In cases where a social welfare foundation established a joint collateral for the land and buildings which are fundamental property with the permission of the Minister of Health and Welfare, but demolished the buildings and then constructed a new building, and thereafter auction for the said new building was conducted pursuant to the collective auction claim under Article 365 of the Civil Act, whether the auction court shall deny the sale to the highest bidder unless the Minister of Health and Welfare separately permits the sale of the said new building (affirmative)

According to the provisions of Article 23(3)1 of the Social Welfare Services Act, a social welfare foundation shall obtain permission from the Minister of Health and Welfare to sell its fundamental property, and the same applies to the sale by auction procedure. If the highest bidder fails to obtain permission from the Minister of Health and Welfare with respect to the acquisition of real estate in the real estate auction procedure conducted with respect to the fundamental property of the social welfare foundation, the auction court should deny the sale of the property because the highest bidder falls under “when the highest bidder is not entitled to purchase the real estate” as provided by Article 121 subparag. 2 of the Civil Execution Act. This also applies where the social welfare foundation established a joint collateral mortgage on the land and building with the permission of the Minister of Health and Welfare, but removes the building and newly constructs the new building and proceeds from the auction of the said new building pursuant to Article 365 of the Civil Act. Thus, the sale of the highest bidder cannot be permitted unless otherwise permitted by the Minister of Health and Welfare.

Article 23(3)1 of the Social Welfare Services Act, Article 365 of the Civil Act, Article 121 Subparag. 2, Article 123, and Article 268 of the Civil Execution Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law No. 7355, Sep. 26, 2003) (Gong2003Ha, 2293)

National Agricultural Cooperative Federation

Jeonju District Court Order 2005Ra42 dated November 23, 2005

The reappeal is dismissed.

The grounds of reappeal are examined.

According to the provisions of Article 23(3)1 of the Social Welfare Services Act, a social welfare foundation shall obtain permission from the Minister of Health and Welfare to sell its basic property, which also applies to sale through auction procedures (see Supreme Court Decisions 77Da1476, Sept. 13, 1977; 2002Ma4353, Sept. 26, 2003; 2002Ma4353, Sept. 26, 2003; etc.). If the highest bidder fails to obtain permission from the Minister of Health and Welfare with regard to the acquisition of the real property in the real estate auction procedure conducted with regard to the basic property of a social welfare foundation, the auction court shall be prohibited from selling it, since the highest bidder is "where the highest bidder is not entitled to purchase the real estate" under Article 121 subparag. 2 of the Civil Execution Act. This is likewise applicable to the case where a social welfare foundation established a joint collateral on the land and building with the permission of the Minister of Health and Welfare, but removed and newly constructed a new building.

In the same purport, the court below is just in holding that the highest bidder is not able to permit the sale because the building (child nurture facility) in the judgment that was the real property subject to the collective auction of this case was the basic property of the social welfare foundation (title omitted). There is no violation of the laws and regulations regarding the interpretation and application of Article 23(3) of the Social Welfare Services Act as alleged in the grounds for reappeal.

Therefore, the reappeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yang Sung-tae (Presiding Justice)