Seldom did a plenary session of the Contentious-Administrative Chamber of the Supreme Court have attracted as much attention as this week. 28 magistrates had to decide whether the tax of documented legal acts, associated with all notarial deeds of mortgages, banks had to assume, as five of them had decided on October 16, or returned to fall on their clients, as established by the jurisprudence until then. The session in the Plenary Hall, a baroque-style room on the second floor of the former Palace of Salesas, lasted 15 hours on two different days, last Monday and Tuesday.
What follows is a reconstruction of what happened in the four sessions in which it was developed the deliberation, according to the testimonies of several of the assistants.
Monday morning: the majority endorses Díez-Picazo
The plenary session is convened at 10. Minutes before the hour, each judge sits at the site marked by the protocol. On the stand, the president of the room, Luis María Díez-Picazo, occupies the central chair, which usually sits the King in the opening acts of the judicial year. At his side, the speakers of the resources on which they are going to deliberate: on the right Nicolás Maurandi, president of the second section, expert on taxes and responsible for the sentence of October 16. On the left, Francisco José Navarro, from the third section. Next to these sit the rest of magistrates according to their antiquity within the high court. The more veteran, closer to the stage. If you look up, you see a vaulted ceiling with stained glass windows and a fresco by Marcelino Santa María that represents Justice triumphing over evil.
They are called 31, but only go 28. Rafael Fernández Valverde is traveling. An authorized trip, according to sources in the room, when the plenary session was already fixed. Segundo Menéndez is a member of the Central Electoral Board and can not participate in the deliberations; and Octavio Herrero has left because his son lives in a house promoted by the municipal housing company of Rivas Vaciamadrid, the protagonist of the sentence of October 16 and the three resources on which it is going to deliberate.
The ceremonial stage will welcome one of the most controversial plenums of recent years in the Supreme, although the tone will be correct and formal most of the time. The Monday morning session, however, is tense, as several of its members have moved. Before entering into a decision on who should pay the mortgage tax, some magistrates present objections and prior doubts. One of them questions Díez-Picazo's decision to raise the criterion established by the tax expert section to the plenary session. Several members of the plenary support him, but the vast majority endorses the president. Some, however, warns that the decision, although legal, is untimely because it has created legal uncertainty, seems to question the competencies of tax magistrates and has transferred the impression that it is yielding to the pressures of the banks, which they suffered strong falls on the stock market following the ruling that held them responsible for paying the tax.
The long preliminary debate, in which all the judges participate, leads to the first vote. Magistrate Navarro demands that the appeals be admitted directly and the reason given to the housing company of Rivas because the Supreme Court has already taken a recent decision on that matter: that of the sentence of October 16. It is voted, but only eight magistrates support this proposal, which if it had come to fruition would have ended the plenary in less than five hours.
After all the morning debating without having given time to enter the center of the conflict, the magistrates will eat after 14.30 assuming that they have many hours of discussion ahead.
Monday afternoon: the reproaches for the change of doctrine
The Third Chamber meets again at 4.30 pm to discuss the merits of the matter: who must pay the tax on documented legal acts. The first speakers are the two speakers (those who have studied the case in detail and propose a solution). They defend that the new criterion is maintained that imputes the tribute to the banking entities. It was foreseeable because both belong to the second section and they subscribed that decision. But, although they coincide in the background, they disagree on the scope of the measure. Maurandi is in favor of leaving in writing that the banks have to assume the tax with a retroactivity of four years, the time it takes to prescribe the taxes. Navarro refuses to set this deadline.
After them, it is time for each member of the plenary to intervene to fix their position, starting with the newest in the room and leaving the last shifts to the oldest ones. The first to take the floor is Dimitry Berberoff, who joined the Supreme Court in September. It belongs to the second section and participated in the deliberation of the first resource of Rivas, which originated the change of jurisprudence. But he did not agree with this modification and signed a particular vote to translate the discrepancy with his colleagues. In the plenary he insists that he sees no reason to have changed.
The rupture within the second section is again evident with the intervention of Rafael Toledano, the only one of its seven members who did not participate in the October sentence. His intervention in the plenary session was, according to several of those present, one of the hardest. He reproached his colleagues for having changed a doctrine in force for more than three decades and not having taken into account two 2005 Constitutional Court rulings that endorsed the article of the regulation that they have annulled.
Two other magistrates, Ángel Arozamena and José Luis Requero, subscribe similar arguments and are in favor of returning to the old jurisprudence. They argue that although the key article of the regulation is no longer in force (its nullity can not be revoked), the law of the tax of documented legal acts establishes that the "acquirer" must pay it, so it must be interpreted that it is the client that subscribes the loan who has to pay it
Interventions for and against confirming the new doctrine intersect. The first to propose that the bank pay is Fernando Román, who is followed by Jesús Cudero, the speaker of the October ruling, and Judge César Tolosa. They argue that the law says that the tax should be charged on whoever benefits from the deed of the mortgage, and there is no doubt that the beneficiary is the bank because the deed protects him from possible breaches by the client.
In seven hours of debate, seven magistrates have intervened, in addition to the two speakers. The break is total: five in favor of confirming the new criterion and four against. But although the positions are found, the afternoon session is less tense than that of the morning and focuses on legal arguments to position itself in one or the other direction. At 7:30 p.m., the president adjourned the meeting and re-quoted the plenary at 10.00 on Tuesday.
Tuesday morning: intermediate formulas to settle the issue
The meeting begins as the day before has ended: with crossed positions. The interventions follow each other. Some of just three minutes; others, of more than 40. The defenders to ratify the October decision, like magistrates Diego Córdoba or Isabel Perelló, are brief and insist that the deed benefits the bank. The opposites of this measure are more extended. Some, such as Wenceslao Olea and Antonio Fonseca-Herrero, are especially critical of the October ruling, which they accuse of throwing away decades of jurisprudence in the opposite direction without solid arguments.
Some magistrates in favor of returning to the old doctrine emphasize that the resources they were reviewing did not confront banking and consumers, but rather the municipal housing company of Rivas-Vaciamadrid with the Autonomous Community and the State. These two administrations are the ones "harmed" by the new criterion and if they are forced to return the tax money they would generate a hole that the finance minister has estimated at 5,000 million euros, which will end up affecting basic services such as health or education. This sector also refers to non-legal criteria such as if the tax is imputed to the banks, they will pass it on to the client. Some leave evidence that political parties can change the law in Congress and eliminate or modify the tax.
Intermediate formulas are also proposed. The magistrate José Manuel Bandrés proposes to raise to the Constitutional a question of unconstitutionality on the text of the tax law of documented legal acts, which considers incomplete, which generates ambiguity and obliges the Supreme to "supplant" the legislator. It also proposes to ask the EU Court of Justice a preliminary ruling on how to interpret a 2014 consumer protection directive. With both options, the decision on the tax would be taken out of the Supreme.
Tuesday afternoon: the "consensus route" fails and votes are voted
When the magistrates stopped to eat, only five of the 28 remained to intervene: the president, Luis Díez-Picazo, and the four oldest members of the room. Arguments continue to accumulate in both directions and the two veterans, José Manuel Sieira, and Jorge Rodríguez-Zapata, confirm the split: the first defends ratifying the new jurisprudence; and the second, that is revoked. Díez-Picazo does not oppose the payment of the bank, but only in the new mortgages, without possible retroactive effects.
Judge Pilar Teso, who in the morning session has been in favor of returning to the old doctrine, then proposes a "way of consensus": confirm the October criterion but limit its scope under article 73 of the law of administrative litigation jurisdiction, which regulates that when a final judgment has declared a regulatory provision null (in this case, Article 68 of the tax regulation), that decision does not apply to previous firm acts. This would close the door to return the money from the mortgage tax already signed. Díez-Picazo, defender of this position, opts to submit it to a vote.
The amendment fails with 11 votes in favor and 17 against. Among the latter, two opposing opinions are added: those who flatly refuse to pay the bank and some who oppose the dismissal of all tax refunds already paid, including those for the last four years. A dozen magistrates demand at that moment the word, the majority, to explore formulas of retroactivity, but the president of the Chamber refuses to extend the deliberation. "You have to vote now," he says. Several magistrates raise the tone and criticize Díez-Picazo's position. His predecessor in office, Judge Sieira, separated from him only by the speaker Navarro, accuses him of being "stealing" the debate. The president cuts short and orders to vote directly if the resources of Rivas are admitted (and the new doctrine is confirmed) or rejected.
The magistrates present their final position in the same order in which they have spoken. Díez-Picazo is the last one, and when it's his turn, at 19.30, the result is 14 against confirming the new criterion and 13 in favor. If he votes in favor, there will be a tie that would probably have to be resolved by another room of the Supreme Court. The president, who until that moment had defended to confirm the doctrine as long as it did not have retroactive effects, opts to end the discussion and votes to charge the tax on the client. After 15 hours of debate, the decision comes at the last minute: for the first time, the Supreme Court rectifies a jurisprudence established a few days before.