It must be pointed out at the outset that, in this petition for interpretation, the laws applied in irrevocable adjudications of courts (the Supreme Administrative Court decision No. 90-Pan-Tze-1189, the Supreme Court decision No. 91-Tai-Shang-Tze-908, the Supreme Court ruling No. 90-Tai-Shang-Tze-2236, Taiwan High Court, Taichung Branch, decision No. 89-Shang-Tze-180, and the Supreme Administrative Court decision No. 91-Pan-Tze-875), including the Rent Reduction Statute, Article 5, first sentence; Article 6, Paragraph 1; Article 16, Paragraph 1; Article 17, Paragraph 1, Subparagraph 1 and Paragraph 2, Subparagraph 3; Article 19, Paragraph 1; and Article 20 are documents that may be submitted for our interpretation under the Law of Procedure for Interpretation by the Grand Justices, Article 5, Paragraph 1, Subparagraph 2, and that Article 19, Paragraph 3, of the Rent Reduction Statute, whereby the provision of Article 17, Paragraph 2, Subparagraph 3, of the same Statute relating to compensation payable to the lessee of farmland is made applicable to the situation where the lessor of a farmland repossesses his farmland for the purpose of expanding the operation of his family farm, being of important relevance to the application of Article 19, Paragraph 1, Subparagraph 2, thereof, is also considered by us in delivering this interpretation.
In light of the freedom of development of the individual personality, every person has the right to decide freely how to use, receive benefits from and dispose of the resources necessary for their livelihood, and may thus freely exchange such resources with other persons. Article 15 of the Constitution guarantees the people the protection of their property rights, thereby entitling owners of property with the capacity to exercise their freedom to use, dispose of and receive benefits from their property to the extent of the condition in which the property exists, so that the resources of livelihood on which the people rely for their daily living as well as free development of their personality may be safely protected. Article 22 of the Constitution guarantees the people the freedom of contract, which enables contractual parties to choose freely the manner to make contracts and the provisions thereof, thereby ensuring the freedom to exchange with others the resources of livelihood. However, the skills required for living being varied in degree of competency from person to person, with the possibility of resulting in excessively disproportionate distribution of the overall resources of social life, the State may certainly impose restrictions on the freedom of contract and furthermore the property right of the people by enacting laws within the scope defined by the principle of proportionality under Article 23 of the Constitution for the purpose of reasonable distribution of resources.
Article 143, Paragraph 4, of the Constitution requiring that in the distribution and readjustment of land the State shall in principle assist land-holding farmers and those who make use of the land by themselves and shall also regulate the adequate acreage for their operation, and Article 153, Paragraph 1, providing that in order to improve the livelihood of farmers and to enhance their production skills the State shall enact laws and carry out policies for their protection are intended to effect reasonable distribution of agricultural resources. According to relevant materials kept in the archives of competent government agencies, the policy to reduce the farmland rent was launched in view of the then existing situation that, while the economy in Taiwan was relying on agricultural production and over one half of the total employed population were farmers, a great majority of the agricultural producers were employed farmers, tenant farmers and semi land-holding farmers, whereas the farmland resources were controlled by a small number of landlords who would either terminate the tenancy or raise the rent as they wished, although the rent for some acres was already rather high and the term of the lease was generally unfixed, thereby giving rise to frequent disputes in connection with leases. (See The Annual Report on Statistics of Land Administration in the Taiwan Provinces, Volume 15, P. 3, edited and published May 1997 by The Land Administration Department, Taiwan Provincial Government; and Facts Book of the Land Reform Program in the Early Years after the Recovery of Taiwan, P. 282 et seq., edited and published June 1992 by the Ministry of Interior). Consequently, on March 20, 1947, the government issued the decree No. Chung-Tze-10050 to set a limit on the farmland rent to be paid by all tenant farmers at the rate of 37.5 percent of the yield of the principal product. This executive order, however, was not fully enforced by governments at all levels due to the lack of specific provisions in the Land Law, with the result that the decree turned out to be virtually meaningless. On April 14, 1949, the Regulations on the Lease of Private Farmland in the Taiwan Provinces were promulgated, followed by the issue of the Enforcement Rules of the Regulations on the Lease of Private Farmland in the Taiwan Provinces, Instructions on the Recordation of Private Farmland Lease Contracts in the Taiwan Provinces, the Organic Rules of the Commission for the Supervision over the Implementation of the 37.5 Percent Farmland Rent Reduction Program in the Taiwan Provinces, and the Organic Rules of the Commissions for Supervision over the Implementation of the 37.5 Percent Farmland Rent Reduction Program in the Counties and Cities of the Taiwan Provinces to carry through the 37.5% rent reduction policy by way of overall review of all lease agreements, demanding corrective actions with respect to collection of rent in violation of agreements and illegal cancellation of leases, and assistance in the signing of new contracts in place of and supplementary to existing contracts. Despite such efforts, some landlords had forcibly terminated leases by using the excuse of decreased earnings after reduction of rent. Because the resulting litigations were found difficult to resolve by courts of justice invoking provisions of the Land Law and other relevant laws and regulations, the Statute for the Reduction of Farmland Rent to 37.5 Percent was enacted and promulgated on June 7, 1951, to provide a legal basis for resolving such disputes, so as to uphold the initial success achieved in the implementation of the 37.5% rent reduction program. (See Legislative Yuan Gazette, Vols. 2 & 3 combined edition, p. 40 et seq., published September 30, 1951). To protect the interest of tenant farmers, the Rent Reduction Statute, which has rebuilt the agricultural industrial relationship between lessors and lessees of farmland by way of setting a limit on the rent and stringent restrictive conditions on which lessors of farmland may terminate the lease and demand return of the land, for the purpose of reasonable distribution of agricultural resources and laying a foundation for the development of the national economy, is appropriate in terms of its legislative purposes. While no interim clauses are incorporated into the Statute to protect the vested contractual interest of lessor, the restrictions imposed thereby on the lessor’s freedom of contract and property right are not beyond the expectation of lessors as the government policy to reduce farm rent had been in progress for several years before the Rent Reduction Statute was enacted, allowing lessors the opportunity to familiarize themselves with the rent reduction mechanism, and the very purpose of the Statute is to put into practice the constitutional provisions requiring the State to assist land-holding farmers in the distribution and readjustment of land. Hence the Statute, considering the special historical background and the distinct significance to the public interest attainable through reasonable distribution of agricultural resources, is not in conflict with the constitutional principle of reliance protection.
