The slow and imperceptible death of civil trusts

On February 17, 2017, the Superintendence of Companies, by means of Official Letter number 220-021816, ratified what was stated in Official Letter 220-126109 of June 20, 2016, regarding the feasibility of the practice of attachment and sequestration measures in executive proceedings for the breach of the main obligations secured with mortgage or chattel liens on assets delivered in civil trust.

In the Official Letter of reference, the Superintendency of Corporations brings to mention the provisions of article 816 of the Civil Code, which states that within the scope of the powers granted to the trust owner, the latter has the power to constitute mortgages and other encumbrances on the assets delivered in civil trust, provided that he previously requests judicial authorization and informs the trustees of the cause, otherwise, the latter will not be obliged to recognize the encumbrances constituted.

In addition to the above, the Superintendence of Corporations indicated in its Official Letter that with the issuance of the General Code of the Process, the provision previously established in Article 684 of the Code of Civil Procedure was eliminated, according to which "the objects held in trust cannot be seized". From there arises the conceptual discussion about those assets that civil legislation considers unattachable by reason of the civil trust, since numeral 8 of article 1677 of the Civil Code, maintains in force the stipulation according to which the property of the objects that the debtor holds fiduciarily is unattachable, while article 594 of the General Code of the Process lists the circumstances and the unattachable assets, within which no restriction is included referring to the assets and objects delivered in civil trust.

In relation to the conceptual discussion, the Superintendence of Corporations concludes that this is solved in the terms of article 594 of the General Code of the Process, since the things held in trust are not established as unattachable, and the practice of attachment and seizure measures can be applied to them.

In our opinion, the conclusion reached by the Superintendence of Corporations violates both the principle of prevalence of substantive law over procedural law, stipulated in Article 228 of the Political Constitution, and the principle of legality, according to which the interpretative power of the Superintendence of Corporations cannot exceed a substantive rule that expressly establishes the contrary, as is the case with numeral 8 of Article 1677 of the Civil Code.