Taiwan - Article 184 Of The Civil Code Shall Also Apply To A Juristic Person.
Legal News & Analysis - Asia Pacific - Taiwan - Dispute Resolution
13 January 2021
The Supreme Court rendered the 108-Tai-Shang-2035-Zi Decision of August 19, 2020 (hereinafter, the “Decision”), holding that Article 184 of the Civil Code shall also apply to a juristic person.
According to the facts underlying this Decision, the Appellant asserted that he had never applied for a credit card from the Appellee (Bank A). However, the Appellee applied to the Taoyuan District Court for a payment order on the ground that the Appellant had owed an outstanding credit card debt and used the Appellant’s registered household address, which the Appellee was obviously aware is not the Appellant’s residence address, as the service address. The payment order was confirmed due to service by deposit. The Appellee applied for the compulsory enforcement of the Appellant’s land based on this payment order and the land was auctioned for a price below the going market rate. As a result, the Appellant was damaged for losing the right to claim the Elder Farmers’ Welfare Allowance, assuming relevant enforcement costs, price difference for the land at issue and the loss of his entitlement under the Old Farmer Pension Program. The Appellee was requested to pay the amount of the above damage plus statutory interest in accordance with Article 184 of the Civil Code.
The original trial court reversed the first instance decision in which the Appellant prevailed and reject such claim on grounds summarized as follows. Organized as a juristic person, the Appellee itself is not capable of tort, and for its damages liability for tort to be established, its directors or other individuals with representative power should cause damage to others during the discharge of their duty or its employees illegally violate the rights of others during the discharge of their duty so that the Appellee will be jointly and severally liable with each actor in accordance with Articles 28 and 188 of the Civil Code. The types of tort under Article 184 of the same law all apply to the tort committed by a natural person and do not apply to juristic persons. Therefore, the Appellant’s claim asserted in accordance with Article 184 of the Civil Code is not justified and should not be granted.
It was first pointed out in this Decision that with respect to the legal opinion concerning “whether Article 184 of the Civil Code applies to the tort committed by a juristic person,” which serves as the basis of the adjudication, past adjudications involving identical facts were quite diverse with some holding affirmative views and some negative views. Since the panel of judges for this Decision believed that an affirmative view should be adopted, they solicited opinions from other civil courts. The civil courts whose opinions were sought all adopted the same legal opinion. To wit, Article 184 of the Civil Code also applies to a juristic person. Therefore, such legal opinion was adopted as the basis of adjudication in this case and a final decision was directly rendered accordingly.
It was further stated in the Decision that a juristic person is the subject of rights and is capable of enjoying rights under Articles 26 through 28 of the Civil Code. If it is necessary to engage in the target business, a juristic person also has disposing capacity and is also capable of assuming liabilities. In addition, Articles 28 and 188 of the same law provide that with respect to the establishment of a juristic person’s liability for tort, the juristic person is jointly and severally liability with each actor only when its directors or other individuals with representative power cause damage to others during the discharge of their duty or when its employees illegally violate the rights of others during the discharge of their duty. However, the provisions on tort under the Civil Code (i.e., Article 184) are not limited to natural persons. Since a juristic person may organize its own activities for its own purposes, it can certainly consolidate the intent and activities of its members as its own collective intent and activities. If a juristic person’s liability for tort cannot be established without relying on the tort of its representative organ or employees, not only its legal representative or employees will assume excessively heavy liabilities to external parties, but also a victim will be required to specifically identify and substantiate the wrongdoers and details about their acts within the corporate organization of the juristic person when claiming damages. In view of the risk that the wrongdoers and the reasons for their culpability cannot be ascertained in special incidents, in case the acts of a juristic person’s legal representative or employees do not meet the criteria under Articles 28 and 188 of the Civil Code, the juristic person may still be able to avoid its liability for damages even in spite of other reasons for the occurrence of the damage which are attributable to the juristic person. This is certainly inappropriate for the protection of the victim. Since a juristic person pursues and generates profits through its organizational activities and is capable of diversifying risks, it should certainly assume the damages liabilities arising from its organizational activities and Article 184 of the Civil Code should also apply in order to be fair. The original trial court held a different view and inappropriately jumped to the conclusion that Article 184 of the Civil Code does not apply. The gist of the appeal was not groundless.
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