The Rent Reduction Statute, Article 5, the first sentence, which provides for a minimum period of lease to prevent the lessor from arbitrarily repossessing his land, is designed to encourage the lessee to engage in activities for improvements of the land and agricultural production techniques for the purpose of increasing the productivity of farmland and developing the lessee’s ability to operate and acquire land. Article 6, Paragraph 1, requiring that all lease agreements must be made in writing and recorded upon application to be submitted jointly by both the lessor and the lessee is intended to prevent disputes often arising out of oral agreements. The provision of Article 16, Paragraph 1, prohibiting sub-lease of farmland, aims to further maintain a stabilized relationship of lease, where the lessee will keep his promise to engage in farming, so that the farmland will not become a tool with which intermediate exploitation may be undertaken. The statutory reasons for termination of lease specified by Article 17, Paragraph 1, Subparagraph 1, of the Statute, applicable only to the circumstance where the lessee dies during the term of the lease, leaving no heir to continue farming the land, make it possible for the lessor to repossess the land if the lessee’s heir is incapable of self-tilling, and thus allow the option for the lessors to repossess the land for farming by themselves. Such provisions are helpful in carrying out the nation’s fundamental policies designed to assist land-holding farmers and to improve the livelihood of farmers. While the freedom of contract and the property right of lessors are subject to certain restraints, the approach is necessary and appropriate in light of the purpose of the legislation, and the interest of both lessors and lessees is likewise being ensured. The provisions are thus consistent with the Constitution insofar as the principle of proportionality under Article 23, the safeguard of the freedom of contract under Article 22, the property right under Article 15 and the equality right under Article 7 are concerned.
The Rent Reduction Statute provides in Article 19, Paragraph 1, Subparagraph 1, that a lessor incapable of self-tilling is not entitled to demand return of his land, whereby a lessee capable of farming will not be caught in the situation of losing the land to work on. It reflects the essential means to put into practice the provision of Article 143, Paragraph 4, for assisting land-holding farmers. However, to deal with the situation of worldwide agricultural competition and encourage the development of agricultural technologies and new diversified industrial patterns, the meaning of the expression “self-tilling by the lessor” therein is not limited to the situation of personal farming by manual labor in light of the purpose of Article 146 of the Constitution and Article 10, Paragraph 1, of the Amendments to the Constitution for the industrialization and modernization of agriculture. Within the meaning is also included self-farming or contracting someone else to do the farming by way of agricultural technology and in the manner of a businesslike operation. Under the Rent Reduction Statute, Article 19, Paragraph 1, Subparagraph 2, the lessor has no right to repossess the land for his own cultivation if the total income of the lessor is sufficient to support his family. This provision has virtually made the lease renewal for an indefinite term of duration, thereby weakening the desire of the lessee to make himself a land-holding farmer and representing a departure from the purpose of Article 143, Paragraph 4, to support land-holding farmers. However, in consequence of the amendment made by the Legislature on December 23, 1983, by adding to the article the second paragraph allowing the lessor to repossess for his own cultivation the farmland situated in the same sector as or in a sector adjacent to his self-cultivated land for the purpose of expanding the business of his family farm, the restraint on the property right of lessors is thus eased and thereby the lease of farmland would not deprive the lessor of his ownership of the land. Subparagraph 3 of the same article, which prohibits the lessor from repossessing his land if the lessee will be deprived of the subsistence for his family, is an essential measure to protect the fundamental means of livelihood of farmland lessees for carrying out the policy to improve farmers’ livelihood as declared in Article 153, Paragraph 1, of the Constitution; and if the lessor is likewise devoid of the means to support his family s/he may request that the farmland lease and tenancy committee mediate, so that the actual needs of both lessor and lessee can be ensured. In light of the policies to assist land-holding farmers under Article 143, Paragraph 4, of the Constitution, to promote the industrialization and modernization of agriculture under Article 146 of the Constitution and Article 10, Paragraph 1, of the Amendments to the Constitution, and to improve the livelihood of farmers under Article 153, Paragraph 1, of the Constitution, the provisions of the three subparagraphs cited above, placing constraint on ownership to farmland by setting forth restrictive conditions on which lessors of farmland may repossess the land, appear to be necessary and are found consistent with the principle of proportionality under Article 23 of the Constitution and the provision of Article 15 of the Constitution with respect to the protection of the property right of the people. As regards the question of whether or not the lessor may lease the repossessed farmland to another person, it is a question of application of law.
