The Plaintiff of the original case , Chan-Shin CHEN, brought a legal action and made the following claim: the inheritors of the one-third ownership holding of the land lot, located at no. twenty of Nanshanping sub-plot, Shihfenliao plot, Pingchi District, New Taipei City, (hereinafter the Disputed Land), failed to apply for the inheritance registration within the publicly announced time limit. As a result, the New Taipei City Government produced documentation of the Disputed Land and assumed its management, and, after the period of management came to an end, transferred the Disputed Land to the Northern Region Branch, National Property Administration, Ministry of Finance (hereinafter the NNPA). The NNPA authorized the Taiwan Financial Asset Service Corporation (hereinafter the TFASC) to sell the Disputed land by public tender pursuant to Article 73-1 of the Land Act, and Li-Yun LI was the successful bidder. The Plaintiff, claiming to be a lawful occupant, sought to exercise his preferential right to purchase the Disputed Land, as per Article 73-1, Paragraph 3, First Sentence of the Land Act, which prescribes that: “[Regarding] the sale by tender of the land or constructional improvement according to Paragraph 2, … the lawful occupants … shall have a preferential right to purchase the area occupied by them … ” (hereinafter the Disputed Provision). The TFASC notified the Plaintiff either to submit proof of lawful occupancy of the Disputed Land or, if such proof were unavailable, to file a suit for a declaratory judgment confirming the existence of the preferential purchase right and submit the certificate of commencement of that litigation within the time limit. Failure to comply within the time limit would be deemed a waiver of the preferential purchase right. The Plaintiff accordingly brought an action to the Taiwan Keelung District Court (hereinafter the Keelung District Court), for a declaratory judgment confirming the existence of the preferential purchase right.
After hearing the case, the Keelung District Court opined that, when the NNPA sells (or authorizes the TFASC to sell) the Disputed Land by public tender to the successful bidder, or to the preferential purchase right holder, as prescribed by the Land Act, it stands on an equal footing with the buyer to perform a bilateral act governed by the private law. However, when a claimant with the preferential purchase right seeks to exercise the right, the authority in charge, namely the National Property Administrative, the Ministry of Finance (hereinafter the NPA) still has to exercise public power. The authority should, in its official capacity, independently review, investigate and confirm whether the legal requirements of the preferential purchase right under the Disputed Provision are satisfied, irrespective of the intent of the counterparty. Moreover, upon the confirmation of being a holder of the preferential purchase right, the claimant is entitled to the right to be prioritized over the successful bidder in buying the Disputed Land. This confirmation of the “qualification for preferential purchase” is a unilateral legal act with direct external effects, rendered by an administrative authority in making a decision within its public authority, in accordance with public law, in respect of a specific matter. Such an act, despite incurring legal effects of private law, constitutes an administrative disposition. It is, therefore, a dispute pertaining to public law by its very nature. The District Court, thus, transferred the case to the Taipei High Administrative Court on its own initiative with Civil Decision 104-Shui-213 (2015). The Decision became irrevocable as none of the parties filed an appeal (hereinafter the Irrevocable Decision).
The Taipei High Administrative Court, after hearing the transferred case, ruled in Decision 105-Shui-302 (2016) that, pursuant to the legislative intent of the Disputed Provision, the existence of the preferential purchase right should be determined according to relevant provisions of the Civil Code. The agreement upon which the sale by tender at issue is founded is a civil one. The existence of the preferential purchase right, being a prerequisite legal relation for the said agreement, is likewise a dispute pertaining to private rights, and therefore should be adjudicated by ordinary courts. Furthermore, the Disputed Provision is distinct from cases of the two-stage theory (Zweistufentheorie); no administrative disposition is involved here. A great majority of court decisions to date has held that the litigation for a declaratory judgment confirming the existence of the preferential purchase right is a dispute pertaining to private law. In addition, the administrative court (prior to its reorganization) had indicated, recurrently, that cases arising from public tenders of lands by government agencies should be adjudicated by ordinary courts. At this juncture, the Taipei High Administrative Court’s judgment regarding its power to hear cases contradicted the view of the Irrevocable Decision which had applied the same provisions, the Administrative Court thus petitioned this Court for an interpretation. This petition shall be granted since it meets requirements for the unified interpretation as prescribed by Article 7, Paragraph 1, Subparagraph 1 of the Constitutional Interpretation Procedure Act, and Article 178 of the Administrative Litigation Act. This Court hereby makes this Interpretation and the reasoning is as follows:
A dual system of litigation has been adopted in this State. The division of adjudication between ordinary and administrative courts is an issue for the legislative body to decide, taking into full consideration the nature of cases litigated and the function of the existing litigation system (including court organic and assignment of court staff, relevant procedural rules and timely and effective protection of rights, etc.). Where the matter of adjudication is not specified in the law, the suitable remedy shall be determined by the nature of disputes and the function of the existing litigation system. Namely, as a general principle, disputes arising from a relation governed by private law shall be adjudicated by ordinary courts, whereas disputes arising from a relation governed by public law shall be adjudicated by administrative courts (see J.Y. Interpretations Nos. 466, 695, 758, 759, and 772).
The Disputed Provision only stipulates that “the lawful occupants…shall have a preferential right to purchase the area occupied by them…” It is, however, left unspecified as to which court—the ordinary or the administrative—shall hear the case concerning the dispute arising therefrom. The relevant Interpretations of this Court suggest that the power of adjudication shall be attributed according to the nature of the dispute.
Article 73-1, Paragraph 1, Paragraph 2, First Sentence of Paragraph 3, and Paragraph 4 of the Land Act provide that if the inheritance of land or constructional improvement is not registered within one year of the date of the inheritance, the competent Municipal or County (City) Land Office shall publicly notify that the inheritors ought to apply for the registration within three months. If the application for inheritance registration is not filed within the time limit, the competent Land Office may produce documentation of the land or constructional improvement and assume its management. The duration of such management shall not exceed fifteen years. If the registration has not been applied for before the management period comes to an end, the competent Land Office shall transfer the documentation of the land or construction improvement to the National Property Bureau for the public tender. The sale by tender of the land or constructional improvement shall be publicly announced for thirty days, and “the lawful occupants…shall have a preferential right to purchase the area occupied by them…” (i.e. the Disputed Provision). A special account shall be set up in the National Treasury to keep the proceeds from the sale by tender; the inheritors may withdraw their lawful shares accordingly. The proceeds, if not retrieved by any inheritor within ten years, shall belong to the National Treasury.
In light of the constitutive components of the preferential purchase right set forth in the Disputed Provision, to determine whether the occupants who claim to be lawful are indeed lawful, and thereby are entitled to the preferential purchase right, it is necessary to ascertain whether there exists a legal ground for the occupancy, for instance, a legal basis to take possession under the law of Rights In Rem, or a rental or loaning relation under the law of Obligations. Issues of this kind involve the existence of private legal relations. Their legal effects are merely to confirm whether the claimant of the preferential purchase right may take priority over the successful bidder and become the buyer of the land sale agreement. In other words, both the components and effects of the preferential purchase right set forth in the Disputed Provision pertain to private legal relations and shall be determined in accordance with relevant provisions of the Civil Code. These components and effects are unrelated to the exercise of public power. It is therefore evident that the lawsuit for a declaratory judgment confirming the existence of the preferential purchase right, which is brought by the claimant of such a right, is by its nature a dispute arising from private legal relations.
In conclusion, the case for a declaratory judgment confirming the existence of the preferential purchase right, brought by the lawful occupants of the land or constructional improvement as unregistered inheritance , who seek to exercise such a right under the Disputed Provision over their occupied area, in the public tender held by the National Property Administration or its agencies, is by nature a dispute arising from private legal relations, and shall be adjudicated by ordinary courts.
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*Translated by Ya-Wen YANG