In a case where the fundamental property of a social welfare foundation constitutes an important property acquired with a national subsidy or whose utility has increased, whether not only the permission of the Minister of Health and Welfare prescribed in Article 23(3) of the former Social Welfare Services Act but also the approval of the head of a central government agency prescribed in Article 35 of the former Act on the Budgeting and Management of Subsidies shall be obtained in order

Considering the details and legislative intent of the main text of Article 35 of the former Act on Budget and Management of Subsidies (amended by Act No. 10898, Jul. 25, 201; hereinafter “former Subsidy Act”) and the main text of Article 23(3) of the former Social Welfare Services Act (amended by Act No. 10997, Aug. 4, 201; hereinafter the same), in cases where a social welfare foundation’s fundamental property constitutes an important property acquired or whose utility has increased with the State’s subsidies, it is necessary to obtain not only the permission from the Minister of Health and Welfare prescribed in Article 23(3) of the former Social Welfare Services Act but also the approval from the head of a central government agency prescribed in Article 35 of the former Subsidy Act.

Article 35 (see current Article 35(3) of the former Act on the Budgeting and Management of Subsidies (Amended by Act No. 10898, Jul. 25, 201) and Article 23(3) of the former Social Welfare Services Act (Amended by Act No. 10997, Aug. 4, 2011)

Social Welfare Foundation Merit and Welfare Association

Defendant

Seoul Northern District Court Decision 2015Na463 decided June 16, 2015

The judgment of the court below is reversed, and the case is remanded to the Seoul Northern District Court Panel Division.

The grounds of appeal are examined.

1. The main text of Article 35 of the former Act on the Budgeting and Management of Subsidies (amended by Act No. 10898, Jul. 25, 201; hereinafter “former Subsidy Act”) provides that “The head of the relevant subsidized project operator shall not use, transfer, exchange, lend, or provide as security any important property prescribed by the Presidential Decree, which is acquired by subsidies or whose utility has increased, for any purpose contrary to the purpose of granting subsidies, even after the completion of the relevant subsidized project.” The foregoing provision provides that “The legislative purpose is to prevent the property acquired by subsidies granted by the State budget from being used or disposed of for any purpose other than the purpose of granting subsidies to ensure the proper management of the State and the effectiveness of subsidies.” Thus, the above provision is not an effective provision (see Supreme Court Decision 2004Da5556, Oct. 28, 2004, etc.).

Meanwhile, the main text of Article 23(3) of the former Social Welfare Services Act (amended by Act No. 10997, Aug. 4, 201; hereinafter the same) provides that “A social welfare corporation shall obtain permission from the Minister of Health and Welfare in cases of selling, donating, exchanging, leasing, providing security, or changing its use with respect to its fundamental property.” The above provision aims to promote the sound development of a social welfare corporation by ensuring the smooth management and maintenance of its property and the appropriateness of its adjudication in light of the special nature of the social welfare corporation, and to have the social welfare corporation faithfully perform its original purpose (see, e.g., Constitutional Court en banc Order 2004Hun-Ba10, Feb. 3, 2005). In addition, the above provision is a mandatory provision, and it is not effective when the social welfare corporation disposes of its fundamental property without obtaining permission from the Minister of Health and Welfare (see, e.g., Supreme Court Order 2002Ma4353, Sept. 2

Considering the above main text of Article 35 of the former Subsidy Act and the legislative purport of Article 23(3) of the former Social Welfare Services Act, in cases where fundamental property of a social welfare foundation constitutes an important property acquired with a State subsidy or its utility increased, in order to provide such fundamental property as a security for the State, not only the permission of the Minister of Health and Welfare under Article 23(3) of the former Social Welfare Services Act but also the approval of the head of a central government agency under Article 35 of the former Subsidy

2. The court below accepted the judgment of the court of first instance, and rejected the Plaintiff’s claim on the ground that the registration of ownership transfer in the name of the Defendant cannot be deemed null and void even if the Plaintiff, which is a social welfare foundation, obtained permission from the Mayor of Seoul Special Metropolitan City delegated with permission by the Minister of Health and Welfare under Article 23(3) of the former Social Welfare Services Act, as long as it is necessary to dispose of basic property of a social welfare foundation under Article 23(3) of the former Social Welfare Services Act from the head of the Seoul Special Metropolitan City delegated with permission by the Minister of Health and Welfare to provide the land and buildings

3. However, the record reveals that, in addition to the argument that the court of first instance and the court below regarding permission to dispose of fundamental property of a social welfare foundation as above, the Plaintiff constituted an important property acquired with the State subsidy or the utility of which increased due to such acquisition, but the Plaintiff did not obtain approval from the head of a central government agency pursuant to Article 35 of the former Subsidy Act while offering the instant land and buildings as security, and thus, the Plaintiff asserted that the act of offering the instant land and buildings as security was null and void, and submitted the evidence that the Plaintiff newly constructed the instant building with the government subsidy.

Therefore, in light of the aforementioned legal principles, even if the Plaintiff obtained necessary permission under Article 23(3) of the former Social Welfare Services Act while offering the instant land and buildings, which are fundamental property, as seen above, as seen above, the lower court should have deliberated on whether the instant land and buildings were an important property acquired with the State’s subsidies or their utility increased, and whether the instant land and buildings were approved by the head of a central government agency pursuant to Article 35 of the former Subsidy Act while offering the instant land and buildings as security. Nevertheless, the lower court rejected the Plaintiff’s claim without making any decision thereon, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds of appeal on this point is with merit.

4. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Sang-ok (Presiding Justice)