Article 17, Paragraph 2, Subparagraph 3, of the Rent Reduction Statute, as added thereto by amendment on December 23, 1983, whereby the lessor of a farmland that is classified as or changed into land for non-cultivation use before the expiration of the lease shall give the lessee a compensation equal to one-third of the remaining amount of the government-declared current land value after deducting therefrom the amount of land value increment tax payable therefor, is applicable only to such land that may continue to be utilized for its original purpose pending the time when such specified use begins under Article 83 of the Land Law. The period of continued use of the land under the Land Law represents an interim provision designed to protect the established legal status of the land user. Because the lease of the farmland has not yet expired, the land may of course be used continuously for its original purpose for a specific period of time. In such circumstance, if the lessor of the farmland desires to terminate the lease before the expiration of its term, the Rent Reduction Statute imposes upon him, by Article 17, Paragraph 2, Subparagraph 3, the obligation to give the lessee a compensation, in order to indemnify the lessee for the damage suffered as a result of loss of his right to the lease and to balance the jural relationship between them. The restraint so imposed on the ownership of the lessor to the farmland constitutes no contravention of the intention of Article 15 of the Constitution in protecting the property right. Nevertheless, the inflexible rule of compensation in one-third of the amount regardless of the actual circumstances must be reviewed and modified at the earliest possible date by the government agency concerned by taking into account factors such as the protection of the freedom of contract contemplated by Article 22 of the Constitution and changes in socio-economic conditions.
Under Article 19, Paragraph 3, of the Rent Reduction Statute as added thereto by amendment on December 23, 1983, the lessor who repossesses his farmland upon expiration of the lease for the purpose of expanding the operation of his family farm and enhancing the efficient utilization of the land shall, by mutatis mutandis application of Article 17, Paragraph 2, Subparagraph 3, of the Statute, give the lessee a compensation equal to one-third of the remaining amount of the land value declared by the government for the period during which the lease is terminated, after deducting therefrom the amount of land value increment tax payable therefor. But, the relationship of lease being automatically extinguished upon expiration of the lease, the imposition on the lessor of a further obligation to compensate the lessee constitutes an unnecessary burden on the farmland owner, which is similar by nature to a barrier set up to prevent the lessor from taking back his farmland, and is thus contrary to the legislative purpose of encouraging the expanded operation of family farms to promote the modernization of agriculture. A fortiori, to repossess the farmland after expiration of the lease, albeit for expansion of his family farm, the lessor must satisfy the requirement that he is capable of self-tilling and that the lessee is not deprived thereby of the subsistence for his family. Inasmuch as the lessee’s family is not devoid of means of livelihood, the requirement that the lessor must assume the further obligation to take care of the lessee’s livelihood can hardly be deemed reasonable and justifiable. Consequently, the above provision, whereby Article 17, Paragraph 2, Subparagraph 3, of the Statute is made applicable mutatis mutandis to require that compensation be given to the lessee as an additional condition on which the lessor may repossess his farmland, is imposing an undue restraint on the property right of the lessor of farmland and is inconsistent with the purpose for the development of agriculture as embodied in Article 146 of the Constitution and Article 10, Paragraph 1, of the Amendments to the Constitution. The provision is further in conflict with the principle of proportionality under Article 23 of the Constitution and the provision set forth in Article 15 of the Constitution for the protection of the property right of the people, and must therefore be rendered ineffective as of the date not later than the last day of the second year from the issuance of this Interpretation.
Article 20 of the Rent Reduction Statute provides that, if the lessee desires to renew the lease upon expiration thereof, the lessor is bound to renew the lease unless the lessor has a statutory reason to repossess the land. It limits the right of the lessee to have the lease renewed to the situation where the lessor is not legally permitted to repossess the farmland. In the situation where the lessor is not legally permitted to repossess the farmland, the provision to restrain the lessor’s freedom of contract and to impose on him the obligation to renew the lease is intended to prevent the lease and tenancy contract from falling into an uncertain condition, rather than imposing on the lessor an additional burden other than the situations where the lessor is prohibited from demanding return of the farmland, and is therefore consistent with the principle of proportionality under Article 23 of the Constitution and the provision set forth in Article 15 of the Constitution for the protection of the property right of the people.
*Translated by Raymond T. Chu.