Compraventa de Productos Alimenticios Dividend Prescription Action Fails

I. Trial and First-Instance Judgment

Order

Compraventa de Productos Alimenticios, S.A. (later merged by absorption into Avícola Las Margaritas, S.A.) filed an ordinary action for extinctive prescription against Lisa, S.A., seeking to declare prescribed the obligation to pay dividends decreed at the Annual General Shareholders' Assembly held on May 2, 2012. The assembly approved the distribution of profits for fiscal year 2011 and accumulated profits. Lisa, S.A. holds 25% of the shares issued by Compraventa. The complaint was admitted on March 8, 2018.

Compraventa argued that more than five years had elapsed since the obligation became exigible without Lisa demanding payment, relying on Articles 1501 and 1508 of the Civil Code. According to the plaintiff, dividends were available to shareholders from the day after the assembly.

Lisa, S.A. presented an extensive defense at the final hearing. Lisa established that the Avícola Villalobos Group had not paid dividends to Lisa since 1999, with annual dividends of $5,481,851.00 and total share value and retained dividends of $334,578,171.00. Lisa demonstrated the existence of multiple active embargoes on its shares and dividends across all group entities, obtained by the Avícola Group entities themselves in proceedings including the ordinary lawsuit by Reproductores Avícolas, S.A., the summary proceeding by Avícola Villalobos, S.A., the ordinary lawsuit by Compañía Alimenticia de Centroamérica, S.A., and the ordinary lawsuit by Industria Forrajera de Mazatenango, S.A., among others. Lisa pointed out that the plaintiff itself had obtained embargoes on the very dividends it now sought to declare prescribed, a procedural contradiction that prevented prescription from running under Article 1506 of the Civil Code. Lisa further argued that the articles of incorporation vest in the Board of Directors the authority to determine the date and form of payment, which never occurred, meaning the obligation never became perfected. Lisa characterized the action as fraud of law and submitted a copy of the Bermuda Supreme Court judgment.

The court determined that exigibility was not clearly established: the assembly minutes did not specify the amount per share, date, form, or place of payment, and the plaintiff offered no proof that the specific conditions of payment had been determined. There was no certainty as to Lisa's inaction, as Lisa's representative declared that extrajudicial collection efforts had been made and refused by the plaintiff, and that the dividends were recorded as embargoed in the plaintiff's own books. The court also declined to give probative value to the Board Chairman's certification regarding the absence of lawsuits challenging the distribution, reasoning that such a circumstance should be certified by the Judicial Administrative Services Center, not by an interested party.

The prescription claim was rejected and costs were imposed on the losing party.

The Fifth Civil and Commercial Court of Appeals confirmed the ruling on December 1, 2020, reasoning that the obligor never demonstrated an intention to pay and that without determination of date, form, place, and amount, the obligation was not exigible. The Supreme Court of Justice, Civil Chamber, dismissed the cassation appeal on August 11, 2021, due to insurmountable technical deficiencies in the pleading.

II. Constitutional Challenge

Amparo Ruling

Avícola Las Margaritas, S.A. filed an amparo before the Constitutional Court against the Civil Chamber's dismissal of the cassation appeal. The petitioner alleged violations of the right to defense and the principles of legality and due process, arguing that the Civil Chamber dismissed the cassation based on formalistic requirements that were in fact satisfied, analyzed submotivos jointly when doctrine required separate analysis, and created interpretive criteria that exist neither in the law nor in binding doctrine.

The Constitutional Court examined each submotivo and determined that the Civil Chamber acted within its legal authority. On the error of fact in the appreciation of evidence, the petitioner failed to explain why the appellate court had distorted the evidence's content or its impact on the ruling. On the error of law, the petitioner did not formulate an argument demonstrating how the evidence was erroneously evaluated. On violation of law by non-application and improper application, the Court applied the complementarity doctrine: since Article 1506 of the Civil Code was not part of the appellate ruling's legal basis, the improper application claim failed, which in turn made it impossible to analyze the non-application. The erroneous interpretation of Article 126 of the Civil and Commercial Procedural Code was rejected because the provision is procedural, not substantive, and cannot be challenged through cassation on substantive grounds. The erroneous interpretation of Article 134 of the Commercial Code was dismissed because the appellate court did not rely on that provision.

The Court denied the amparo as manifestly inadmissible, ordered costs against the petitioner, and imposed a fine of Q1,000.00 on the sponsoring attorney, Ana Lucrecia Palomo Marroquín de Ortiz. This ruling closed all avenues of review and left firm the first-instance judgment that rejected the prescription of Lisa's dividends.