puertorico

Decisión del Tribunal Supremo de que el ELA es un Territorio

El viernes 20 de marzo de 2015, el Tribunal Supremo de Puerto Rico emitió una decisión de importancia fundamental. A primeras vistas, el caso de Pueblo v. Sánchez es uno sobre el tema sumamente técnico legal de la doble exposición o “double jeopardy”. En síntesis ésta doctrina indica que un ciudadano no puede ser castigado dos veces por la comisión de los mismos hechos. La excepción usual es cuando el gobierno federal te encausa y también un estado de la unión. La teoría es que como son dos soberanos distintos, su poder de encausar acusados emana de distintas fuentes.

En Pueblo v. Sánchez, el Tribunal Supremo se enfrenta a unos acusados que se declararon culpables de ciertos delitos en el sistema federal y son acusados por el ELA por otros delitos. El Tribunal Supremo encuentra en su análisis que uno de los delitos federales contiene los elementos de uno de los delitos por el cual se les acusa en PR. El Tribunal de Primera Instancia determinó que el poder de PR para acusar emana del Congreso, el Apelativo revocó basado en el análisis contrario del Primer Circuito en U.S. v. López Andino, 831 F.2d 1164 (1st Cir. 1987) y el Tribunal Supremo de PR en Pueblo v. Castro García, 120 D.P.R. 749 (1988) donde se indica que luego de la Constitución del 1952, la soberanía del Pueblo de PR le daba poder soberano al ELA para acusar y que por ende no había doble exposición.

Como nos tiene acostumbrados, el Juez Martínez Torres en Pueblo v. Sánchez hace una análisis riguroso y extenso de la doctrina de doble exposición en la jurisprudencia del Tribunal Supremo Federal (SCOTUS) desde sus orígenes hasta el presente. Su análisis hace claro que siempre el SCOTUS ha entendido que el poder de los territorios de hacer leyes criminales emana del Congreso y como el Congreso es el que hace las leyes federales, no se puede acusar a una persona en el ámbito federal y territorial por el mismo delito. Ver, Grafton v. U.S., 206 U.S. 333 (1907) y Puerto Rico v. Shell Co., 302 D.P.R. 253 (1937). Pero, esta doctrina cambió en el Primer Circuito luego de López Andino.

El Juez Martínez Torres demuestra con su metódico y brillante análisis de los casos federales que la doctrina de López Andino es errónea. Nos cita el caso del 11avo Circuito de U.S. v. Sánchez, 992 F.2d 1142 (11th Cir. 1993) donde éste decidió de forma contraria a López Andino y decidió que PR no era más que un territorio y por ende no un soberano separado. De la página 32 en adelante de su opinión de 68 páginas, el Juez Martínez Torres hace un recuento histórico y legal de la situación jurídica de PR comenzando cuando indica que “[c]ontrario a las tribus nativo-americanas o los estados, Puerto Rico nunca ha ejercido soberanía original o primigenia.”(esta palabra se repite por toda la opinión) Nos lleva por el Acta Foraker, la ley Jones y los testimonios de Luis Muñoz Marín y Manuel Fernós Isern ante el Congreso donde repetidamente indican que la Ley 600 y la Constitución no cambian el poder del Congreso sobre Puerto Rico. Lectura obligada. Ver, también The Supreme Court and Puerto Rico: The Doctrine of Separate and Unequal by Juan R. Torruella 1985.

La opinión continua con un análisis de las decisiones del SCOTUS luego de la aprobación de la Constitución en 1952. Es de notar que de todos ellos, es en Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 672 (1974) donde se indica que PR “is a political entity created by the act and with the consent of the people of Puerto Rico and joined in union with the United States of America under the terms of the compact.” La opinión indica lo mucho que se ha hecho sobre esta aseveración y continua su análisis de la jurisprudencia del SCOTUS demostrando que de ahí en adelante, culminando con Harris v. Rosario, 446 U.S. 652 (1980), se ha tratado a PR como un territorio y no como algo especial. A la página 48-49 de la opinión el Juez Martínez Torres se indica así:

Por su parte, la sec. 2 del Art. I de la Constitución del ELA que establece que “[e]l gobierno del Estado Libre Asociado de Puerto Rico y sus Poderes Legislativo, Ejecutivo y Judicial . . . estarán igualmente subordinados a la soberanía del pueblo de Puerto Rico” no significa que Puerto Rico haya sido investido de una soberanía propia ni que el Congreso le delegó a los puertorriqueños la facultad de manejar el gobierno de la Isla y sus propios asuntos internos sujetos a la voluntad popular. En ese sentido, el Pueblo de Puerto Rico es soberano solamente en aquellas materias locales que no están regidas por la Constitución de Estados Unidos. Sin embargo, eso no significa que Puerto Rico dejo de ser, como cuestión de derecho constitucional, un territorio de Estados Unidos; nunca hubo una cesión de soberanía, lo que hubo fue una delegación de poderes. (escolios y citas omitidas)

El Tribunal Supremo cita con aprobación el caso de Córdoba & Simonpietri Ins. Agency, Inc. v. Chase Manhattan Bank, N.A., 649 F.2d 36, 41 (1st Cir. 1981) del Juez Breyer, ahora en el Supremo Federal (y que no participó en la opinión de López Andino) quien dijo: “the federal government’s relation with Puerto Rico changed from being bound merely by the territorial clause, and the rights of the people of Puerto Rico as United States citizens, to being bounded by the United States and Puerto Rico Constitutions, Public Law 600, the Puerto Rican Public Relations Act and the rights of the people of Puerto Rico as United States citizens.”

La opinión del Tribunal Supremo continua a las páginas 54-55 explicando las implicaciones de esta delegación:

Sin embargo, lejos de representar una renuncia irrevocable a su poder sobre el territorio, esas limitaciones legales que el Congreso aprobó son parte del ejercicio de ese poder legislativo. Así, del mismo modo, que las relaciones entre el Distrito de Colombia dejaron de estar sujetas meramente a la voluntad del Congreso autorizada por el Art. I, sec. 8, Cl. 17 de la Constitución al aprobarse legislación que le dio al Distrito un gobierno municipal efectivo, la relaciones entre Puerto Rico y el gobierno federal se rigen no solo por Art. I, sec. 8 de la Constitución, si no también por la legislación que el Congreso aprobó. . .

Esa delegación de poder no constituye una renuncia irrevocable ni una terminación del poder del Congreso. El Pueblo de los Estados Unidos le otorgó al Congreso, por medio de la Constitución, un poder amplio para administrar sus territorios. Por esa razón, el Congreso no puede renunciar de forma irrevocable a un poder que le fue conferido por el Pueblo de los Estados Unidos. Véase Clinton v. City of New York, 524 U.S. 417, 452 (1998)(“The Constitution is a compact enduring for more than our time, and one Congress cannot yield up its own powers, much less those of other Congresses to follow”). . . Por eso la propuesta alterna de algunos autores no es persuasiva. (Escolios y citas omitidas)(la cita de Clinton es de la concurrencia del Juez Kennedy)

Esta última oración es claramente dirigida a la tesis del ex-gobernador Rafael Hernández Colón que postula que el Congreso “relinquished” su poder para legislar sobre PR en asuntos internos. Se desprende que la posición del ex-gobernador es incorrecta legalmente.

La opinión continua con los informes de Casa Blanca de Bush, Jr. y Obama donde ambos coinciden que PR es un territorio bajo la Cláusula Territorial. Explica la opinión a la página 58 que el informe de Casa Blanca de 2011 sobre PR establece “También se afirma en el documento que es imposible establecer una relación entre el territorio y el gobierno federal que solo pueda alterarse por consentimiento mutuo. Id. . . Esa relación no se puede poner en práctica ‘porque un Congreso futuro podría optar por modifica la relación unilateralmente.’” Aunque la opinión dice que esto esta en la página 28, esta en la 26 y reproduzco lo que el Task Force dijo:

Third, consistent with the legal conclusions reached by prior Task Force reports, one aspect of some proposals for enhanced Commonwealth remains constitutionally problematic—proposals that would establish a relationship between Puerto Rico and the Federal Government that could not be altered except by mutual consent.This was a focus of past Task Force reports.The Obama Administration has taken a fresh look at the issue of such mutual consent provisions, and it has concluded that such provisions would not be enforceable because a future Congress could choose to alter that relationship unilaterally.(Congress similarly could elect to enact legislation violating a treaty with a foreign country or to legislate over the opposition of one or more States.)

En síntesis, “Dicho de otro modo, el sistema de gobierno que rige internamente en Puerto Rico está sujeto por completo a la voluntad política y la autoridad legal del Congreso.” (pág. 58 de la opinión) El Juez Martínez Torres continua de la siguiente forma:

            Todo lo anterior nos lleva a concluir que la aprobación de una constitución para Puerto Rico no representó un cambio en la base de las relaciones con Estados Unidos y, por lo tanto, Puerto Rico continua siendo un territorio sujeto a la cláusula territorial de la Constitución federal. Así lo revela el tracto legislativo de la ley 600 y su posterior interpretación por el Tribunal Supremo federal. Así lo interpreta también la Rama Ejecutiva federal. En fin, existe unanimidad entre las tres ramas acerca de este tema. . . No obstante por todo lo expuesto tenemos que concluir que el poder que sin duda ejerce Puerto Rico para procesar el crimen emana realmente de la soberanía de los Estados Unidos y no de una soberanía primigenia.

La opinión hace aún más claro el estado del derecho a las páginas 62-63 donde indica así:

La autoridad de Puerto Rico para enjuiciar personas se deriva de la delegación que efectuó el Congreso de los Estados Unidos y no en virtud de una soberanía propia. Como vimos, y contrario a las tribus indias o los estados, Puerto Rico nunca ha tenido una soberanía original o anterior bajo la cual delegó poderes al Congreso. Es al revés. La soberanía sobre Puerto Rico que poseía España fue transferida formalmente a los Estados Unidos en 1899, por el Tratado de París. Desde entonces, Estados Unidos administró a Puerto Rico por legislación aprobada al amparo de la cláusula territorial de la Constitución Federal. La adopción de una Constitución, por delegación del Congreso, para organizar el gobierno local en sustitución de gran parte de la ley orgánica vigente entonces, no representó una cesión de soberanía a Puerto Rico. Por el contrario, Puerto Rico no dejó de ser un territorio de los Estados Unidos.

Esta decisión tiene varios aspectos fundamentales. El primero es el del derecho de los acusados de no ser expuestos por el mismo soberano a doble acusación. Recordemos que son varios acusados en el caso de Sánchez que reclamaron sus derechos y les fueron concedidos por el Tribunal de Primera Instancia y arrebatados por el Tribunal Apelativo. Le tocaba al Tribunal Supremo intervenir como lo hizo.

Otro aspecto importantísimo es que entierra para siempre las ínfulas de soberanía de ciertos sectores políticos en PR. El Supremo reitera lo que muchos ya sabemos: Puerto Rico no es más que una colonia sin soberanía alguna ajena al Congreso federal.

Finalmente, la decisión crea un Catch-22 terrible para el Gobierno de PR. Si no solicita certiorari al Supremo Federal, está aceptando como correcta la decisión que en esencia determina que el ELA no es más que un territorio de los USA y no ese “lugar especial” que siempre se ha dicho que es y que el Primer Circuito confirmó en López Andino. Más aún, no podría acusar a muchos reos federales y es posible que muchos ya sirviendo pidan habeas corpus para revisar sus sentencias como De Castro Font. El Gobierno de PR tiene buenos argumentos para el certiorari ya que hay conflicto entre los circuitos, i.e. 1er Circuito y 11avo Circuito; conflicto entre un estado (PR) y el 1er Circuito en una decisión basada no en derecho puertorriqueño si no en derecho federal.

Pero si PR solicita el certiorari y se le deniega o peor aún, se le concede y el SCOTUS coincide con el Supremo de PR, sería la humillación mayor de que el más alto foro confirme su territorialidad común y corriente. Daría al traste con las teorías del inmovilismo del PPD capitaneado por Rafael Hernández Colón y su grupo. Veremos que hace el Departamento de Justicia.

Investors Beware: Bonds and Amending the Constitution

Today, three PPD (Manuel Natal, Luis Vega & Luis Torres) members of the Puerto Rico House of Representatives announced that tomorrow, they will be filing a Joint Resolution to consult the People of the Island whether to amend the Constitution “to permit the renegotiation of the Government’s debt and of the public corporations recognizing the importance that it does not impair or subordinate to it other socioeconomic development priorities of our people. Among these priorities are: the financing of cheaper energy; cheaper drinking water, strategic investment in infrastructure that encourages private investment and job creation; schools with teachers and materials that students need; special education programs; and better and more far reaching health services for the whole island.”

Natal Alvelo reminded us that PC 2003, which he wrote, seeks a 4-year moratorium on debt service, extendable for 3 additional years. In addition, PC 2314, also of Natal Alvelo’s authorship, calls for the creation of a Special Independent Commission to review all debt issues to determine which are legal and which are illegal. The illegal debt would be rejected. Witch hunt anyone?

At this time, we do not know how much support this Constitutional Amendment or the abovementioned measures have. Suffice it to say that if approved, they are tantamount to Puerto Rico rejecting its General Obligation debt, at least temporarily. Fortunately, Article VII of the Puerto Rico Constitution requires that the Joint Resolution be approved by 2/3’s of the legislative assembly in order for it to be put to popular vote, which would need to be held with the general election, unless ¾ of the legislature so approved it, which then could be at any time. Since the PPD has only a 3-vote majority in the House, it is unlikely it will be approved.

Even if this amendment was approved by the electorate, it would be subject to challenge in federal court for impairment of contractual obligations, see, United Auto., Aerospace, Agr. Implement Workers of America Intern. Union v. Fortuño, 633 F.3d 37 (1st Cir. 2011), and Romer v. Evans, 517 U.S. 620 (1996) (state constitution is not free from federal scrutiny).

As to PC 2003 and PC 2314, they were filed in 2014 and have not been moved in the House. This does not mean, as we saw with the Recovery Act, that they could not be approved, if need be, in one day. Investors need to monitor the situation closely.

Puerto Rico’s Local Chapter 9, a Good Start

PR’s Local Chapter 9

Yesterday, Senators Nadal Power and Rosa Rodríguez filed a proposed act by which PR’s public corporations could reorganize its debts or even liquidate themselves. Essentially a local Bankruptcy Chapter 9. Both should be congratulated for having the moral fortitude to admit this must be considered. The preamble correctly indicates that state law may regulate those areas where Federal Bankruptcy law is silent or those entities excluded from the Bankruptcy Code, such as insurance companies or Puerto Rico’s municipalities and public corporations, expressly excluded via 11 U.S.C. § 101 (52). Moreover, the liquidation procedure of the P.R. Civil Code, Articles 1811-29, 31 L.P.R.A.  §§ 5171-5214 is totally obsolete since it dates back to the 19th Century.  In addition, the Preamble to this Act states that it is obsolete, making this a special law that preempts the more general law of the Civil Code.

The piece is a good start but lacks many of the necessary statutes that makes the Federal Bankruptcy Code a unique tool. Moreover, it should include the island’s municipalities, most of which are insolvent. In addition, it would make some sense for the law to require that some of the Commonwealth Courts be set for this type of procedure which will elicit massive litigation once it is started. Also, its judges should be especially trained in bankruptcy and dispute resolution since at this time the Puerto Rico bench is devoid of such knowledge. Now I will go to the specific areas that need to be added to the law. For your reference, I include English and Spanish versions but the statute states that the English version will prevail in case of doubt.

The law lacks a definitions section. The Bankruptcy Code has a long definitions section with more than fifty entries, see 11 U.S.C. § 101. For example, the proposed law does not define what is a public corporation, something which may cause further litigation and delay. The law should clearly define what entities are covered by the law.

Although the law specifies that the Court may grant a stay (Article 8(c)) it does not state the parameters pursuant to which it may be granted or even who can grant it. I believe there should be an automatic stay as in the Bankruptcy Code. Moreover, the law does not state who or even if, this stay, once granted, may be lifted. Anyone who litigates in Bankruptcy Court knows that a significant amount of the court’s time is consumed by this issue. Hence, it should be automatic on filing the petition and later any party in interest  could petition the court to do so under clear guidelines which should be in the law.

Article 2 of the law provides a procedure by which the Board of Directors or whomever has control over the corporation may make a declaration “declaring themselves eligible under this Act, subject to the process spelled out in Article 1. If the Governor so authorizes it, said resolution will be filed in the Court of First Instance (Superior Court).” Article 4 states that “[t}he resolution declaring eligibility under Article 2 shall state:

(1) the reasons why the public corporation is eligible under this Act and whether it is caused or not by lack of liquidity;

(2) recommendations as to the interim management of the public corporation;

(3) recommendations as to a plan for restoring solvency if possible, and complying with existing obligations and liquidation if necessary.

The information that is required by this section is de minimis. It should be that information required by the Bankruptcy Rules and Schedules D-H of the official forms. These include information of bank accounts, creditors, the corporate debtors, objections to creditors claims etc. Moreover, there is no procedure to object to the filing of the procedure, either voluntary or involuntary. Article 3 mentions that in an involuntary case there must be a public hearing; does that mean a hearing in Court or another type of hearing? When will the Schedules be filed in an involuntary proceeding? Not clear at all. In addition, in a Chapter 9, debtor is required to claim he has negotiated in good faith with his creditors to prevent the filing. Given the importance of some of the public corporations, this should be included in this Act.

There is no procedure in the law for the filing of proof of claim or what it must contain. The proof of claim is the means by which a creditor establishes his claim in a Bankruptcy Proceeding. Why is it important? Because it is vital for an orderly reorganization to know who is a creditor and how much is he owed. Moreover, it is not uncommon for debtors to forget a creditor who will then have to rush to file a motion explaining his claim. The procedure should be spelled out completely. Moreover, what is the effect of the filing of a proof of claim or the cut-off date to file it or to object to the claim.  In the Bankruptcy Code, the filing of the proof of claim is prima facie evidence of a claim’s validity. See Fed.R.Bankr.P. 3001(f). “Under this rule, a claim is presumed valid until an objecting party has introduced evidence sufficient to rebut the claimant’s prima facie case.” In re Inter-Island Vessel Co., 98 B.R. 606, 608 (Bankr.D.Mass.1988). A proof of claim will prevail over a mere formal objection. See, e.g., Juniper Dev. Group v. Kahn (In re Hemingway Transp., Inc.) 993 F.2d 915, 925 (1st Cir. 1993) (“The interposition of an objection does not deprive the proof of claim of presumptive validity unless the objection is supported by substantial evidence.”).

A very important issue is attorney compensation. Since public corporations are not natural personas pursuant to PR law, they must act through and of attorneys before its courts. Attorneys are usually retained and paid by debtor BEFORE the filing of any bankruptcy papers and employees and attorneys on retainer could not represent the public corporation since there is an inherent conflict of interest since they may be creditors at a later date. Bankruptcy law requires that the compensation paid to the attorneys BEFORE the filing be disclosed. Moreover, attorneys and other professionals, indispensable to the reorganization effort have to have Court approval for their hiring and compensation. Provisions for the hiring and compensation of attorneys must be spelled out by the Act. In addition, the Act must specify how the public corporations are to make payments in the ordinary course of business and to whom. Also, there is no provision on how or if new credit can be secured, which is a necessary addition to the Act.

Once the resolution is filed, Article 7 of the Act states that “[t]he public corporation that has been declared eligible under this Act shall, while the proceedings go on, be administered by a Board of Receivers composed of 5 members. The Governor shall name 2 of the members with the advice and consent of the Senate, and the Court shall name 3. The Court shall establish the powers and duties and supervise the Board of Receivers and shall have the power to issue orders as necessary to execute its role.” Chapter 9 of the Bankruptcy Code, and Chapter 11, provide for the debtor to remain in possession administering the entity due to its large size and complexity This should be considered here and a procedure to remove them when necessary. Moreover, the Federal Bankruptcy system has the U.S. Trustees’ Office  responsible for overseeing the administration of bankruptcy cases and private trustees under 28 U.S.C. §586 and 11 U.S.C. §101, et seq. Its powers are clearly established by law. The PR Courts lack the knowledge and experience to know what powers receivers may have and should be clearly spelled out in the law. Moreover, Trustees in Bankruptcy court, no matter how complicated the case, handle the case with their staff. There is no need to involve 5 persons, much less 2 named by the Governor, who will be professional politicians to try to save his behind in the crisis. Also, it would take time to have the Governor do it. In addition, what procedure should be used to contest the power and actions of the Receivers? The Act is silent.

Another area that has always brought litigation in the Bankruptcy Code is the avoidance power of the Trustee or here, receivers. For example, any payment done 90 days before the filing of the petition or 1 year when it involves insiders (family, lawyers, etc.) would be considered a voidable preference. Also, the Act is silent about the rejection of executory contracts (rentals and union contracts, for example). The Act only generally states that the Court may, under certain circumstances, impair contracts. Since the main reason for this Act is to deal with bond holders, the procedure should be spelled out completely.

The Act is totally silent as to creditors’ committees, a very common and necessary feature of Bankruptcy proceedings. Provisions to this effect should be added.

Although the Act mentions a plan, which obviously has to spell out the reorganization, there are no timetables for its filing or what its contents must have. This is a necessary amendment to the Act, as well as a more clearly defined timetable of things to do.

No plan can function without a clear understanding of the type of creditors involved in the procedure. In Bankruptcy proceedings some creditors will be secured, some with preferences, even none secured may have different debts maturing at different times and some that will be impaired by the plan and others that won’t. The Act needs to deal with this and determine the order of payment.

Now lets discuss procedural matters. The Bankruptcy Code has many sections, but there are Federal Rules of Bankruptcy Procedure and even Local Rules of the Bankruptcy Court that need to be taken into account for this Act. Will one judge be able to handle all cases of one particular public corporation which include labor, environmental, torts, debt collection, etc.? Moreover, what happens when the Court issues a determination on a certain small but important aspect of the case? Can it be reviewed by the Appellate Courts as an Appeal or will it be a certiorari? Can a certiorari even be considered for such a case? The Act is silent as to these important issues. Also, will this procedure be eligible for the Puerto Rico Rules of Complex Litigation, which has different rules than those of Civil Procedure? The Act should address this question.

In addition, what effect will this Act or the Court’s orders have on environmental or other administrative claims by local agencies (we know it won’t have any on Federal Agencies)? Can the Court impair them or reverse them? Also, the Act does not make it illegal to accelerate debt due to bankruptcy or to in any way impair debtor and it should be considered.

There are other areas where the law is silent. If there is a claim that is not liquidated, a tort damages claim not adjudicated, can the Court, in imitation of 11 U.S.C. § 502(c)(1) estimate the amount? After the case is commenced, will payments to Social Security, pensions and others continue? Under what circumstances? Will the Retirement Administration be eligible for this proceeding? What happens if a creditor is not notified and only learns of the proceeding after the plan has been approved? The Senators and their staff should carefully review the Bankruptcy Code and its Rules, especially 3000’s and 6000’s. Also, the Act provides for liquidation but does not provide any details of how to do it.

Finally, some jurisdictional issues not mentioned in the Preamble of the Act. The Act would not have the ample police power of the Federal Government to stay actions by Federal Agencies and it cannot enjoin federal courts. However, even in cases where the Federal Court has exercised its jurisdiction in a Constitutionally valid way, the case may still be sent state court via Burford v. Sun Oil Co., 319 U.S. 315 (1943) or Louisiana Power & Light Co. v. City of Thibodaux, 360 U.S. 25 (1959) type abstentions. In addition, the case in Federal Court could be dismissed for reasons of comity, see, Smith v. Bayer Corporation, 131 S.Ct. 2368  (2011).  Finally, since the idea is to hand a type of discharge to the public corporations of their debts, does PR have to power to impair obligations of those who are not its residents? Can PR give a discharge to debts owed by those who do not live here? In Stellwagen v. Clum, 245 U.S. 608-615 (1917) the Court stated that “[I]t is settled that a state may not pass an insolvency law which provides for a discharge of the debtor from his obligations, which shall have the effect of a bankruptcy discharge as to creditors in other states, and this although no general federal bankruptcy act is in effect.” The questions need clear answer. As I said in the beginning, this is a laudable effort, but much more is needed.