Court of Appeals upholds denial of dividend prescription for failure to prove exigibility
Nov 4 2024
Court of Appeals
The First Chamber of the Court of Appeals for Civil and Commercial Matters, in its ruling of November 4, 2024, partially granted the appeal filed by Avícola Las Margaritas, S.A. (successor by merger of Importadora de Alimentos de Guatemala, S.A.) against the first-instance judgment of June 11, 2024, which had denied the extinctive prescription of dividends owed to Lisa, S.A. Despite revoking four of the five peremptory exceptions that Lisa had obtained at first instance, the Chamber upheld the denial of the prescription claim on different grounds: the impossibility of computing the prescriptive period absent proof of when the payment obligation became exigible.
Avícola Las Margaritas, S.A., as successor of Importadora de Alimentos de Guatemala, S.A., filed a summary commercial action for extinctive prescription against Lisa, S.A. to extinguish the obligation to pay dividends decreed at the Annual Ordinary General Shareholders' Assembly of June 10, 2014. That assembly approved the distribution of 2013 profits at a rate of Q837.60 per share, with the proviso that the administration was authorized to make payment "in the form and when it deems convenient."
Lisa, S.A. answered the complaint in the negative and raised five peremptory exceptions: (a) lack of veracity in the facts alleged by the plaintiff; (b) failure to meet the legal prerequisites for prescription due to the absence of exigibility; (c) lack of free disposition over the dividends; (d) violation of third-party rights through pre-existing precautionary measures; and (e) interruption of prescription by judicial and extrajudicial actions. The first-instance judgment denied the prescription claim, upheld all five exceptions, and imposed costs on the plaintiff. Avícola Las Margaritas appealed.
Avícola Las Margaritas argued that the first-instance court erred by failing to apply Article 675 of the Commercial Code, which provides that commercial obligations without a specified term are immediately due. The plaintiff maintained that dividends were exigible from June 10, 2014, that the five-year prescriptive period under Article 1508 of the Civil Code had elapsed, and that no legally recognized cause of interruption occurred. Regarding third-party precautionary measures, the plaintiff argued that Lisa, S.A. never judicially demanded payment of the dividend obligation nor obtained any precautionary measures to enforce it within the prescriptive period.
On exigibility and computation of the prescriptive period. The Chamber examined clause sixteen of the articles of incorporation, which grants the Board of Directors the authority to "determine the date and form of payment of agreed-upon profits." Finding no evidence in the record that the Board ever exercised this function, nor any proof of payment to other shareholders from which a payment date could be inferred, the Chamber concluded it could not compute the prescriptive period. Accordingly, the grievance regarding the alleged misapplication of Article 675 of the Commercial Code was rejected.
On the exceptions grounded in embargoes and precautionary measures. In contrast with the first-instance court, the Chamber held that precautionary measures decreed by third parties over Lisa's assets are independent of Lisa's right to collect dividends. The Chamber reasoned that Lisa must answer with its patrimony for obligations incurred and the potential outcomes of judicial proceedings, and that third-party actions over that patrimony "cannot at any point interrupt the prescription sought, and by the same token cannot be used as instruments to evade their responsibility." The Chamber therefore revoked the peremptory exceptions related to lack of free disposition, third-party precautionary measures, and interruption of prescription.
On the evidence offered by Lisa, S.A. Lisa submitted, among other evidence, a copy of the judgment of February 28, 2020 by the Eighth Court of First Instance for Civil Matters in an ordinary prescription action brought by Compraventa de Productos Alimenticios, S.A., which was affirmed on appeal. Lisa also requested a document in the adversary's possession through the legal procedure, but Avícola Las Margaritas failed to produce it within the court-ordered deadline. The Chamber gathered reports from multiple courts (Eighth, Fifth, First, Thirteenth, and Seventh Pluripersonal Courts of First Instance for Civil Matters) and from the Commercial Registry regarding precautionary measures in force over Lisa's assets.
Practical effect. The net outcome of the appeal did not alter the plaintiff's defeat: the prescription claim was denied. However, the legal basis shifted significantly. While the first-instance court relied on existing embargoes to deny prescription, the Chamber eliminated that foundation and sustained the denial solely on the uncertainty surrounding exigibility, confirming that Lisa's right to collect dividends remains intact so long as the moment of exigibility has not been established.
Avícola Las Margaritas, S.A. filed a cassation appeal against this ruling. Lisa, S.A. submitted its defense plea against cassation on July 3, 2025. The Supreme Court of Justice issued its cassation ruling on October 7, 2025, rejecting the dividend prescription claim.