Panama Executive Process
It is important to establish that the Executive processes in the Panamanian jurisdiction consist of the execution of a right, which is already recognized and that it derives its existence in attention to a document that at all times constitutes the executive title in favor of the performer.
The Executory Proceeding s can be filed in accordance with the competence and jurisdiction in courts and State Institutions, on clear and enforceable obligations.
In this sense, executive processes shall only proceed when the obligation is clear, liquid, and enforceable and that it is in default in accordance with each contract.
Whether they are mortgages, personal loans and/or car loans, the executive processes apply to all.
In that order, our judicial code in article 1613 provides that types of documents are called “executive titles” which are the following:
1. The executory sentences of convictions and the executory resolutions that approve a search, a compromise, or an agreement;
2.The rulings of arbitrators at law and arbitrators in equity;
3. Any judicial action from which it appears that a person is obliged to pay an amount, deliver, do or stop doing something;
4.Public deeds;
5.Private documents of any kind, provided that the debtor has acknowledged his signature before the Judge or has been declared confessed or has presented the document to a Notary for certification or protocolization or has died and the heirs recognize the signature;
6. Without prejudice to the provisions of special laws, lease fees whose liquidity is proven by unpaid receipts, together with the respective lease agreement registered in the competent official office, or that meets any of the requirements set forth in the previous ordinal. ;
7.The document stating against the owner of the cargo, credits in accordance with the Commercial Code;
8.The document that records, against the owner of the ship, credits in accordance with the Commercial Code;
9.The document stating against the owner of the freight, credits in accordance with the Commercial Code;
10.Bounced checks by the bank against which it was drawn, due to insufficient funds or because the drawer does not have an account in the Bank;
11. Negotiable documents against the drawers, grantors, acceptors, endorsers, guarantors and other parties involved thereof;
12.Bonds and their coupons;
13.The credit for common expenses of buildings subject to the horizontal property regime, as provided in the Law;
14.Any other Title that the Law attributes executive force to;
15. The certifications issued by Banks, Savings Banks and Savings and Loan Associations, duly authorized to operate their economic activities in accordance with the Law, in which said entities record the credit balances that their accounting books show against the defendant, provided that such certifications are reviewed by a Certified Public Accountant;
16.The document containing a joint surety, even if it does not express a liquid amount, provided that said document meets the requirements set forth in section 5 of this article and the surety agrees to an obligation documented in a Title that, in itself, lend executive merit; and~
17. The certifications issued by the issuer or its representative in relation to the rights that a person has over securities represented by book entries, and those issued by an intermediary in relation to the stock market rights that it has recognized over financial assets in custody accounts.
18. The statement of account or unpaid receipts of the for fees and/or common or extraordinary expenses that a co-owner must pay.
In that order we can determine that in Panama there are the following
- Foreclosure: This process is used to enforce a mortgage obligation.
- Execution of sentences: When a person loses a trial and does not comply with the sentence, the winner requests the execution of the sentence, to force the loser to comply with the obligations established in the sentence.
- Execution of guarantees: The creditor can request the execution of the guarantee to recover the money owed. If a debtor defaults on a financial obligation that is backed by collateral
- Executive labor processes: In this case, the worker, after having won the labor process, requests the execution of the sentence before the labor courts.
- Executory Proceedings for coercive collection: In this case, it is carried out by credit that comes from or originates from obligations where the creditor is an autonomous and semi-autonomous entity of the Panamanian State.
- Executory Proceedings of Maintenance Fee of Horizontal Property: That in this case, the executive title is a statement of account or receipts of the maintenance fees of the Horizontal Property, which must be signed by the Administrator of the HP who must be duly registered in the Public Registry.
In that order, executory proceedings are divided into processes of higher and lower amounts; where they are attended to by virtue of the amount of the demand, which is divided into smaller amounts ranging from USD$ 1,000.00. up to USD$5,000.00, which are handled by the civil municipal courts.
