Banking Board Resolution JB-2015-3392

Banking Board of Ecuador

RESOLUTION No. JB-2015-3392

THE BANKING BOARD

CONSIDERING:

THAT the second paragraph of the Third Transitory Provision of the Organic Code of Monetary and Financial Affairs determines that the Banking Board will continue to act until it resolves all claims, appeals, and other administrative procedures it was handling on the date this Code entered into force, within a period of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT pursuant to letter No. IRG-DAyEU-V-R-2014-195, dated March 19, 2014, Mr. Federico Eduardo Alarcón Franco, before the First Notary of the Canton of Milagro, granted a power of attorney to Mrs. Gloria Esther Alarcón Franco to constitute herself as an authorized signatory for savings account No. 3656916500 held at Banco Pichincha C.A.; through a certificate issued by the Ecuadorian Social Security Institute, IESS Hospital of Milagro, it is justified that Mr. Federico Eduardo Alarcón Franco, a client of Banco Pichincha C.A., passed away on April 9, 2012;

THAT through communication dated November 6, 2012, Mr. Daniel Fernando Alarcón Pérez and Mrs. Sofía Paola Alarcón Pérez, Ingrid Leonor Alarcón Pérez, and Norma Leonor Pérez Gómez, in their capacity as children and widow, respectively, of Mr. Federico Eduardo Alarcón Franco, filed a claim against Banco Pichincha C.A. seeking that the regulatory body order the aforementioned financial institution to restitute "$29,011.42", a sum that was deposited in savings account No. 3656916500 whose titular was Mr. Federico Eduardo Alarcón Franco.

THAT regarding the present claim, with letter No. AUD-C-R-078-2013, dated November 1, 2013, signed by Mr. Juan Calderón, Alternate Internal Auditor of Banco Pichincha C.A., the following is reported: that Banco Pichincha C.A. received a special power of attorney granted in favor of Mrs. Gloria Esther Alarcón Franco, with which she constituted herself as an authorized signatory for savings account No. 3656916500; that on May 18, 2012, Banco Pichincha C.A. received the documentation required for the payment of the credit operations life insurance contracted by Mr. Federico Eduardo Alarcón Franco; that by virtue of the aforementioned power, during the months of August and September 2012, Mrs. Gloria Esther Alarcón Franco, sister of the deceased, made withdrawals from the savings account in question; and, that on October 8, 2012, Banco Pichincha C.A. received a communication from Mrs. Sofía Alarcón Pérez in the following terms: "...I warned the bank to keep the funds frozen while the succession trial was being processed, where a common administrator had to be appointed to withdraw the mentioned funds proportionally with sufficient power...";

THAT with regard to the claim described above, the Regional Intendancy of Guayaquil, with letter No. IRG-DAyEU-V-R-2014-195, dated March 19, 2014, resolved the following: "(...) 2. ORDER BANCO PICHINCHA to proceed to restitute in savings account No. 3656915600, whose titular was Mr. Eduardo Alarcón Franco, the sum of... (US$30,530.00), in order that it be delivered to the legitimate heirs who are declared as such by a competent judicial authority...";

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THAT through communication entered into the Superintendency of Banks on April 2, 2014, Banco Pichincha C.A. filed an appeal for reconsideration of letter IRG-DAyEU-V-R-2014-195, dated March 19, 2014. Through letter No. IRG-DAyEU-V-R-2014-593, dated June 11, 2014, the Regional Intendancy of Guayaquil rejected the claims contained in the aforementioned appeal for reconsideration and ratified the content of letter No. IRG-DAyEU-V-R-2014-195, dated March 19, 2014;

THAT through communication entered into the Superintendency of Banks on June 24, 2014, Mr. Simón Acosta Espinosa, Vice President of Banco Pichincha C.A., filed before the Banking Board an appeal for review of letter No. IRG-DAyEU-V-R-2014-593, dated June 11, 2014;

THAT regarding the appellant's argument related to the alleged lack of consideration of the arguments of fact and law raised against the appeal for reconsideration filed against letter No. IRG-DAyEU-V-R-2014-195, dated March 19, 2014, it must be said that in accordance with Article 3, of Chapter II, of Title XVI, of Book I of the Codification of Resolutions of the Superintendency of Banks and the Banking Board, the appeal for reconsideration must be based solely on the existence of elements of fact and law not known by the regulatory body at the time of issuing the resolution being challenged. Thus, before the issuance of letter No. IRG-DAyEU-V-R-2014-593, dated June 11, 2014, which confirmed letter No. IRG-DAyEU-V-R-2014-195, dated March 19, 2014, the writing of April 2, 2014, with which Banco Pichincha C.A. filed the appeal for reconsideration in the case, was analyzed, and upon not verifying new grounds of fact or law in said documentation, in view of the current legal framework, the aforementioned appeal for reconsideration was rejected;

THAT in the present case, Banco Pichincha C.A. maintains that it did not incur in any incorrect procedure regarding the withdrawal of deposits of Mr. Federico Eduardo Alarcón Franco by his sister, Mrs. Gloria Esther Alarcón Franco. The Bank states that Mr. Federico Eduardo Alarcón Franco granted a power of attorney to Mrs. Gloria Esther Alarcón Franco that constituted her as an authorized signatory in savings account No. 3656916500 of said financial institution; and that, in that line, it was legally inappropriate, in attention to such power, to prevent the authorized signatory from making withdrawals from the mentioned account, especially since no one notified him about the death of Mr. Federico Eduardo Alarcón Franco;

