Ordinary Action for Extinctive Prescription

I. Ordinary Lawsuit and Procedural-Route Ruling

Escobio, S.A. filed an ordinary civil action for extinctive prescription against Lisa, S.A. on February 24, 2017, seeking a judicial declaration that the dividend payment obligations arising from profit distribution resolutions approved at various shareholder assemblies were time-barred. Had the claim succeeded, it would have extinguished Lisa's right to collect the dividends owed to it as a holder of 25% of Escobio's equity.

Lisa, S.A., through its special judicial representative, Tito Enoc Marroquín Cabrera, challenged the admission of the complaint through a motion for revocation on two grounds. First, both the plaintiff and the defendant are commercial entities, and Article 1039 of the Commercial Code requires that disputes between merchants be resolved through commercial summary proceedings rather than ordinary civil proceedings. Second, the twenty-fifth clause of Escobio's articles of incorporation submits any dispute between the company and its shareholders to summary proceedings before the ordinary courts, a submission clause binding under Article 13 of the Judiciary Act.

In its Order, issued by the Fourteenth Civil Court of First Instance on August 3, 2018, the court agreed that Escobio's claim was a liberatory action arising from purely commercial acts (the profit distributions approved at the shareholder assemblies of a commercial entity) and that both the Commercial Code and the articles of incorporation precluded the ordinary route. The court granted the motion for revocation, revoked the admission decree of February 24, 2017, and rejected the complaint for having been filed under the wrong procedural route, holding that the claim had to be pursued through commercial summary proceedings instead. It ordered the return of the documents attached to the initial filing, and their copies, at the appropriate procedural stage.

The rejection halted one of multiple attempts by the Avícola Villalobos Group to extinguish by prescription the dividend obligations owed to Lisa, S.A. Escobio's complaint forms part of a coordinated series of prescription actions filed by various group entities against Lisa as a minority shareholder, and its dismissal on procedural grounds reinforced Lisa's position against those attempts to erase its dividend rights.