[1] The initial date of the period of exclusion from the imposition of penalty surcharges against a person who has no long-term registration under the former Act on the Registration of Real Estate under Actual Titleholder’s Name

[2] The validity of the seizure of claims under the National Tax Collection Act

[3] The scope of application of Article 10 of the Act on the Registration of Real Estate under Actual Titleholder's Name as amended on December 30, 2003 according to the decision of inconsistency with the Constitution

[4] Whether the comparative negligence offsetting system applies to the liability to pay penalty surcharges (negative)

[1] According to Articles 10(2) and 5(5) of the former Act on the Registration of Real Estate under Actual Titleholder’s Name (amended by Act No. 6683, Mar. 30, 2002); Article 3(5) of the Enforcement Decree of the same Act; Article 30-4(1) of the Local Tax Act (amended by Act No. 7013, Dec. 30, 2003); Article 14-2(1)2 of the Enforcement Decree of the Local Tax Act, the exclusion period of imposition of a penalty surcharge under Article 10(1) of the former Act on the Registration of Real Estate under Actual Titleholder’s Name is five years; the initial date is the date on which the obligation to pay the penalty surcharge is established; in light of the fact that the actual titleholder continues to have violated his/her obligation unless the registration has been completed in his/her name, the establishment date of the obligation to pay the penalty surcharge for a long-term unregistered real estate has been completed in his/her name and the status of violation is complete.

[2] Article 28 of the Local Tax Act provides that the disposition of arrears of a local government’s impositions shall be made in the same manner as delinquent national taxes are collected, except as otherwise provided in the Local Tax Act. Article 41(2) of the National Tax Collection Act provides that when the chief of a tax office has notified a debtor of the attachment of claims, he/she subrogated to creditors within the scope of national taxes, additional dues, and expenses for disposition on default (national taxes in arrears). The attachment of claims under the National Tax Collection Act prohibits all acts of disposal, such as repayment, collection, etc. of claims subject to attachment as a result of compulsory execution. However, as in the case of compulsory execution, the acquisition of claims subject to attachment on behalf of a delinquent

[3] The Constitutional Court rendered a ruling of inconsistency with the Constitution as to Article 10(1) of the former Act on the Registration of Real Estate under Actual Titleholder’s Name (amended by Act No. 6683 of March 30, 2002), which stipulates that a penalty surcharge equivalent to 30/100 of the value of the real estate shall be imposed uniformly on a person whose long-term registration is not yet registered. If the legislators do not amend the Act by June 30, 2002, they shall lose its effect from July 1 of the same year. Meanwhile, Article 10 of the former Act on the Registration of Real Estate under Actual Titleholder’s Name (amended by Act No. 6683 of March 30, 202) provides that a ruling of inconsistency with the Constitution as to the initial imposition of a penalty surcharge shall not apply to the registration of real estate under the name of a person who is not registered for a long-term period of time, within the scope of 30/100 of the assessed value of the real estate before the amendment becomes effective.

[4] The Act on the Registration of Real Estate under Actual Titleholder’s Name aims to contribute to the sound development of the national economy by preventing speculation, evasion of taxes, acts against society, such as evasion of laws, etc. which abuse the real estate registration system, normalization of real estate transactions and stabilization of real estate prices by having the ownership and other real rights to real estate registered under the name of the actual right holder so as to conform to the substantive legal relationship. The purport or purpose of the Act differs from the system that compensates for damages caused by illegal acts or nonperformance of obligations. Thus, the theory of comparative negligence does not apply to the obligation to pay penalty under the same Act.

[1] Articles 5(5) and 10(2) of the former Act on the Registration of Real Estate under Actual Titleholder’s Name (amended by Act No. 6683, Mar. 30, 2002); Article 3(5) of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder’s Name; Article 30-4(1) of the former Local Tax Act (amended by Act No. 7013, Dec. 30, 2003); Article 14-2(1)2 of the Enforcement Decree of the Local Tax Act / [2] Article 28 of the Local Tax Act; Article 41(2) of the National Tax Collection Act / [3] Article 10(1) and (2) of the former Act on the Registration of Real Estate under Actual Titleholder’s Name (amended by Act No. 6683, Mar. 30, 200); Article 10(1) of the former Act on the Registration of Real Estate under Actual Titleholder’s Name; Article 30(1) of the Addenda

[2] Supreme Court Decision 79Da662 delivered on June 12, 1979 (Gong1979, 12010) Supreme Court Decision 82Da449 delivered on April 9, 1985 (Gong1985, 708) / [3] Constitutional Court en banc Decision 99Hun-Ga18 delivered on May 31, 2001, 99Hun-Ba7111, 200Hun-Ba51, 64, 85, 201Hun-Ba2 (combined) (Hun-Ga57, 518) en banc Decision 99Hun-Ga18 delivered on May 31, 200, 200Hun-Ba51, 64,

Plaintiff (Law Firm International, Attorneys Ha Man-young et al., Counsel for the plaintiff-appellant)

The head of Gangseo-gu Busan Metropolitan Government

June 28, 2007

1. All of the plaintiff's claims are dismissed.

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

The attachment disposition taken by the Defendant on June 8, 2006 against the Plaintiff’s claim of KRW 101,579,700, out of the Plaintiff’s claim for compensation for losses for the Busan Metropolitan City Urban Development Corporation, and the attachment disposition taken on February 15, 2007 with respect to the Plaintiff’s share of KRW 936/14,00, out of the 1404m2, Busan Gangseo-gu, Gangseo-gu, Busan Metropolitan City (number omitted)

1. Details of the disposition;

The following facts are not disputed between the parties, or can be acknowledged in full view of the purport of the entire pleadings in each of the statements in Gap evidence Nos. 1, 2, 4, 5, 7, 8, and 1-1, 2, and 4.