THAT pursuant to letter No. IRG-DAyEU-V-R-2014-195, from the documentation sent by Banco Pichincha C.A., withdrawal slips presented by Mrs. Gloria Esther Alarcón Franco, made between August 16 and September 21, 2012, are evidenced, which sum a total of USD$30,530.00. Likewise, it must be highlighted that Banco Pichincha C.A. and the claimants have stated that in view of the present case, a succession trial is being processed;

THAT on the other hand, Banco Pichincha C.A., as recorded in letter No. AUD-C-R-078-2013, incurs in the following contradictions. It states: "it must be made clear that the Bank was not notified by the heirs about the death of the owner of this account"; that on May 18, 2012, it received the documentation to process the life insurance; that Mrs. Gloria Esther Alarcón Franco made the withdrawals from her brother's account "in the months of August and September 2012"; and that "in the unconsented supposition that the Bank could have blocked funds, by that date, there were no funds available, as the withdrawals were made prior to the request". From the foregoing, it is inferred that the Bank did know about the death of Mr. Federico Eduardo Alarcón Franco, and proof of this is the receipt of documents related to the life insurance, which occurred before Mrs. Gloria Esther Alarcón Franco made the withdrawals in question;

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THAT in that line, it agrees with what was stated in letter No. IRG-DAyEU-2014-379, dated December 3, 2014, to the extent that Banco Pichincha C.A. failed to comply with what is provided in Articles 2020 and 2067, numeral 5, of the Civil Code, which provide the following:

"Art. 2020.- Mandate is a contract in which a person entrusts the management of one or more business matters to another, who takes charge of them on behalf and at the risk of the first."

"Art. 2067.- The mandate ends:

1. By the performance of the business for which it was constituted;
2. By the expiration of the term or by the fulfillment of the condition fixed for the termination of the mandate;
3. By the revocation of the principal;
4. By the resignation of the agent;
5. By the death of the principal or the agent;
6. By the bankruptcy or insolvency of one or the other;
7. By the interdiction of one or the other; and,
8. By the cessation of the functions of the principal, if the mandate was given in the exercise of them;";

THAT on the date of the death of Mr. Federico Eduardo Alarcón Franco, the mandate by virtue of which his sister constituted herself as an authorized signatory should have been extinguished, and that should have occurred before the disputed money withdrawals were made;

THAT the order to restitute values to the client, in the face of a claim such as the one we are dealing with, has legal basis in Article 5, of Chapter IX, of Title XX, of Book I, of the Codification of Resolutions of the Superintendency of Banks and the Banking Board, when the regulatory body detects an incorrect procedure in the management of the financial institution. In light of the criterion expressed by lawyer Humberto Moya González, Regional Intendant of Guayaquil, constant in letter No. IRG-DAyEU-2014-379, dated December 3, 2014, the incorrect procedure in which the financial institution incurred consists of the violation of Articles 2020 and 2067, numeral 5, of the Civil Code;

THAT notwithstanding the aforementioned regarding having verified that the controlled entity has incurred in an incorrect procedure by delivering the deposited sums to someone who was no longer the depositary's attorney, it is necessary to observe that the challenged administrative act contains imprecisions necessary to rectify: firstly, in that it accepts the claim in its entirety, and not partially, which could imply accepting the textual request of the claimants in the sense that they "cancel immediately the amount of $29,011.42...", a claim that does not proceed since the deposited funds

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belong to the heirs of the account holder, whose status is not disputed before this body, has not been submitted to its consideration, nor does it legally correspond to it to adjudicate; and, additionally, because it is not accurate to order that those funds be delivered to the heirs who are declared by the "competent judicial authority", as conditioning the delivery to a judicial declaration would imply imposing requirements, not necessarily required by law, for the heirs or surviving spouse to access receiving their share of marital property or the inheritance, as the case may be;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2015-0100 of February 3, 2015, recommended to the Banking Board to reject the claim contained in the appeal for review filed;

AND IN exercise of its legal attributes,

RESOLVES:

SINGLE ARTICLE.- REJECT the petition contained in the appeal for review filed; and, consequently, PARTIALLY RATIFY letter No. IRG-DAyEU-V-R-2014-593, dated June 11, 2014, with which the content of letter No. IRG-DAyEU-V-R-2014-195, dated March 19, 2014, was confirmed, making it clear that the claim is accepted insofar as it orders BANCO PICHINCHA C.A. to restitute in savings account No. 3656916500, whose titular was Mr. Eduardo Alarcón Franco, the sum of THIRTY THOUSAND FIVE HUNDRED AND THIRTY 00/100 United States Dollars, clarifying that these sums must be delivered to the heirs who justify to the bank having obtained effective possession, and meet the legal requirements to exercise acts of administration of the hereditary assets, such as the collection of credits, or are awardees of the deposited claim in an act of partition; all this without prejudice to the right of the surviving spouse to receive their share as marital property, in case there was a marital society at the time of the depositary's death.

NOTIFY.- Given at the Superintendency of Banks, in Quito, Metropolitan District, on the thirtieth of April of two thousand fifteen.

[Signature] Econ. Rodrigo Landeta Parra GENERAL INTENDENT, S/ PRESIDENT OF THE BANKING BOARD, E

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

[Signature] Lcdo. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD