Dismisses extinctive prescription action on dividends filed by Administradora de Restaurantes against Lisa, S.A.
Oct 5 2022
10th Civil Court
The Tenth Civil Court of First Instance of Guatemala, in a ruling dated October 5, 2022, dismisses the extinctive prescription action filed by Administradora de Restaurantes, S.A. against Lisa, S.A. The court concludes that Guatemala's Commercial Code does not contemplate prescription of the right to payment of corporate dividends, and that attempting to extinguish such right contravenes the principles of commercial law and the nature of the sociedad anonima. The ruling represents a favorable outcome for Lisa, S.A., affirming the continued validity of its right to receive decreed but unpaid dividends.
Administradora de Restaurantes, S.A., a member of the Avicola Villalobos Group, filed an ordinary action for extinctive prescription against Lisa, S.A., holder of 25% of the company's issued shares. The action sought to declare prescribed the obligations to pay dividends arising from seven annual ordinary shareholder assemblies held on October 3, 2001, May 3, 2004, May 30, 2005, August 14, 2008, December 17, 2009, April 29, 2010, and April 5, 2011. The plaintiff argued that more than five years had elapsed since the obligation became enforceable, invoking Article 1508 of the Civil Code.
Lisa, S.A. filed its answer in the negative on September 4, 2020, together with four peremptory exceptions.
Administradora de Restaurantes, S.A. sought a declaration that the dividend payment obligations from all seven assemblies were prescribed and extinguished, on the basis that the five-year limitation period under Article 1508 of the Civil Code had run. The plaintiff asserted that the funds were available to shareholders at the company's registered office the day after each assembly and that Lisa, S.A. never appeared to claim payment.
Lisa, S.A. raised four peremptory exceptions:
Lack of veracity in the plaintiff's factual allegations. Lisa, S.A. argued that the plaintiff omitted to disclose that the reason dividends were never received was the Avicola Villalobos Group's systematic bad faith conduct, which through judicial actions and embargoes prevented payment.
Failure to meet legal prerequisites for invoking prescription. Lisa, S.A. contended that the payment obligation had never been perfected because, under Clause 16 of the articles of incorporation of Administradora de Restaurantes, S.A. (public deed No. 33, dated March 8, 1995), the Board of Directors (Consejo de Administracion) was required to determine the date and form of dividend payment. That condition had never been fulfilled, the obligation was not yet enforceable, and the prescription period could not begin to run.
Interruption of prescription by judicial actions. Lisa, S.A. invoked Article 1506 of the Civil Code, pointing to multiple lawsuits and precautionary measures that interrupted any prescriptive period. Entities within the Avicola Villalobos Group had obtained embargo orders on Lisa's dividends and shares in proceedings including Expediente 01044-2012-00279 (filed by Reproductores Avicolas, S.A.), Expediente 01045-2012-00210 (filed by Compania Alimenticia de Centroamerica, S.A.), Expediente 01045-2012-00242 (filed by Industria Forrajera de Mazatenango, S.A.), and Expediente 01163-2012-00178 (filed by another group entity), among others.
Non-existence of the claimed extinctive prescription. Lisa, S.A. argued that decreed dividends constitute the shareholder's property under Articles 39 of the Constitution and 451 of the Civil Code, and that property rights do not prescribe. Lisa characterized the action as a fraud upon the law intended to consummate the misappropriation of assets belonging to Lisa, S.A.
Lisa, S.A. also submitted an economic study quantifying the value of its shares and illegally retained dividends across the Avicola Villalobos Group at $334,578,171.00 as of January 2012, comprising $205,614,050.00 in share value and $128,964,121.00 in owed dividends. A certification by accountant Lawrence Sidney Rosen identified 25 group entities that had not paid dividends to Lisa, S.A. since the fiscal year ending June 30, 1999, with $5,481,851.00 owed by the group in dividend payments.
Lisa, S.A. further demonstrated that it had requested dividend payment by letter dated February 28, 2017, and that the response from Administradora de Restaurantes, S.A. (letter dated November 8, 2018, signed by Vice-President of the Board Gabriel Arturo Muadi) confirmed that dividends could not be paid due to existing judicial embargoes. This fact, Lisa argued, proved both that it had demanded payment and that the plaintiff's own affiliated entities had obtained the precautionary measures preventing disbursement.
The court focused its analysis on the fundamental legal question: whether extinctive prescription of corporate dividend payment obligations is cognizable under Guatemalan law.
On the nature of the dividend right. The court determined that Article 105(1) of the Commercial Code confers upon shareholders an inherent right to participate in the distribution of corporate profits. This right is intrinsic to shareholder status and to the very purpose of a commercial enterprise, which is to generate profits and distribute them among its members.
On the inapplicability of prescription. The court found that the Commercial Code does not contemplate prescription for dividend payments. Turning to the Civil Code as a supplementary source, Article 1501 regulates extinctive prescription exercised by a "debtor" to extinguish an obligation, presupposing a creditor-debtor relationship. The court concluded that the relationship between a corporation and its shareholders does not constitute such a creditorial relationship, and that the plaintiff was attempting to artificially impose that framework on a relationship of a corporate nature.
On accumulated dividends. The court invoked Articles 35 and 111 of the Commercial Code, which expressly recognize the distribution of accumulated profits from prior fiscal years, as evidence that commercial legislation does not contemplate temporal expiration of dividend rights.
On the leonine pact prohibition. The court noted that Article 34 of the Commercial Code declares void any clause stipulating that a shareholder shall not participate in profits. Permitting prescription of decreed dividends would effectively deprive a shareholder of their profit participation, producing a leonine result prohibited by law.
On standing. The court determined that there was no evidence that the shareholders' assembly of Administradora de Restaurantes, S.A. had ever resolved that accumulated dividends would prescribe after five years, and that the entity lacked standing to bring the action. The only reference to prescription in corporate matters in the Commercial Code appears in Article 253, applicable exclusively to the liquidation of commercial entities.
"La sociedad no puede afianzarse de las utilidades de los socios accionistas, utilizando la figura de prescripcion, porque no esta en consonancia con los principios propios del derecho mercantil, ni con la naturaleza propia de la sociedad anonima" (Page 37)
On the peremptory exceptions. The court denied all four of Lisa's peremptory exceptions. The lack-of-veracity exception was rejected as imprecise for referring globally to the alleged facts without specifying which lacked veracity. The remaining three exceptions were analyzed jointly and denied as imprecise and internally contradictory, simultaneously alleging lack of prerequisites, interruption, and non-existence of prescription. Nevertheless, the substantive outcome was entirely favorable to Lisa, S.A. through the dismissal of the action itself.
Administradora de Restaurantes, S.A. filed an appeal, admitted on June 26, 2024. The Third Chamber of the Court of Appeals for Civil and Commercial Matters, in its ruling of October 24, 2025, denied the appeal and affirmed the first-instance ruling in full, with costs imposed on the appellant. The appellate court held that a shareholder's right to collect dividends may be exercised at any time until the liquidation of the company, and that failure to collect during the authorized period does not trigger prescription.