Precedent No. 02/2016/AL – Overseas Vietnamese asking a person in Vietnam to hold land use rights on their behalf
As provided under the former regulations, Vietnamese law did not allow overseas Vietnamese to own land in Vietnam. Therefore, many had to ask their relatives or acquaintances in Vietnam to hold land use rights in their names. Later, disputes arose when those holding the property refused to return it. Below is Precedent No. 02/2016, which was established to guide the settlement of similar disputes.
(I personally have a great appreciation for this precedent.)
Precedent No. 02/2016/AL
Adopted by the Council of Judges of the Supreme People’s Court on April 6, 2016, and published under Decision No. 220/QĐ-CA dated April 6, 2016, of the Chief Justice of the Supreme People’s Court.
Source of the precedent:
Cassation Decision No. 27/2010/DS-GĐT dated July 8, 2010, of the Council of Judges of the Supreme People’s Court in the case “Dispute over recovery of property” in Soc Trang Province between the plaintiff, Mrs. Nguyen Thi Thanh, and the defendant, Mr. Nguyen Van Tam; with a related party, Mrs. Nguyen Thi Yem.
Summary of the precedent:
In cases where an overseas Vietnamese paid to acquire land use rights but had a person residing in Vietnam hold the title in their name, when a dispute arises, the Court must consider and assess the efforts made by the nominal titleholder in maintaining, preserving, or improving the land’s value. If the titleholder’s contribution cannot be precisely determined, it should be considered that both parties — the person who paid for the land and the person holding the title — contributed equally, and they should share the increase in value equally, after deducting the initial amount paid for the transfer of land use rights.
Relevant provisions of law:
Articles 137 and 235 of the 2005 Civil Code.
CASE DETAILS
In the statement of claim dated January 24, 2005, the written testimony dated February 7, 2005, and throughout the proceedings, the plaintiff, Mrs. Nguyen Thi Thanh, stated as follows:
Mrs. Thanh, a Vietnamese national residing in the Netherlands, returned to Vietnam to visit her family and intended to acquire land use rights. On August 10, 1993, she purchased 7,595.7 square meters of rice field land from Mr. Heng Tinh and Mrs. Ly Thi Sa Quenh in Ward 7, Soc Trang Town, for 21.99 taels of gold. She personally conducted the negotiation, concluded the transaction, and paid the gold to the sellers.
Her purpose in purchasing the land was to allow her younger brother, Mr. Nguyen Van Tam, and Mrs. Nguyen Thi Chinh Em to cultivate the land and use the proceeds to care for their parents. As Mrs. Thanh was an overseas Vietnamese, she asked Mr. Tam to have his name written on the transfer documents. She also presented a “Land Transfer Deed” dated August 10, 1993, bearing the certification of the People’s Committee of An Hiep Commune.
After the transfer, she allowed Mr. Tam and his wife to cultivate the land. However, in 2004, without her consent, Mr. Tam sold the entire 7,595.7 m² to Minh Chau Co., Ltd. for VND 1,260,000,000 (one billion two hundred sixty million dong). Therefore, Mrs. Thanh requested that Mr. Tam return the proceeds from the sale of her land.
The defendant, Mr. Nguyen Van Tam, stated:
The disputed 7,595.7 m² of land was purchased by him and his wife using their own money and gold from Mr. Heng Tinh and Mrs. Ly Thi Sa Quenh. He was the one whose name appeared on the “Land Transfer Deed” dated August 10, 1993, which, however, did not bear the certification of the local authorities.
Later, on August 11, 1993, he and the sellers signed a formal contract and application for transfer of land use rights, which were duly certified by the People’s Committee of An Hiep Commune and approved by the People’s Committee of My Tu District. Afterward, he registered the land and was issued the Certificate of Land Use Rights on May 28, 1994.
Therefore, in 2004, he lawfully transferred the land to Minh Chau Co., Ltd. for VND 1,260,000,000. He also argued that the “Land Transfer Deed” dated August 10, 1993, produced by Mrs. Thanh and certified by the People’s Committee of An Hiep Commune, was forged, since according to Forensic Examination Report No. 2784/C21 (P7) dated October 25, 2005 by the Criminal Science Institute under the General Department of Police, the signature on that document was not his. Thus, he rejected Mrs. Thanh’s claim.
Mrs. Nguyen Thi Yem, Mr. Tam’s wife and a person with related rights and obligations, stated:
In 1993, she and her husband purchased the land from Mr. Heng Tinh. Although she did not directly participate in the transfer procedures, she provided her husband with the money and gold used to pay the sellers. Therefore, she also did not agree with Mrs. Thanh’s claim.
The sellers, Mr. Heng Tinh and Mrs. Ly Thi Sa Quenh (also known as Ly Thi Sa Venh), confirmed that Mrs. Thanh personally negotiated and paid 21.99 taels of gold for the land and that she had asked that Mr. Tam be listed as the transferee on her behalf in the “Land Transfer Deed” dated August 10, 1993. They further affirmed that the signatures appearing on the document produced by Mrs. Thanh were indeed theirs.
At the First-Instance Civil Judgment No. 04/2006/DS-ST dated April 28, 2006, the People’s Court of Soc Trang Province ruled as follows:
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Partially upheld Mrs. Nguyen Thi Thanh’s claim for recovery of the land transfer payment.
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Ordered Mr. Nguyen Van Tam and Mrs. Nguyen Thi Yem to jointly pay VND 630,000,000 to Mrs. Thanh.
The court also decided on court fees, expert examination costs, and the parties’ right to appeal in accordance with the law.
On May 10, 2006, Mr. Nguyen Van Tam appealed, arguing that Mrs. Thanh was not the lawful owner of the land he had sold to Minh Chau Co., Ltd., and that the trial court’s order requiring him to pay her VND 630,000,000 was incorrect.
On May 12, 2006, Mr. Nguyen Huu Phong, acting as the representative of Mrs. Thanh, appealed and requested that the appellate court order Mr. Tam to return the entire VND 1,260,000,000 he had received from the land transfer.
In Civil Appellate Judgment No. 334/2006/DS-PT dated August 25, 2006, the Appellate Court of the Supreme People’s Court in Ho Chi Minh City decided to reject the appeals of both the plaintiff and the defendant and to amend the first-instance judgment as follows:
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To partially accept the claim of Mrs. Nguyễn Thị Thảnh regarding the recovery of proceeds from the transfer of land use rights.
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To require Mr. Nguyễn Văn Tám and Mrs. Nguyễn Thị Yêm to return to Mrs. Nguyễn Thị Thảnh an amount of 27,047,700 VND, equivalent to 21.99 taels of 24k gold.
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To require Mr. Nguyễn Văn Tám and Mrs. Nguyễn Thị Yêm to remit 1,232,266,860 VND to the State Treasury.
In addition, the appellate court also ruled on court fees.
After the appellate trial, Mr. Nguyễn Văn Tám filed a complaint against the above appellate civil judgment.
In Decision No. 449/2009/KN-DS dated August 21, 2009, the Chief Justice of the Supreme People’s Court protested against Civil Appellate Judgment No. 334/2006/DS-PT dated August 25, 2006 of the Appellate Court of the Supreme People’s Court in Ho Chi Minh City, requesting the Judicial Council of the Supreme People’s Court to conduct cassation review, annul the said appellate judgment and annul Civil First-instance Judgment No. 04/2006/DS-ST dated April 28, 2006 of the People’s Court of Sóc Trăng Province; and to remand the case to the Sóc Trăng Provincial People’s Court for retrial in accordance with the law, with the following reasoning:
“Mrs. Nguyễn Thị Thảnh filed a lawsuit to reclaim property from Mr. Nguyễn Văn Tám, claiming that since she is a Vietnamese residing overseas, she had asked her younger brother, Mr. Tám, to hold the land transferred from Mr. and Mrs. Hêng Tính on her behalf. Later, Mr. Tám sold that land to another person.
Both the first-instance and appellate courts determined that Mr. Tám held the land in name only on behalf of Mrs. Thảnh, which was well-founded.
Since Mrs. Thảnh is a Vietnamese residing overseas, she is not entitled to be allocated land, but only to be reimbursed for her investment – the money spent on the land transfer.
Regarding the difference in land value: at the time of both first-instance and appellate trials, the 2005 Civil Code was in effect, which contained no provision requiring confiscation of the value difference for the State. Therefore, this difference should be shared between Mrs. Thảnh and Mr. Tám. The first-instance court’s decision not to confiscate the value difference was proper, but its failure to order reimbursement to Mrs. Thảnh for her initial investment was incorrect. The appellate court’s order to confiscate the entire difference (1,232,226,860 VND) to the State Treasury lacked legal basis.”
At the cassation hearing, the representative of the Supreme People’s Procuracy recommended that the Judicial Council of the Supreme People’s Court accept the protest of the Chief Justice, annul both the appellate and first-instance civil judgments, and remand the case to the Sóc Trăng Provincial People’s Court for retrial according to law.
The Judicial Council of the Supreme People’s Court held that:
Mrs. Nguyễn Thị Thảnh sued Mr. Nguyễn Văn Tám, demanding that he return 1,260,000,000 VND, claiming that she personally negotiated and paid for the transfer of 7,595.7 m² of land from Mr. and Mrs. Hêng Tính, but because she was an overseas Vietnamese, she asked her brother, Mr. Tám, to hold the title. Later, without her consent, Mr. Tám transferred the land to Minh Châu Co., Ltd. for 1,260,000,000 VND.
Mr. Tám contended that he himself negotiated and paid for the land, that the land transfer documents bore his name, that he directly managed and used the land, registered it, and was granted the land use right certificate, and that the sale to Minh Châu Co., Ltd. was lawfully approved. Therefore, he did not agree with Mrs. Thảnh’s claim.
However, during the proceedings, the statements of Mr. Tám and his wife were inconsistent regarding the money and gold paid to Mr. Hêng Tính, and they failed to prove the source of the funds allegedly used. Meanwhile, Mr. and Mrs. Hêng Tính consistently confirmed that they transacted directly with Mrs. Thảnh and received payment in gold from her, with Mr. Tám’s name appearing in the land transfer document only at Mrs. Thảnh’s request, as she was residing overseas.
According to the testimony of Ms. Thái Thị Ba, Mr. Nguyễn Phước Hoàng, and Ms. Nguyễn Thị Chính Em (mother and siblings of Mrs. Thảnh and Mr. Tám), it was Mrs. Thảnh who negotiated and paid for the land, while Mr. Tám only held the name on her behalf.
Based on all the above evidence, it is well-founded to conclude that both the first-instance and appellate courts were correct in determining that Mrs. Thảnh provided the entire 21.99 taels of gold for the land purchase, and Mr. Tám merely held the title on her behalf. Since Mr. Tám later sold the land to Minh Châu Co., Ltd., and Mrs. Thảnh requested repayment of the 1,260,000,000 VND sale proceeds, the courts’ acceptance of jurisdiction was proper.
Although Mrs. Thảnh contributed 21.99 taels of gold (approximately 27,047,700 VND) for the purchase, the land title was under Mr. Tám’s name, and he managed, maintained, and later sold the land. Therefore, Mr. Tám’s efforts in preserving and enhancing the land’s value should be recognized. Accordingly, after deducting Mrs. Thảnh’s principal contribution, the remaining proceeds should be considered joint profits between Mrs. Thảnh and Mr. Tám. The court must determine Mr. Tám’s share proportionate to his contribution; if this cannot be precisely established, it should be assumed that both contributed equally.
The first-instance court correctly recognized that both parties each had half ownership of the proceeds but erred in failing to award Mrs. Thảnh reimbursement of her initial investment equivalent to 21.99 taels of gold.
The appellate court, on the other hand, incorrectly limited Mrs. Thảnh’s entitlement to only her initial 21.99 taels of gold and confiscated the remainder to the State, which contradicts the 2005 Civil Code and fails to protect the legitimate rights of the parties.
Furthermore, since Mrs. Thảnh’s claim sought recovery of 1,260,000,000 VND, the proceeds from the sale of land use rights (and not the land itself), and Mr. Tám claimed ownership of that sum, the dispute concerned ownership of the money, not a simple “recovery of property” as characterized by the lower courts.
Therefore, pursuant to Clause 3, Article 297, and Article 299 of the Civil Procedure Code:
DECISION
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To annul Civil Appellate Judgment No. 334/2006/DS-PT dated August 25, 2006, of the Appellate Court of the Supreme People’s Court in Ho Chi Minh City, and Civil First-instance Judgment No. 04/2006/DS-ST dated April 28, 2006, of the People’s Court of Sóc Trăng Province, in the case of a dispute over property recovery between plaintiff Mrs. Nguyễn Thị Thảnh and defendant Mr. Nguyễn Văn Tám, with related party Mrs. Nguyễn Thị Yêm.
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To remand the case to the People’s Court of Sóc Trăng Province for retrial in accordance with the law.
CONTENT OF THE PRECEDENT
“Although Mrs. Thảnh contributed 21.99 taels of gold (approximately 27,047,700 VND) to purchase the land, the land title was in Mr. Tám’s name, and after the purchase, he managed and later sold it. Therefore, Mr. Tám should be recognized for his contribution in maintaining and enhancing the land’s value. The proceeds, after deducting Mrs. Thảnh’s principal contribution, constitute joint profits of both parties. The court should determine Mr. Tám’s share based on his contribution; if this cannot be precisely established, both should be deemed to have contributed equally.”
Source: Precedent No. 02/2016/AL – Case on Property Recovery Dispute
