Recognizing Construction Co., Ltd., the administrator of a recognised Construction Co., Ltd. (Law Firm Street, Attorney Park Jong-pon, Counsel for the plaintiff-appellant)

The head of Gwangjin-gu Seoul Metropolitan Government (Attorney Kim Yong-sik, Counsel for defendant)

November 30, 2011

1. The Defendant’s imposition of a penalty surcharge of KRW 3,718,90,00 against the Plaintiff on March 7, 2011 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On June 7, 201, the Plaintiff (the administrator, Nonparty 1 filed the instant lawsuit with the competent court on June 7, 201, and thereafter the company’s rehabilitation procedure is terminated on August 11, 2011, the Plaintiff taken over the litigation procedures. The administrator, Nonparty 1 and the Plaintiff, who is the party taking over the litigation, collectively, of the Plaintiff, purchased the attached Form 1 land purchase of the Jyang-dong, Seoul Special Metropolitan City (number 3 omitted) and 16 land (hereinafter “instant land”) (hereinafter “instant land”). From November 30 to November 16, 206, the registration of ownership transfer was completed under the name of Nonparty 2 and Nonparty 12 (hereinafter “instant land title trust”).

B. On August 21, 2008, under the former Debtor Rehabilitation and Bankruptcy Act (amended by Act No. 10219, Mar. 31, 2010; hereinafter “ Debtor Rehabilitation Act”), the Plaintiff filed an application for commencing rehabilitation procedures with the Seoul Central District Court and received a decision to commence rehabilitation procedures on September 22, 2008, and the rehabilitation plan was authorized on September 4, 2009.

C. On April 20, 2010, the Plaintiff: (a) as indicated in the grounds for calculation of the penalty surcharge for aggregate buildings attached Form 2; (b) 12 households (hereinafter “instant building”) which are an aggregate building of 14,805 square meters on the ground of Jyang-dong, Seoul Special Metropolitan City (number 4 omitted) and 14,805 square meters (hereinafter “instant building”) are entrusted to Nonparty 3 and 11, who are the relatives of the Plaintiff’s officers and employees, and completed the registration of ownership transfer in their respective names (hereinafter “instant building title trust”).

D. On December 24, 2010, the Defendant notified the head of Seocho District Tax Office of the title trust of the instant land and building, and on March 7, 201, imposed a penalty surcharge of KRW 3,718,990,000 on the Plaintiff on the ground that the Plaintiff violated Article 3 of the Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “Real Estate Real Name Act”) in relation to the title trust of the instant land and building (hereinafter “instant disposition”).

[Ground of recognition] Evidence No. 1, Evidence No. 2-1 through 3, Evidence No. 3, Evidence No. 4-1, 2, Gap, 5, 10, 11, evidence No. 1-1 through No. 4, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The title trust part of the instant land

A) Penalty surcharges arising from the instant land title trust constitute rehabilitation claims, which are “property claims arising from any cause arising prior to the commencement of rehabilitation procedures” under Article 118 subparag. 1 of the Debtor Rehabilitation Act. However, since the Defendant was excluded from the rehabilitation plan as it did not report it to the rehabilitation court, the instant disposition on this portion was unlawful as it was exempted under Article 251 of the Debtor Rehabilitation Act

B) Of the instant land, the land in the Seoul Special Metropolitan City Gwangjin-dong (number 1 omitted), the same (number 2 omitted), and the same (number 2 omitted), is not nominal trust.

2) The title trust part of the instant building

The penalty surcharge due to the title trust of the instant building did not have the purpose of evading tax or avoiding legal restrictions on the Plaintiff. Therefore, the Defendant, even though the penalty surcharge should be mitigated by 50% pursuant to the proviso of Article 3-2 of the Enforcement Decree of the Real Estate Real Name Act, did not reduce the penalty surcharge, thereby

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) The title trust part of the instant land

A) Whether the right to claim penalty surcharges on the instant land constitutes rehabilitation claims

According to Articles 118 subparag. 1, 140(2), 156(1), and 251 of the Debtor Rehabilitation Act, claims on property, which may be collected pursuant to the National Tax Collection Act or the practices of collecting national taxes, arising from the commencement of rehabilitation procedures, are so-called “tax, etc.” and are rehabilitation claims under the Debtor Rehabilitation Act. Article 5(6) of the Real Estate Real Name Act provides that if a penalty surcharge is not paid by the deadline for payment, it shall be collected in the same manner as delinquent local taxes are collected. Article 98 of the Framework Act on Local Taxes provides that the same Act or local tax-related Acts shall apply mutatis mutandis to the disposition on default of the money collectible by a local government, except as otherwise provided for in the same Act or local tax-related Acts. Thus, the claims on penalty arising from title trust are claims that can be collected according

However, as long as Article 5(1) of the Real Estate Real Name Act provides for the imposition of a penalty surcharge against a title truster who violates Article 3(1) of the same Act, even if the Defendant was unaware of the title trust of the instant land, as seen earlier, it is reasonable to deem that the Defendant’s right to claim a penalty surcharge has already been established and the requirements for imposition have been satisfied by registering the title trust of the instant land between November 30, 200 and November 16, 2006, which was prior to the decision to commence the rehabilitation procedure, and in this case, even if the disposition of imposition of penalty surcharge was rendered after the decision to commence the rehabilitation procedure, the right to claim a penalty surcharge on the instant land constitutes rehabilitation claim.

B) Whether the disposition of imposition of the penalty surcharge on the instant land is unlawful

Since the imposition of the penalty surcharge is an administrative act that generates specific amount of the claim for penalty surcharge abstractly established as well as the imposition of the tax, and generates specific claim for penalty surcharge accompanying the self-execution right such as the disposition on default, even if the right to claim for penalty surcharge was abstractly established before the decision on commencement of rehabilitation procedures, if the decision on commencement of rehabilitation procedures is made without reporting the right to claim for penalty surcharge specifically determined as rehabilitation claims and without reporting the right to claim for penalty surcharge as rehabilitation claims, the imposition of penalty surcharge may not be exercised by the imposing authority pursuant to Article 251 of the Debtor Rehabilitation Act, and therefore, the imposition of penalty surcharge after the decision on commencement of rehabilitation procedures is unlawful (see Supreme Court Decision 2005Da43883

In light of the following circumstances which are acknowledged based on the facts of recognition and the evidence mentioned above and the overall purport of oral argument as follows: ① the defendant did not report the right to claim a penalty surcharge on the land of this case as a rehabilitation claim in the rehabilitation procedure against the plaintiff; ② the rehabilitation plan approved thereafter did not contain the above right to claim a penalty surcharge; ② the initial date of the exclusion period for the imposition of a penalty surcharge is regarded as the time the title trust registration was terminated; and ② the existence of the right to claim a penalty surcharge already established as the rehabilitation claim can not be viewed as a new establishment of the right to claim a penalty surcharge on the land of this case after the decision on commencement of rehabilitation procedure against the plaintiff was rendered. Furthermore, the defendant cannot impose a penalty surcharge on the plaintiff after September 4, 2009 after the decision on commencement of rehabilitation procedure against the plaintiff. (Inasmuch as the defendant's imposition of a penalty surcharge on the land of this case is recognized as illegal, the defendant's assertion that the land of this case is not subject to the title trust registration of this case.

2) The title trust part of the instant building

A) The proviso of Article 3-2 of the Enforcement Decree of the Real Estate Real Name Act concerning the reduction of a penalty surcharge imposed on a title truster who violates the obligation to register in the name of the actual right holder is a discretionary reduction provision. Thus, even if the grounds for reduction exist, if the imposing authority imposes the full amount of a penalty surcharge without considering the grounds for reduction even though it does not reduce the penalty surcharge, it cannot be readily concluded that it is unlawful. However, if the imposing authority did not take into account the above grounds for reduction at all, or did not reduce the remaining penalty surcharge, which was mistaken for not constituting the grounds for reduction, the imposition of the penalty surcharge is an illegal disposition that deviates from or abused by discretionary authority (see Supreme Court Decision 2010Du7031, Jul. 1

B) We examine the instant case in light of the following circumstances: ① the Plaintiff’s registration of title trust on the instant building to Nonparty 3 and 11, and the Plaintiff appears to have been subject to each additional loan under the name of a title trustee by avoiding the restriction on the per capita loan limit prescribed by the financial right; ② the Defendant asserted that the Plaintiff avoided the amount of comprehensive real estate holding tax equivalent to approximately KRW 114,00,000 by distributed the 12 households in the future of the title trustee; however, the instant building was a multi-family housing constructed by the Plaintiff with the approval of the business plan pursuant to Article 16 of the Housing Act, which was constructed by the Plaintiff with the approval of the title trust registration pursuant to Article 8(2)2 of the former Comprehensive Real Estate Holding Tax Act (amended by Act No. 10789, Jun. 7, 2011); and in light of the fact that the purpose of the Plaintiff’s acquisition tax or the gross real estate holding tax was difficult to be excluded from the total amount of the instant real estate holding tax to the Plaintiff.

3) Therefore, the Defendant’s disposition of this case is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is reasonable, and it is decided as per Disposition by admitting it.

[Attachment]

Judge Oi- (Presiding Judge) and Lee Jae-in

A judge is unable to sign and seal due to temporary retirement from office.