Banking Board of Ecuador

RESOLUTION No. JB-2015-3324

THE BANKING BOARD

CONSIDERING:

THAT by communication dated March 28, 2014, received by the Superintendency of Banks and Insurance on April 1, 2014, Mr. Jorge Acosta Espinosa, Adjunct President of Banco Pichincha C.A., informed the Superintendency of Banks and Insurance that regarding the claim filed by Mr. Luis Alejandro Torres Baquero, "... he has filed the corresponding lawsuit before the Judges of District Court No. 1 of the Contencioso Administrativo...";

THAT by Official Letter No. INSFPR-D1-2014-0690 of April 15, 2014, Economist Valeria Llerena E., National Superintendent of the Private Financial Sector, under the provisions of Article 175, letter d), of the General Law of Institutions of the Financial System, organic in nature, and Article 76 of the Law of the Contencioso Administrativo Jurisdiction, which expressly prohibits suspending the execution of the administrative act, replied to the Executive President of Banco Pichincha C.A. in the following manner:

"Given that compliance with legal provisions is imperative, that is to say, notwithstanding that Banco Pichincha C.A. has filed a judicial lawsuit in District Court No. 1 of the Contencioso Administrativo regarding the provision contained in Resolution No. JB-2014-2776 of January 30, 2014, it must comply with what was ordered by said collegiate body in the administrative act by which it resolved the repossession appeal.";

THAT through communication dated April 22, 2014, received by the Superintendency of Banks and Insurance on the 23rd of the same month and year, the Adjunct President of Banco Pichincha C.A. filed a repossession appeal against the administrative act contained in Official Letter No. INSFPR-D1-2014-0690 of April 15, 2014, which, in accordance with the provisions of Articles 175, letter d), and 180, letter j), of the General Law of Institutions of the Financial System, organic in nature, as well as the provisions of Article 76 of the Law of the Contencioso Administrativo Jurisdiction, was resolved by Economist Edgar Abad Molina, Acting National Superintendent of the Private Financial Sector, by Official Letter No. INSFPR-D1-2014-0942 of May 29, 2014, rejecting the claim contained in the repossession appeal and ratifying the appealed official letter;

THAT by communication received by the Superintendency of Banks and Insurance on June 9, 2014, Mr. Antonio Acosta Espinosa, Adjunct President of Banco Pichincha C.A., filed a review appeal before the Banking Board against the administrative act contained in Official Letter No. INSFPR-D1-2014-0942 of May 29, 2014, arguing: that based on the criterion of the National Legal Superintendency, contained in Report No. INJ-DNJ-SAL-2013-0874 of December 19, 2013, the repossession appeal filed against administrative act No. INSFPR-D1-2014-0690 of April 15, 2014, should not have been rejected; that Article 175 of the General Law of Institutions of the Financial System refers to administrative order matters of financial entities and not to ordering

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returns due to customer claims, therefore Resolution No. JB-2014-2776 of January 30, 2014, violates the principle of legality, due to lack of competence of the Banking Board; that the grounds of the repossession appeal have not been subject to analysis or motivation in the official letter of the present challenge, contrary to the provisions of Article 66, numeral 23, of the Constitution of the Republic of Ecuador, which leads to the nullity provided for in letter l), of numeral 7, of Article 76 ibidem; and, that the case of Mr. Luis Alejandro Torres Baquero is subject to ordinary justice, therefore, based on the principle of independence of the Judicial Function, he requests that the control organism abstain from treating it;

THAT by Official Letter No. JB-2014-1502 of June 11, 2014, the Acting Secretary of the Banking Board, communicated to the Adjunct President of Banco Pichincha C.A. that the review appeal has been accepted for processing and that he may present additional documentation within the term of fifteen days from being notified with that official letter;

THAT by Memorandum No. INSFPR-D1-2014-0724 of July 15, 2014, Economist Edgar Abad Molina, Acting National Superintendent of the Private Financial Sector, issued his technical report through which, after exposing the background of the case; referring to the grounds of fact and law exposed by the appellant; and, analyzing them in light of Articles 175, letter d), and 180, letter j), of the General Law of Institutions of the Financial System, organic in nature, as well as Article 76 of the Jurisdiction of the Contencioso Administrativo, and of the legal criteria set forth through Memoranda Nos. INJ-DNJ-SAL-2013-0874 of December 19, 2013 and INJ-DNJ-SAL-2014-0447 of June 19, 2014, concludes, as follows:

"... the bank has not provided new elements of a technical and/or legal nature to those already analyzed by this office in the repossession appeal, whose response is challenged with the mentioned review appeal, therefore, this office and under the shelter of the content of the criteria of the National Legal Superintendency and of the National Directorate of Attention and Education to the User, (...) recommends that the Banking Board deny the review appeal filed and ratify the content of Official Letter No. INSFPR-D1-2014-0942 of May 29, 2014.";

THAT regarding the argument of the appellant in the sense that based on the criterion of the National Legal Superintendency, contained in Report No. INJ-DNJ-SAL-2013-0874 of December 19, 2013, the repossession appeal filed against administrative act No. INSFPR-D1-2014-0690 of April 15, 2014, should not have been rejected, it is necessary to transcribe below the first paragraph of Article 76 of the Law of the Contencioso Administrativo Jurisdiction, and the pertinent part of the cited legal report:

Law of the Contencioso Administrativo Jurisdiction

"Art. 76.- Except as provided in the preceding article, (suspension of the coercive procedure) in no case shall the execution or compliance of the administrative act be suspended."

Report No. INJ-DNJ-SAL-2013-0874 of December 19, 2013

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"The contencioso administrative action filed by the Bank, challenging the resolution of the Banking Board, since it is a subjective action or of full jurisdiction, has as its purpose that the bank, seeks the protection of its subjective rights allegedly affected, denied, unrecognized or not recognized, that is to say it is an action that tends to justify the lack of legal validity of the challenged act and the manner in which it causes grievance to the plaintiff.

Since the matter has been submitted to the judicial seat, the Court of the Contencioso Administrativo shall determine the validity and legal efficacy of the challenged administrative act and, if applicable, shall order the annulment or illegality of the administrative act, the restoration of the affected subjective rights of the plaintiff, that is, the bank.";

THAT in the same sense, the criterion set forth by the National Legal Superintendency itself through Memorandum No. INJ-DNJ-SAL-2014-0447 of June 19, 2014, which, for the knowledge of the Bank, is transcribed below, is supported:

"... in concordance with the position maintained by the National Legal Superintendency, it is reiterated that the resolutions of the Banking Board on administrative appeals must be executed, without prejudice to the contencioso actions that the interested parties could file before the Contencioso Administrative Court."; (emphasis added)

THAT in merit of the legal criteria transcribed, the argument of the appellant is not appropriate, since nowhere in said criteria has it been mentioned that by having submitted the resolution of the Banking Board to the Court of the Contencioso Administrativo, its execution should be suspended, but quite the contrary, that is, that the resolution must be executed, without prejudice to the contencioso administrative actions;

THAT arguing that Article 175 of the General Law of Institutions of the Financial System refers to "administrative order matters of financial institutions and not to ordering returns due to customer claims, therefore Resolution No. JB-2014-2776 of January 30, 2014, violates the principle of legality, due to lack of competence of the Banking Board", is wanting to give the legal provision the interpretation convenient to the interests of the appellant and not the one that derives from the spirit of said provision, which literally states:

"ARTICLE 175.- The following are the attributions of the Banking Board:

(...)

d) Resolve the review appeals of administrative order raised before this organ;

(...) ";

THAT the appeals that the Banking Board hears cannot be of any other nature than of "administrative order", since they arise as a consequence of

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the resolutions adopted by the Superintendency of Banks and Insurance in the administrative sphere;

THAT those resolutions of an administrative nature, are issued under the shelter of the faculties and attributions provided for in the Constitution and the Law; therefore, in all cases of provisions or resolutions emanating from the Superintendency of Banks and Insurance or from the Banking Board, the principle of legality contemplated in Article 226 of the Constitution of the Republic of Ecuador is observed;

THAT the argument that Article 175 of the General Law of Institutions of the Financial System "refers to administrative order matters of financial system institutions" and that the Banking Board does not have competence to hear and resolve this type of appeals, is not pertinent, since it intends to disregard the scope of the invoked legal provision and the principles of Administrative Law;

THAT neither is the argument pertinent that states that the grounds of the repossession appeal have not been subject to analysis or motivation in the official letter of the present challenge, in reason that Official Letter No. INSFPR-D1-2014-0942 of May 29, 2014 contains in detail the background of the case; refers to the grounds of fact and law exposed by the appellant; analyzes them in light of the pertinent legal provisions, which are even transcribed in the appealed official letter; and, arrives at the correct conclusion, which derives from the application of the law to the facts that occurred. Consequently, the challenged official letter does not contradict the provisions of Article 66, numeral 23, of the Constitution, and less can it be a cause for nullity, in the terms of Article 76, numeral 7, letter l) ibidem;

THAT regarding the request that the control organism abstain from treating the case of Mr. Luis Alejandro Torres Baquero because it is subject to ordinary justice, it must be indicated that at no time has the Superintendency of Banks and Insurance interfered with the administration of justice nor has it failed to observe Article 168 of the Constitution of the Republic. The case of Mr. Torres, was already known and resolved in advance, both by the Superintendency of Banks and Insurance and by the Banking Board;

THAT the National Legal Superintendency, through Memorandum INJ-DNJ-SAL-2014-0701 of September 17, 2014, recommended to the Banking Board to reject the claim contained in the review appeal filed; and,

IN exercise of its legal attributions,

RESOLVES:

SINGLE ARTICLE.- REJECT the claim contained in the review appeal filed by Mr. Antonio Acosta Espinosa, Adjunct President of Banco Pichincha C.A.; and, consequently, CONFIRM the administrative act contained in Official Letter No. INSFPR-D1-2014-0942, of May 29, 2014, through which the Acting National Superintendent of the Private Financial Sector, rejected the repossession appeal and confirmed Official Letter No. INSFPR-D1-2014-0690 of April 15, 2014, through which that Superintendency

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disposed that the bank comply with what was ordered in Resolution No. JB-2014-2776 of January 30, 2014, with the clarification that this resolution is final, without compliance by the financial entity.

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

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.

Lcdo. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD