Whether a hospital has the capacity to be a party;

The Do-affiliated long-term care hospital specializing in older persons is merely a facility and cannot be deemed a corporation or an organization deemed a corporation, etc., and thus, the lawsuit of this case is unlawful.

Article 8 (Application of Act) of the Administrative Litigation Act

2017Guhap24778 Revocation of Disposition of Corporate Tax Imposition

AAAdo BB Care Hospitals Specialized for the Aged

BB Director of the Tax Office

November 9, 2018

December 5, 2018

1. The instant lawsuit shall be dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

Each imposition of corporate tax of KRW 131,022,720 (including additional tax) and corporate tax of KRW 111,806,880 (including additional tax) that the Defendant rendered to the Plaintiff on February 1, 2017 shall be revoked.

1. Basic facts

A. In accordance with the AA Do Governor’s Ordinance on the Establishment and Operation of a Specialized Care Hospital for the Aged of AAdo (Ordinance No. 2558 of Apr. 22, 1999), the AA Do Governor established an OO on Apr. 22, 199, at the OO located in BB, and the Plaintiff AAA AB BB Elderly Special Care Hospital (hereinafter “Plaintiff hospital”).

B. On April 27, 1999, the AAA Do Governor entered into a contract on the entrusted operation of the BCC Medical Foundation (the representative DD; hereinafter referred to as the "Medical Foundation") with the Plaintiff hospital, and entrusted the affairs concerning the management and operation of the hospital to the Medical Foundation.

Accordingly, the medical foundation is managing and operating the plaintiff hospital from May 10, 1999 to the date.

C. From November 24, 2016 to December 23, 2016, the Defendant conducted a regular tax investigation with respect to the Plaintiff hospital. As a result, the Defendant denied the Plaintiff’s income from the operation of the Plaintiff hospital from the deductible expenses, on the ground that the income falls under the income accrued from the profit-making business of a non-profit domestic corporation under Article 31(3)1 of the Corporate Tax Act and Article 2(1) of the Enforcement Decree thereof, the Defendant denied the amount in excess of the limit on the establishment of the reserve fund for proper purpose business from the deductible expenses, and issued a correction and notification of the corporate tax of KRW 131,02,720 (including additional tax) and corporate tax of KRW 11,806,880 (including additional tax) for the business year 2015 (hereinafter “instant disposition”).

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on May 2, 2017, but the appeal was dismissed on September 20, 2017.

Facts that there is no dispute over recognition, the purport of the whole pleading.

2. The plaintiff's assertion

For the following reasons, the Plaintiff hospital is a medical institution established by the AA Do Governor, and the person to whom the operating profits accrue, is a local government, and thus the Defendant may not impose corporate tax on the Plaintiff pursuant to Article 2(3) of the Corporate Tax Act.

(1) The Plaintiff hospital is a specialized elderly care hospital established by the AA Governor pursuant to the Ordinance on the Establishment and Operation of the Specialized Elderly Care Hospital.

(2) The AA Do Governor has the right to make decisions on the operation of the Plaintiff hospital, including the operation policy of the hospital, the number of employees and patients, the details of the medical care and treatment services, and the management of hospital facilities.

3. The owners of the land and the building at the Plaintiff hospital are both AA and completed real estate and the medical equipment, etc. purchased shall be registered or recorded in the name of the AAdo and managed.

(4) The Plaintiff hospital shall submit a report on the settlement of accounts prepared by a certified public accountant designated by the AA Governor within two months after the end of each fiscal year to the AA Governor.

In addition, the AAA Do Governor orders the operation of the hospital or the agency to submit or report necessary materials, and actually manages and operates the plaintiff hospital as it is possible to investigate and inspect the current status of operation, books, and other related documents of the hospital.

(5) The Plaintiff hospital and the BCC medical foundation respectively constitute separate separate accounts and process profits and losses separately.

(6) In a request for pre-assessment review on May 20, 201, the Commissioner of the National Tax Service determined that the person to whom profits accrued from the operation of the Plaintiff hospital belongs is a local government, as a local government.

After that, the amendment of the law to change the judgment of the tax authority or there is no other special change in circumstances, the defendant's disposition of this case violated the principle of protection of trust.

3. Whether the lawsuit of this case is legitimate

(a) organizing the contents and issues of the relevant regulations;

1) According to Article 1 subparag. 2 and Article 2(1)1 and (3) of the Corporate Tax Act, “non-profit domestic corporations” shall mean corporations established under Article 32 of the Civil Act among domestic corporations, corporations established under the Private School Act or other special Acts for the purposes similar to those prescribed in Article 32 of the Civil Act (excluding corporations that are not partnership corporations prescribed by Presidential Decree but can distribute profits to their stockholders, employees, or investors), and organizations deemed corporations under Article 13(4) of the Framework Act on National Taxes.

