Application of sanction for charging usury interest in executive actions

In a tutela ruling of March 13, 2019, the Supreme Court of Justice, with Dr. Luis Alonso Rico Puerta presiding, regarding the penalty referred to in Article 884 of the Code of Commerce (CCo. ) and Article 70 of Law 50 of 1990, stated that, although "the rate for which it was requested [that] a payment order be issued (...) is higher than the current bank rate, for (...) when the claim was filed, (...) this is insufficient to [impose, by means of the payment order, the penalty referred to in the aforementioned articles]". This consideration, together with our position that the decision on such sanction must be deferred to be imposed by the judgment issued in the corresponding proceeding, in order to protect the due process and the right of defense of the possible sanctioned party, is the subject of this column.

According to Article 430 of the General Code of Procedure (hereinafter, the "CGP"), in executive proceedings, "upon presentation of the claim accompanied by a document that has executive merit, the judge shall issue an order directing the defendant to comply with the obligation in the form requested, if appropriate, or in the form he deems legal" [Bold and underlined]. The authorization for the judge to issue a payment order against the debtor in the manner he deems legal becomes relevant whenever the main obligation, its form of payment, condition or term or accessory obligation to pay interest, have been agreed between the parties in violation of legal limits. If such authorization exists, the judge would simply adapt the enforced obligation to the provisions of the law, instead of refraining from issuing a payment order and, thus, omitting to administer justice.

This is precisely what would occur whenever the interest agreed upon in relation to a monetary obligation exceeds the legally established limits and, consequently, constitutes usury. Thus, in accordance with the provisions of Article 884 of the Code of Commerce (CCo.), "when in commercial transactions interest is to be paid on a principal, without the interest rate being specified by agreement, it shall be the current bank rate; if the parties have not stipulated the default interest, it shall be equivalent to one and a half times the current bank rate and as soon as it exceeds any of these amounts the creditor shall lose all interest, without prejudice to the provisions of Article 72, Law 45 of 1990" [Bold and underlined in bold and underlined].

Although this article would seem to mandate that, as a penalty, the usurious creditor forfeits all interest, both interest and interest in arrears, Article 72 of Law 45 of 1990, incorporated by reference to said provision, moderates the penalty. In this sense, said article provides that "when interest is charged in excess of the limits established by law or by the monetary authority, the creditor shall forfeit all interest charged in excess, remunerative, moratorium or both, as the case may be, increased by an equal amount. In such cases, the debtor may request the immediate return of the sums paid for the respective interest, plus a sum equal to the excess, as a penalty" [Bold and underlined].

For practical purposes, it is necessary to articulate the provisions of substantive law, in Articles 884 of the Code of Civil Procedure and 72 of Law 45 of 1990, with the provisions of procedural law, in Article 430 of the Code of Civil Procedure. A first light interpretation of said article could lead us to conclude that, whenever the judge notices that the creditor has incorporated in its title a remuneration or moratorium interest higher than those allowed by law, he must issue a payment order for the principal, plus the remuneration or moratorium interest, reduced by an amount equal to twice the amount exceeding the legal limit. Thus, from the outset, the creditor seeking satisfaction of his credit through the administration of executive justice would be faced with the imposition of a penalty.

However, we consider that this position should be reviewed, in order to adopt a more appropriate one in relation to the protection of the rights of the potentially sanctioned creditor. On this point, in a tutela judgment of March 13, 2019, the Supreme Court of Justice, with Dr. Luis Alonso Rico Puerta presiding, stated that, although "the rate for which it was requested [that] a payment order be issued (...) is higher than the current bank rate, for (...) when the claim was filed, (...) this is insufficient to [impose, through the payment order, the sanction referred to in the aforementioned articles]". Thus, according to the literal wording of the revised substantive provisions, it would not be enough for the creditor to "collect" usury interest for the sanction to apply, but he must also have received the payment, in order to incur in the infraction and be subject to a sanction.

On the other hand, we consider that due process and the right to defense, as constitutional rights, prevail over the referred institution and impose additional considerations. The Colombian Constitutional Court, through judgment C-341 of 2014, with Dr. Mauricio González Cuervo as judge rapporteur, defined the meaning and content of the right to due process, in the following terms, "as the set of guarantees provided in the legal system, through which the protection of the individual involved in a judicial or administrative action is sought, so that during its processing his rights are respected and the correct application of justice is achieved. The guarantees of due process include: (i) The right to (...) obtain reasoned decisions, (...) (iii) The right to defense, understood as the use of all legitimate and adequate means to be heard and obtain a favorable decision. (...) (vi) the right to the independence and impartiality of the judge or official, who must always decide based on the facts, in accordance with the imperatives of the legal order, without advance designations, or unlawful prevention, pressures or influences" [Bold and underlined].

Thus, what is proper to due process and its component of the right to defense is that whoever is called upon to bear the effects of a decision should participate in the process of its formation, be heard, present evidence or challenge the evidence that is presented, and that the decision should be based on the facts and reasons thus accredited. It is evident that these guarantees would not be satisfied in the hypothesis that the sanction is imposed flatly through the issuance of the payment order. Consequently, it is necessary to find an interpretation and a practice that will accommodate the provisions of the substantive, procedural and constitutional provisions.

For such purposes, we consider that it is appropriate that the judge, whenever he notices that the plaintiff has incorporated in the enforceable title remuneration or moratorium interests higher than the maximum rate allowed by law, should adjust the payment order ex officio. In this sense, the judge would order the defendant to pay the principal due plus interest in an amount equal to the maximum allowed by law. In such order, the judge could warn the plaintiff about the possibility of proceeding with the penalty, but, in any case, he would have to defer the decision on this last point to be resolved in the order that ends the process, so that the plaintiff has the opportunity to defend himself along the way.