Those ranging from USD$5,001.00 onwards, which are served by the civil branch circuit courts
The stages of the Executive processes are as follows:
- Presentation of the executory proceeding
- Admission of the lawsuit
- Resolution that issues a payment order, which is called the Enforceable Decision, which once issued is notified to the defendants in this resolution once the defendant has notified them. The latter has a period of two (2) days to announce an appeal, and from there to support its respective appeal. On the other hand, you have a period of eight (8) days to present exceptions.
- Notification of the parties of the enforceable decision.
- Term for the presentation of resources, incidents, and exceptions.
- Sale or judicial auction.
- Provisional self-adjudication.
- Final award according to the case.
- End of the process.
Exceptions
In accordance with article 1682 of the Judicial Code, the disputed partymay file as defense mechanisms an appeal called “exception” that is filed in the executive process. In that order, the most common exceptions that can be filed are the following:
- Pay
- Debt remission
- Compensation
- Novation of obligation
- Intentional violence that the opponent intervened
- Falsehood of the obligation claimed
- Nullity of the act or contract
- Transaction
- Res judicata
- Request ahead of time
- The obligation being demanded is conditional and the condition is not fulfilled
- Force majeure or fortuitous event
Not giving a technical name to an exception is not a reason for the court to ignore the fact that constitutes it.
It is important to highlight that the mortgage foreclosure process with waiver of process; the disputed party may only present the following as an exception:
1. Total Payment of the Obligation and
2. Prescription of the Action.
In the Executory Proceedings of Maintenance Fee of Horizontal Property: The disputed party may only file the exceptions of
1. Payment,
2. Res Judicata and
3. Prescription.
It should be noted that once the exception presented is admitted, the court shall notify the executor for a period of three (3) days to respond. Once it has been answered, the Court must proceed to resolve regarding the admissibility of the evidence. In this sense, the trial practice shall be set for a period of five (5) to twenty (20) days.
After the taking of evidence, a period of three (3) days is set for the disputed party to present his or her arguments, and the executioner shall present his or her arguments within the following three (3) days.
From there, the Court must issue a formal Judgment to resolve this appeal, which may be subject to appeal by any of the parties, and review of cassation respectively.
Embargo
In the mortgage foreclosure process, the property or assets that were guaranteed for the disbursement of the loan can be seized, that is, the Mortgage guarantees payment and is directly seized when the foreclosure process begins.
In that order, in the case of real estate, the embargo shall consist of the following:
a. In putting the property out of business by recording the order in the respective Registry, until the property is auctioned, or released through payment of the debt;
b. In delivering the property to a custodian so that he can collect his rents, if the creditor so requests and the Court deems it so; either
c. In both things at the same time.
Regarding other types of property, the seizure shall be made in the following order:
1. Money and its representative signs;
2. Jewelry, precious stones or metals;
3. Credits realizable in the act;
4. Real estate or its income;
5. Fifteen percent (15%) of the excess of the salary or minimum wage that the debtor earns with his employment, or fifteen percent (15%) of the income he receives as an independent trade or profession;
6. Personal property in general;
7. Fruits and income of all kinds; and
8. The other assets that the debtor has.
In restriction of seizure, exceptas provided in special laws, all alienable assets of the debtor may be subject to seizure with the following exceptions:
1. The minimum wage or salary and the minimum part of the salary, unless it is a claim for alimony;
2. Eighty-five percent of the wage or salary outside the cases expressed in the previous ordinal, except in the case of claims for alimony;
3. The bed of the husband and wife, those of his children who live with him and at his expense and the clothing of all these people; as well as essential family room furniture, including a sewing machine, stove, washing machine, radio, television, refrigerator and kitchen accessories;
4. Books, furniture, machines, instruments and material of their art, trade or profession up to a value of five thousand balboas (B/.5,000.00) and at the discretion of the debtor himself;
5. The machines, animals and instruments for agricultural cultivation, as necessary for the service of the property to which they are assigned, up to a value of five thousand balboas (B/.5,000.00) and at the discretion of the debtor himself;
6. The food and fuel items that exist in the debtor’s possession, up to what is necessary for the family’s consumption for one month;
7. The personal rights of use and habitation that the debtor possesses;
8. Labor benefits in accordance with the Labor Code and alimony payments due by law;
9. Social benefits, pensions or retirements;
10. The pledge consigned in the possession of a Judge for sale;
11. Sums deposited in savings accounts in banking institutions, up to the amount of one thousand balboas (B/.1,000.00);
12. The papers, family portraits, the wedding ring, the decorations, medals, trophies, ornaments and scrolls received in recognition of special merits;
13. Buildings intended for churches, sacred things and other things used for the exercise of religious worship;
14. Assets belonging to the State, Municipalities or state, autonomous or semi-autonomous entities with the exception of mixed companies;
15. The land included within cemeteries, tombs or mausoleums, as well as the area of land on which they are built, regardless of their location;
16. The sums that have been advanced or must be advanced to employers or construction contractors during the execution of the work, with the exception of claims from the respective workers or material suppliers, while the construction of the work lasts;
17. Cattle, horses, pigs, poultry and crops up to five hundred balboas (B/.500.00); and
18. Any other property that the Law indicates as non-seizable.
Judicial Auction
For the Judicial Auction stage, it shall occur once all the procedural stages have been completed, where once the entire process has been corrected and the disputed party has not presented any incidents, appeals or exceptions against the Enforceable Decision, the judge upon request of the disputing party, he shall order and decree the auction of the seized assets, provided that they are free from encumbrances.
Here it is important to establish that recently by means of Law 415 of 2023, an important modification has been made to the criteria to set the amount of the real estate or personal property to be auctioned.
In that order, an appraisal carried out by a qualified professional must be presented, stating the market or commercial value of the property. The debtor may present, before the auction date is set, his own appraisal carried out by a qualified professional, which includes the market or commercial value of the property.
From the above it follows that the Court shall set the auction based on the market or commercial value, based on the average value of the appraisals presented by the parties. If there is no evidence of the presentation of the debtor’s appraisal, the judge shall set its value based on that presented by the executor.
The interested party must provide a guaranteed equivalent to 10% of the AUCTION BASE,through the purchase of a JUDICIAL DEPOSIT CERTIFICATE (for Civil Courts) o CERTIFICATE OF GUARANTEE (Executing Courts) issued by the National Bank of Panama.
The person who purchased the guarantee must take it to the Court that shall hold the auction before 4:00 p.m., on that day, to be qualified as a bidder.
At 4:00 pm the bidding and counter bidding begins and ends when one bidder offers a position that no other can surpass, and the bidders who did not win are later returned the 10% guarantee.
FIRST AUCTION DATE: Itis the first date on which an auction shall be held, and which entails that the MINIMUM ADMISSIBLE BID, by which a bidder can be awarded the property, is 2/3 PARTS of the auction value. the “Base of the Auction”.
This last amount is the minimum or minimum admissible bid by which a bidder can “win” the property that is the object of the auction, in the event that there is no higher offer or bid.
SECOND AUCTION DATE: The second auction date is the date that has been set for an auction to be held that could not be carried out on the First Date because the auction was declared void, that is to say, due to the absence of bidders.
This new date has the peculiarity that the minimum admissible position shall be HALF of the base of the auction.
THIRD AUCTION DATE: It is the auction date that has been set for an auction to be carried out that could not be carried out on the Second Date because the auction was declared void. In this case, there is no minimum admissible bid so a bidder can offer any amount of money without considering the basis of the auction.
Finally, it is important to highlight that people who MAY NOT PARTICIPATE IN AN AUCTION regarding the assets are the following:
- The guardian or curator of property of the people under his or her guardianship.
- The Lawyers regarding the assets and rights of their principals who intervene directly in the process.
- The assets entrusted to the executors.
- The assets whose administration or disposal the agents were in charge of.
- State assets of which public employees are in charge.
- Magistrates, Judges and other officials of the Public Prosecutor’s Office and the Judicial Branch on the assets and rights that are in dispute before the jurisdiction or territory where they exercise functions, a prohibition with the scope of acquiring them through an intermediary under the figure of transfer or subrogation of rights. This exception excludes hereditary actions between co-heirs, or assignment in payment of credits, or guarantee of the assets they possess.
Do not hesitate to contact our team of experts to obtain more information about the executory proceedings in Panama in the situation in question.