(2) Under Article 13(1), (2), (4) and (7) of the Framework Act on National Taxes, non-corporate associations, foundations, or other organizations (referring to domestic corporations and foreign corporations under subparagraphs 1 and 3 of Article 1 of the Corporate Tax Act; hereinafter the same shall apply) which are not corporations (hereinafter referred to as "organizations which are not corporations") shall be deemed non-registered or non-registered foundations (hereinafter referred to as "unregistered or non-registered foundations") with the permission or authorization of the competent administrative agency or registered with the competent administrative agency pursuant to the Acts and subordinate statutes, or foundations which have basic property contributed for public interest and have non-registered property, and shall be deemed non-registered foundation and shall be subject to the application of the Framework Act on National Taxes and other tax-related Acts.

According to Article 8(1) and (2) of the Enforcement Rule of the Framework Act on National Taxes following such delegation, the representative or manager of an organization which is not a corporation shall submit to the head of the competent tax office a document stating the name, location of the principal office, the name and domicile or temporary domicile of the representative or manager, the inherent business, the property status, the articles of incorporation or the operation of the organization, and other necessary matters, of the organization.

Meanwhile, according to Article 8(2) of the Administrative Litigation Act and Articles 51 and 52 of the Civil Procedure Act, the provisions of the Civil Procedure Act shall apply mutatis mutandis to matters not specifically provided for in the Administrative Litigation Act with respect to the administrative litigation. <2> The capacity of a party, litigation capacity, legal representation of a person without litigation capacity, granting authorization necessary for legal representation and litigation acts of a person with litigation capacity shall be governed by the Civil Procedure Act and other Acts, unless otherwise provided for in the Civil Procedure Act, and 3. Where an association or foundation

2) In principle, since a hospital is merely a name of a medical facility established and maintained by its founder or operator, it cannot be deemed that it itself constitutes an unincorporated association or foundation independent of its founder or operator (see Supreme Court Decision 71Da424, Sept. 28, 1971).

Therefore, the plaintiff, in principle, cannot be deemed to have the ability to have substantive legal capacity and to have legal capacity under the Civil Procedure Act. However, if the plaintiff constitutes an organization deemed a corporation under the relevant provisions such as the Framework Act on National Taxes, it shall be deemed that

Ultimately, the issue of this case is whether the Plaintiff is a corporation under Article 13(1) and (2) of the Framework Act on National Taxes and whether the Plaintiff has the capacity to be a party in a lawsuit.

(b) Fact of recognition;

The following facts may be acknowledged in light of the absence of dispute between the parties or the overall purport of Gap evidence Nos. 5, 11, 12, Eul evidence No. 6, 7, Eul evidence No. 8-1, and Eul evidence No. 8-2:

1) On March 26, 1992, the Medical Foundation is a medical corporation that was established and operated with the purpose of establishing and operating a medical institution in the OO located in BB, O on March 26, 1992. The Plaintiff hospital is a specialized hospital for senior citizens established by AAA to construct a building for hospital at the site donated by the Medical Foundation for the purpose of medical care and treatment of dementia and senior citizens.

2) On June 16, 1997 and April 29, 1999, AAADo filed an ownership transfer registration and ownership preservation registration with respect to the land of the Plaintiff hospital, the O-O-O site of the O-O site of the O-O site of the O-O site of the 2B city of BB city, and the one-story underground floor of the 5th floor above the site, and the one-story hospital building of the 5th floor above the ground (a building size of 2,073.96 square meters, total floor area of 10,911.8 square meters). In addition, AA also owns all medical equipment used by the Plaintiff hospital.

3) On April 27, 1999, the AA Do Governor entrusted the operation of the Plaintiff hospital’s property and medical equipment to the medical foundation for the efficient and specialized operation of the Plaintiff hospital. However, the AA Do Governor entered into a management consignment agreement with the content that the medical foundation will substitute it for the investment expenses of the hospital, such as the land donated by the medical foundation.

Accordingly, on May 10, 199, the Medical Foundation established a business registration (business attitude: medical service, category, hospital, and convalescent hospital) under the name of the Plaintiff Hospital (DD, its representative, obtained permission from the AAAD Governor on February 18, 2004 to establish a medical institution under the name of the Plaintiff Hospital (55 rooms, 260 beds in a convalescent hospital). Since that time, the Medical Foundation entrusted the Plaintiff hospital with the management of the Plaintiff hospital and renewed the management consignment agreement with the Plaintiff hospital.

4) The main contents of the modified contract (Evidence 13) on the operation and management entrustment of the Plaintiff hospital that was concluded on May 3, 2016 by the AA Do Governor and the Medical Foundation, the truster, the AA Do Governor and the trustee, are as follows (hereafter in this paragraph, the AA Do Governor and the Medical Foundation shall be referred to as the "Do Governor" and the "Foundation".

