichincha C.A., against the administrative act contained in Resolution No. JB-2015-3226 of January 14, 2015; and, consequently, CONFIRM said resolution.

NOTIFY.- Given in the Superintendence of Banks, in Quito, Metropolitan District, on the first of April of two thousand fifteen.

Signature Econ. Rodrigo Landeta Parra GENERAL SUPERINTENDENT, S PRESIDENT OF THE BANKING BOARD, E

I CERTIFY.- Quito, Metropolitan District, on the first of April of two thousand fifteen.

Signature Lic. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD