Panama's Eleventh Circuit Civil Court denies Villamorey's share auction request and orders the $894,718.00 counterclaim judgment extinguished by set-off against dividends Villamorey retained since 2008.

Competing Motions

The $894,718.00 judgment against Lisa, S.A. imposed by Judgement 42-08, as modified by the First Superior Tribunal's Appeal Ruling of August 28, 2012, entered its enforcement phase in the high-value ordinary proceeding, Exp. 556-99, under the decree of Order No. 1723-16 of September 7, 2016, which elevated the prior sequestration to an attachment. With enforcement opened, the parties filed incompatible petitions. Villamorey, S.A., through its counsel Galindo, Arias & López, sought auction of Lisa, S.A.'s share certificates in the Guatemalan companies listed in the attachment order. Lisa, S.A. requested that the judgment be satisfied from dividends Villamorey had retained as judicial depositary since the sequestration decreed by Order 1624-08 on October 27, 2008.

Court's Analysis

Sufficiency of retained dividends. The judge found that dividends retained by Villamorey, S.A. since November 2008, placed at the court's disposal per the Official Notice of November 25, 2008, exceeded the enforceable amount of $894,718.00 by a substantial margin, rendering a share auction unnecessary.

Parallel BDT Investments, Inc. enforcement. The court took judicial notice of a parallel enforcement proceeding in the Twelfth Circuit Civil Court, Exp. 31638-12, in which BDT Investments, Inc. holds an attachment against Lisa, S.A. for $19,184,680.00. Rather than obstructing the set-off, this circumstance supported it: Villamorey, S.A. held priority by virtue of its earlier precautionary measure, and satisfying its smaller debt through set-off would not prejudice BDT's position. The Twelfth Court would simply need to adjust its enforcement accordingly.

Practical effect. The set-off extinguished the judgment without liquidating Lisa, S.A.'s shareholdings in the seven Guatemalan subsidiaries of the Avícola Villalobos group, preserving assets whose value far exceeded the judgment amount.

Ruling

• Denies the auction request for Lisa, S.A.'s share certificates in the companies listed in Order No. 1723-16 of September 7, 2016
• Orders that the $894,718.00 enforcement amount be satisfied from dividends retained by Villamorey, S.A. in Guatemala or anywhere in the world
• Orders communication to the Twelfth Circuit Court of the First Judicial District of Panama that no outstanding balance remains available for the BDT Investments, Inc. enforcement, Exp. 31638-12, against Lisa, S.A.
• Recognizes Quiroz Govea Abogados as new counsel of record for Lisa, S.A.

Legal Basis

• Articles 17 and 32 of the Constitution — due process guarantees and effective judicial protection
• Article 1 of the Commercial Code — supplementary application of commercial law to corporate relationships
• Articles 1043 and 1662 of the Civil Code — set-off as a mode of extinguishing obligations and the deposit regime
• Article 1259 of the Judicial Code — judicial powers in the enforcement phase

Signatories

• Lcda. María Leticia Cedeño Suira, Judge, Eleventh Circuit Civil Court of the First Judicial District of Panama
• Lcda. Raquel Guzmán Fernández, Judicial Secretary