Banking Board Resolution JB-2015-3519

Junta Bancaria del Ecuador

RESOLUTION No. JB-2015-3519

THE BANKING BOARD

CONSIDERING:

THAT by Resolution No. JB-2015-3392 of April 30, 2015, the Banking Board resolved: "(...) SINGLE ARTICLE.- REJECT the petition contained in the review appeal filed; and, consequently, PARTIALLY RATIFY Office No. IRG-DAyEU-V-R-2014-593, of June 11, 2014, with which the content of Office No. IRG-DAyEU-V-R-2014-195, of March 19, 2014, was confirmed, noting that the claim is accepted insofar as it orders BANCO PICHINCHA C.A. to return to savings account No. 3656916500, whose holder 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 prove before the bank that they have obtained effective possession and comply with legal requirements to exercise administration of the inherited assets, such as collecting debts, or are adjudicators of the deposited claim in a partition act; all this without prejudice to the right of the surviving spouse to receive their share as marital property, in case a marital partnership existed at the time of the depositor's death. (...)", fundamentally for the following considerations:

"(...)

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

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

THAT through a communication of November 6, 2012, Mr. Daniel Fernando Alarcón Pérez and Mrs. Sofía Paola Alarcón Pérez, Ingrid Leonor Alarcón Pérez, and Norma Leonor Pérez Gómez, 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 return "$29,011.42", a sum deposited in savings account No. 3656916500 whose holder was Mr. Federico Eduardo Alarcón Franco.

THAT regarding the present claim, with Office No. AUD-C-R-078-2013, of 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.

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Junta Bancaria del Ecuador

Resolution JB-2015-3519 Page No. 2

Gloria Esther Alarcón Franco with which she was constituted as authorized signatory of savings account No. 3656916500; that on May 18, 2012, Banco Pichincha C.A. received the required documentation for the payment of credit life insurance contracted by Mr. Federico Eduardo Alarcón Franco; that in virtue of the aforementioned power, during August and September 2012, Mrs. Gloria Esther Alarcón Franco, sister of the deceased, made withdrawals from the aforementioned savings account; and that on October 8, 2012, Banco Pichincha C.A. received a communication from Mrs. Sofía Alarcón Pérez in the following terms: "...I advised the bank that the funds remain frozen while the succession lawsuit proceeds, where a common administrator must be named to withdraw the mentioned funds proportionally with sufficient power...";

THAT in view of the aforementioned claim, the Regional Intendancy of Guayaquil, with Office No. IRG-DAyEU-V-R-2014-195, of March 19, 2014, resolved the following: "(...) 2. ORDER BANCO PICHINCHA to proceed to return to savings account No. 3656915600, whose holder was Mr. Eduardo Alarcón Franco, the sum of... (US$30,530.00), in order to be delivered to the legitimate heirs declared as such by competent authority...";

THAT through a communication filed in the Superintendencia de Bancos on April 2, 2014, Banco Pichincha C.A. filed a motion for reconsideration of Office No. IRG-DAyEU-V-R-2014-195, of March 19, 2014. Through Office No. IRG-DAyEU-V-R-2014-593, of June 11, 2014, the Regional Intendancy of Guayaquil rejected the claims contained in the aforementioned motion for reconsideration and ratified the content of Office No. IRG-DAyEU-V-R-2014-195, of March 19, 2014;

THAT through a communication filed in the Superintendencia de Bancos on June 24, 2014, Mr. Simón Acosta Espinosa, Vice President of Banco Pichincha C.A., filed before the Banking Board a review appeal against Office No. IRG-DAyEU-V-R-2014-593, of June 11, 2014;

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

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Resolution JB-2015-3519 Page No. 3

THAT in the present case, Banco Pichincha C.A. maintains that it did not incur any incorrect procedure regarding the withdrawal of deposits by 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, constituting her as authorized signatory in savings account No. 3656916500 of said financial institution; and that, in this line, it was legally improper, given such power, to prevent the authorized signatory from making withdrawals from the mentioned account, especially since no one notified her of Mr. Federico Eduardo Alarcón Franco's death;

THAT pursuant to Office 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 are evidenced, made between August 16 and September 21, 2012, totaling USD $30,530.00. It must also be highlighted that Banco Pichincha C.A. and the claimants have stated that in view of this case, a succession lawsuit is being processed;

THAT on the other hand, Banco Pichincha C.A., as recorded in Office No. AUD-C-R-078-2013, incurs the following contradictions. It states: "it must be made clear that the Bank was not notified by the heirs about the death of this account's owner"; that on May 18, 2012, it received the documentation to process the credit life insurance; that Mrs. Gloria Esther Alarcón Franco made 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 available funds, as the withdrawals were made prior to the request". From the above, it is inferred that the Bank did know about Mr. Federico Eduardo Alarcón Franco's death and proof thereof is the receipt of documents related to credit life insurance, which occurred before Mrs. Gloria Esther Alarcón Franco made the contested withdrawals;

THAT in this line, it agrees with what was stated in Office No. IRG-DAyEU-2014-379, of December 3, 2014, in the sense that Banco Pichincha C.A. failed to comply with Articles 2020 and 2067, paragraph 5, of the Civil Code, which provide as follows:

"Art. 2020.- Mandate is a contract in which one person entrusts the management of one or more businesses 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 fulfillment of the stipulated condition for termination;
3. By revocation by the principal;
4. By resignation of the agent;
5. By death of the principal or the agent;
6. By bankruptcy or insolvency of one or both;
7. By interdiction of one or both; and,

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8. By cessation of the principal's functions, if the mandate was given in exercise thereof.";

THAT at the date of Mr. Federico Eduardo Alarcón Franco's death, the mandate under which his sister was constituted as authorized signatory should have expired, and that should have occurred before the contested money withdrawals were made;

THAT the order to return values to the customer, in a claim like the one at hand, has legal basis in Article 5, Chapter IX, Title XX, Book I of the Codification of Resolutions of the Superintendencia de Bancos and Junta Bancaria, when the control body finds an incorrect procedure in the financial institution's management. In light of the criterion expressed by lawyer Humberto Moya González, Regional Intendant of Guayaquil, constant in Office No. IRG-DAyEU-2014-379, of December 3, 2014, the incorrect procedure incurred by the financial institution consists in the violation of Articles 2020 and 2067, paragraph 5, of the Civil Code;

THAT notwithstanding what is stated regarding having ascertained that the controlled entity incurred an incorrect procedure by delivering deposited sums to someone who was no longer authorized, it is necessary to observe that the challenged administrative act contains imprecisions that must be rectified: first, in accepting the claim in its entirety and not partially, which could imply accepting the textual petition of the claimants to "immediately cancel the amount of $29,011.42 ...", a petition that does not proceed since the deposited funds belong to the account holder's heirs, whose status is not disputed before this body and does not legally fall to it to resolve; and additionally, because it is inaccurate to order that those funds be delivered to heirs declared by the "competent judicial authority", since conditioning delivery on a judicial declaration would impose requirements, not necessarily required by law, for heirs or surviving spouses to access their share of marital property or the inheritance estate, as applicable;

(...)"

THAT through a communication of June 11, 2015, Mr. Antonio Acosta Espinosa, Acting President of Banco Pichincha C.A., filed a motion for reconsideration against the administrative act contained in Resolution No. JB-2015-3392 of April 30, 2015;

THAT the Banking Board, in a session held on July 15, 2015, as established by the second paragraph of Article 3, Chapter II, Title XVI, Book I of the Codification of Resolutions of the Superintendencia de Bancos y Seguros and Junta Bancaria, reviewed the appeal referred to in the preceding paragraph and determined that it does not meet what is provided in the first paragraph thereof, meaning there are no new facts or law elements to justify preparing corresponding reports, so it decided to deny it outright; and,

IN exercise of its legal powers,

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RESOLVES:

SINGLE ARTICLE.- DENY the motion for reconsideration filed by Mr. Antonio Acosta Espinosa, Acting President of Banco Pichincha C.A., against the administrative act contained in Resolution No. JB-2015-3392 of April 30, 2015; and, consequently, CONFIRM said resolution.

NOTIFY.- Given at the Superintendencia de Bancos y Seguros, in Quito, Metropolitan District, on July 15 of the year two thousand fifteen.

[Firma] Econ. Rodrigo Landeta Parra ACTING GENERAL INTENDANT PRESIDENT OF THE BANKING BOARD SESSION (E)

I CERTIFY.- Quito, Metropolitan District, July 15 of the year two thousand fifteen.

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

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Junta Bancaria del Ecuador