Informal review of securities and their causal business in executives

In a decision of March 13, the Supreme Court of Justice (CSJ), with Luis Armando Tolosa Villabona acting as rapporteur, reaffirmed the duty of the judges to review ex officio the titles that serve as basis for the executive process, while extending such duty to the review of the causal business that gives rise to the title deed, whenever the title deed is of this nature.

This position disallows the interpretation of some executors in the sense that article 430 of the General Code of the Process - CGP limited the analysis of the enforceable title to the processing of the appeal for reconsideration filed by the executed party against the order issuing the payment order, while relativizing the principle of autonomy of the securities with respect to their causal business.

However, the aforementioned position is reasonable, corresponds to the spirit that informs the CGP and protects the interest of the parties, as well as the public interest in judicial proceedings, so we must abide by it, within the limits imposed by the regulation of securities, whenever they serve as a basis for the execution.

Pursuant to article 430 of the CGP, "the formal requirements of the enforceable title may only be disputed by means of an appeal for reconsideration against the enforcement order. No controversy on the requirements of the title that has not been raised by means of such appeal shall be admitted. Consequently, the formal defects of the enforceable title may not be recognized or declared by the judge in the judgment or in the order to proceed with the execution, as the case may be". The transcribed provision has been interpreted by the executors of the coactiva proceedings in the sense that the discussion about the titles that serve as basis for the process can only be ventilated through the process of the reposition against the payment order, so that the judge's capacity would be limited to the executing party filing such appeal and the precise sense in which he supports it. Consequently, this interpretation would suggest that the omission to appeal or the clumsy support of the appeal is sufficient to validate an inidoneous title or one arising from a defective business.

In relation to this position, the CSJ had said that "what the legislator contemplated in (...) article 430 of the CGP was that the executed party could not promote a defense with respect to the enforceable title, but by means of a reposition against the payment order (...). ) understood in such a way that it is far from being a prohibition (...) that the natural judge [may not], motu proprio (...) review it again, (...), at the time of issuing the judgment of instance" (STC4053 of March 22, 2018). Interpretation in accordance, according to the Court, with the provisions of the CGP in Articles 4 and 42, numeral 2, regarding the "duty of the judge (...) [to] make effective the equality of the parties in the process [with its informal powers]" [own emphasis] and Article 11, in the sense that the "object of the proceedings is the effectiveness of the rights recognized by the substantive law". These provisions also imply that the exercise of such power is a duty for the judge.

In the case under analysis, the defendant was hired by the executing company, after signing two blank promissory notes with letters instructing the employer to fill them out in accordance with what the employee owed at the end of the employment relationship. After auditing the employee's management, the employer determined that she owed a sum of money, the obligation to pay which she included in one of the promissory notes in order to initiate the executive process. Within the framework of said process, the judge of first instance issued a payment order and the judge of second instance maintained it, under the understanding that the executed party had voluntarily signed the promissory notes and had delivered them to the executing party, without considering that such action was a condition of her employment relationship, in accordance with the principle of autonomy of the security title with respect to its causal business.

With respect to the facts thus stated, the CSJ considered that "the alleged error of fact had materialized because [the judge] did not study the promissory note presented as the basis for the coercive action [and] (...) the allegation of the [defendant] when answering the libel, concerning having subscribed the title that was the object of the litigation to be hired in the executing company, should have generated in the accused judges a diligent activity in order to verify the veracity of that situation". On this point, the Court goes on to say that the judge should "understand that the reproach of the [defendant] went beyond the base amount of the collection. In fact, it censured the origin thereof, that is, the causal business, requiring a study, even ex officio, to determine its legality, [taking] into account that employers may not abuse their position and impose conditions such as the one described here for hiring or making discounts, in accordance with canons 59 and 149 of the Substantive Labor Code" [emphasis added].

Despite finding the Court's position reasonable, we note that, in order to maintain the function of the securities, as commercial goods, and to protect the good faith of third party assignees, the informal review of the legality of the causal business should only proceed when the parties to the executive process are, in turn, those of the causal business, or the executing assignee is in bad faith, in accordance with numeral 12 of article 784 of the Code of Commerce.