(Omission)

5) On July 30, 2012, AA Do Governor imposed a KRW 167 million per annum on the Plaintiff’s hospital’s land and building’s fee, a public property, on July 30, 2012.

On July 22, 2013, the Anti-Corruption and Civil Rights Commission (the Anti-Corruption and Civil Rights Commission) filed an objection with the Anti-Corruption and Civil Rights Commission, and decided to cancel the AA Do Governor's disposition of imposing user fees and to recommend the AA Do Governor to refund user fees already paid.

C. Determination on issues

1) Comprehensively taking account of the facts recognized as above and the following circumstances revealed in the argument of this case, the Plaintiff cannot be deemed as an unincorporated association, foundation, or other organization, i.e., an entity other than a corporation, or an entity deemed a corporation under Article 13(1) and (2) of the Framework Act on National Taxes.

Therefore, the lawsuit of this case is unlawful as it is filed by a person without capacity.

A) In a case where the members of a certain organization have regulations having the nature of an association with its own objective and, on the basis of such regulations, have an organization consisting of a decision-making body and a representative who is an executive body, regardless of a change due to the joining, withdrawal, etc. of members, the organization itself continues to exist, regardless of the organization’s method of representation, the operation of a general assembly or board of directors, the management of assets, and other important matters as an organization, the organization has the substance of an association which is not a juristic person (see, e.g., Supreme Court Decision 92Da2431, Jul

However, the Plaintiff hospital is merely a facility established by AAA and managed and operated by the Medical Foundation, and it cannot be deemed that the members of the Plaintiff hospital have an organization, such as setting up a rule with its own purpose and establishing a decision-making body and appointing a representative who is an executive body, or that it has an entity as an association, not a corporation that determines and exercises the organization's intention by its organization.

B) In addition, AAA also owns all the property such as the site, building and medical equipment of the Plaintiff hospital, and there is no other evidence to acknowledge that the Plaintiff owns any fundamental property under his/her own name.

Therefore, it cannot be recognized that the Plaintiff hospital has the substance as a foundation that is not a juristic person.

C) Although the Plaintiff hospital established a business registration under its own name, and obtained permission to establish a medical institution from the AAA Do Governor (the opener is D. 6) and conducted accounting independently from the medical foundation, and even if the content is different from the medical foundation, it cannot be deemed that the Plaintiff hospital has the substance as a non-corporate entity under Article 13(1) of the Framework Act on National Taxes.

D) Accordingly, the defendant asserts that the plaintiff hospital is a non-corporate association or foundation, even if it does not correspond to the plaintiff hospital, in light of the above circumstances, the plaintiff falls under "organization deemed a corporation" under Article 13 (2) of the Framework Act on National Taxes, and thus

In order to constitute a "organization deemed a corporation" under Article 13 (2) of the Framework Act on National Taxes, ① a representative or a manager has provisions concerning the organization and operation of an association, foundation, or other organization, ② an independent ownership and management of profit and property in the account and name of an association, foundation, or other organization, ③ a member of an association, foundation, or other organization shall not distribute profit to the association, foundation, or organization; ④ a representative or a manager shall request the head of the competent tax office to obtain approval.

However, such circumstance alone as alleged by the Plaintiff is difficult to view that the Plaintiff independently owns and manages the profit and property in its own account and name, or that it has substance as an unincorporated association or an organization equivalent to the foundation, other than a corporation.

In addition, there is no evidence to deem that the representative or manager of the Plaintiff hospital files an application with the Defendant, who is the head of the competent tax office, as a corporation, in accordance with the procedures prescribed in Article 13(2) of the Framework Act on National Taxes and Article 8 of the Enforcement Rule thereof, as well

Therefore, the plaintiff does not constitute "organization deemed a corporation" under Article 13 (2) of the Framework Act on National Taxes. Thus, the defendant's above assertion is without merit.

E) According to Article 13(1) and (2) of the Operation and Management Entrustment Agreement, the operation of the Plaintiff Hospital shall be managed as an independent account separately, and profits shall be used for re-investment in the operation and facility of the hospital, and taxes and public charges arising from the operation of the hospital shall be borne by the hospital account.

The purpose of this is to ensure fairness and transparency in the operation of the Plaintiff Hospital, which is a public medical institution, by processing another hospital and the Plaintiff hospital operated by the medical foundation, as an independent account, as an independent account, which is operated by the medical foundation, and thereby, it cannot be deemed that the subject of the ownership of the final income resulting from the operation of the hospital becomes the Plaintiff hospital rather than the AAA(Plaintiff Claim) or the medical foundation.

2) Meanwhile, a corporation is liable to pay corporate tax on income, such as income for each business year (see Articles 2(1) and 3(1) of the Corporate Tax Act). Therefore, for the taxpayer of corporate tax, namely, for the other party to a taxation, it constitutes a “organization deemed a corporation, such as an unincorporated association or foundation to which the income belongs”.

However, as seen above, the Plaintiff hospital is not only a legal capacity under the Civil Act but also a simple facility (medical institution) that is not treated as a taxpayer under the Corporate Tax Act or the Framework Act on National Taxes

Therefore, the disposition of this case is deemed to be null and void as the defect is significant and apparent.

4. Whether it is allowed to correct an indication of parties.

A. Relevant legal principles

In a lawsuit, who is a party is directly connected to the issue of party capacity, party standing, etc., the court which examines and decides the case shall ex officio confirm who is the party to the lawsuit and proceed with the hearing.

At this time, who is a party shall reasonably interpret and confirm the overall purport of the complaint, including the contents and cause of the complaint, and where the plaintiff is not deemed to be a party, it shall be allowed to correct that indication to the right party to the extent that it is recognized to be identical with the finalized party as a result of a reasonable interpretation of the entire purport of the complaint.

In addition, if the party indicated in the complaint is wrong, the lawsuit shall not be immediately dismissed without taking measures to correct the indication of the party (see, e.g., Supreme Court Decisions 2010Da99040, Mar. 10, 201; 99Du2017, Nov. 13, 2001).

B. Determination on issues

On October 11, 2018, the Plaintiff filed an application for correction of a party’s indication with the content that the party’s indication is corrected from the Plaintiff Hospital to the Medical Foundation.

However, in full view of the following circumstances, even if the Plaintiff hospital is not admitted as a party, the Plaintiff hospital and the medical foundation with the capacity to be a party cannot be said to have the identity of the party.

Therefore, it is improper to correct the indication of the party from the Plaintiff hospital to the Medical Foundation.

1) According to Article 70 of the Corporate Tax Act and Article 109 of the Enforcement Decree thereof, where the head of a tax office having jurisdiction over the place of tax payment or the Commissioner of the competent Regional Tax Office determines or amends the tax base and amount of corporate tax on the income of a domestic corporation for each business year, he

In addition, when imposing a tax by a tax payment notice, the taxpayer’s indication should be objectively determined in accordance with the formal description of the tax payment notice, and its identity should be recognizable. If the taxpayer’s indication in the tax payment notice is not clear enough to identify the taxpayer’s identity, service by the tax payment notice shall not have the effect as a legitimate tax payment notice (see, e.g., Supreme Court Decisions 92Nu14083, Apr. 27, 1993; 2007Du6632, Jan. 28, 2010).

However, the defendant clearly stated the taxpayer in the notice of tax payment in the instant disposition as "D Do Do Do Do Do Do Do Do Do Do Do," so the effect of the confirmation of tax payment has occurred for the plaintiff hospital, not for the

In this regard, the defendant asserts that the plaintiff hospital is strictly distinguished from the medical foundation and its substance, and that the plaintiff hospital has independent legal personality and legal capacity in accordance with Article 13 of the Framework Act on National Taxes.

In full view of the written notice of tax payment or the Defendant’s attitude of response, the other party to the instant disposition is apparent to be the Plaintiff hospital rather than the medical foundation, and the Defendant’s entry of the Plaintiff hospital as a taxpayer in the notice of tax payment cannot be deemed as a mere occupational error or defect.

2) The Plaintiff asserted that the instant disposition was unlawful since the Plaintiff’s operating entity of the Plaintiff Hospital was also AA, a local government, from the first date of pleading to the date of closing argument ( July 18, 2018).

However, on August 13, 2018, the full bench resumed the instant argument on August 13, 2018, and at the same time demanded that the Plaintiff hospital submit both opinions on whether the Plaintiff hospital’s party capacity as the shipment, and later, submitted an application for the correction of a party’s indication on October 11, 2018.

Unlike the attitude of the plaintiff's oral argument, allowing the correction of the party indication by deeming the operator of the plaintiff hospital as the medical foundation is likely to not only be contrary to the plaintiff's assertion but also disadvantage the defendant, who is the other party, in an unexpected response.

3) On May 2, 2017, the Plaintiff filed a request for a trial with the Tax Tribunal on September 20, 2017, and received a decision of dismissal thereof on September 20, 201. If the Plaintiff’s indication in the instant case is allowed to be corrected from the hospital to the Medical Foundation, legal problems arise that the Plaintiff did not undergo an essential procedure for filing a request for examination or a request for trial and a decision thereon, as a legitimate requirement for national tax litigation (see Article 56(1) of the Framework Act on National Taxes)

5. Conclusion

If so, the lawsuit of this case is inappropriate in view of one mother, and it is so decided as per Disposition.