A. The plaintiff filed against the non-party 1 in Busan District Court 93Gahap9036, May 27, 1993, "the non-party 1 shall execute the procedure for the ownership transfer registration on the ground of sale on the land of the non-party 1, the Gangseo-gu Busan Metropolitan City (number omitted) 165m2 (hereinafter "the real estate of this case") and the judgment became final and conclusive around that time, the ownership transfer registration on the real estate of this case was completed on January 28, 200 in accordance with the above final judgment.

B. Accordingly, on July 20, 200, the Defendant imposed a penalty surcharge of KRW 101,579,700 on the Plaintiff on the ground that the Plaintiff violated Article 10(1) of the former Act on the Registration of Real Estate under Actual Titleholder’s Name (amended by Act No. 6683, Mar. 30, 200; hereinafter “Real Estate Real Name Act”), and the Plaintiff did not pay the said penalty surcharge, and on January 9, 2001, the instant real estate was seized.

C. After that, when the instant real estate was incorporated into a zone industrial complex development project implemented by the Busan Metropolitan City Urban Development Corporation (hereinafter “Seoul Metropolitan City Corporation”), the Defendant seized the Plaintiff’s claim amounting to KRW 101,579,700, which is the amount equivalent to the above penalty surcharge, out of the Plaintiff’s compensation claim for losses incurred to Busan Urban Corporation (hereinafter “instant attachment disposition”), and notified the Busan Urban Development Corporation of the attachment. However, on December 12, 2006, the Busan Urban Development Corporation deposited the total amount of KRW 211,45,00,00 for the instant real estate as the Plaintiff, and the Plaintiff received the full amount of the above deposit on December 18, 2006.

D. On February 15, 2007, the Defendant seized 939/1404 shares owned by the Plaintiff among the 1404m2 in Gangseo-gu, Busan Metropolitan City (number omitted) Gangseo-gu (hereinafter “instant attachment disposition”).

2. Determination on this safety defense

The defendant asserts that the plaintiff is not the other party to the attachment disposition of this case and there is no legal interest in seeking its revocation.

The attachment, which is conducted as part of a tax disposition, is an act prohibiting all acts of disposal of the defaulted taxpayer's property, and thus, the other party is the defaulted taxpayer. It does not mean that the delinquent taxpayer's claims are attached, and it does not change. When the delinquent taxpayer's claims are attached, the delinquent taxpayer cannot receive repayment of the attached claim or conduct any other act of disposal, and even if it is contrary to such disposition, the delinquent taxpayer suffers legal disadvantage that is subject to restriction on the exercise of claim because it cannot be set up against the execution creditor, and thus, there is a legal interest

Therefore, the defendant's above assertion is without merit.

3. Whether each of the attachment dispositions of this case is legitimate

A. The plaintiff's assertion

(1) Penalty surcharges pursuant to Article 10(1) of the Real Estate Real Name Act shall be imposed within the exclusion period of five years. The instant penalty surcharges are imposed on the instant real estate after the lapse of five years from August 31, 1993, the time limit for filing an application for registration of the instant real estate, and thus, are null and void, and each of the instant attachment dispositions based thereon is also null and void.

(2) Since the right to collect the penalty surcharge of this case has expired after the lapse of five years from July 1, 1995 when the Real Estate Real Name Act came into force, the imposition of the penalty surcharge of this case, which was made on July 20, 200 thereafter, is null and void. Accordingly, each of the attachment dispositions of this case is null and void, and each of the attachment dispositions of this case is null and void as it was made after the expiration of the statute of limitations.

(3) As a result of the instant attachment disposition, the Plaintiff’s claim for compensation of KRW 101,579,700, which is the amount equivalent to the penalty surcharge, is naturally transferred to the Defendant, and the Plaintiff’s obligation to pay penalty surcharge is extinguished, the instant attachment disposition based on the premise that the Plaintiff had the right to collect penalty surcharge is unlawful.

(4) The Constitutional Court’s ruling of inconsistency with the Constitution on Article 10(1) of the Real Estate Real Name Act was amended by the Constitutional Court. Article 2 of the Addenda to the amended Act provides that if an administrative appeal or administrative litigation is filed against a disposition of penalty surcharge imposed by the previous provisions, the amended provisions shall apply. Thus, the amended provisions shall apply to the disposition of imposing the penalty surcharge of this case, which the Plaintiff filed an administrative appeal before the said ruling of inconsistency with the Constitution

(5) Since the defendant neglected to pay the amount of the claims seized to Busan Urban Corporation after the disposition of attachment No. 1 of this case to the plaintiff, and due to the negligence that the Busan Urban Corporation deposited the full amount of compensation for losses in the future of the plaintiff and caused the plaintiff to receive all of them, the penalty surcharge of this case shall be reduced in consideration of the above defendant's negligence.

(b) Markets:

(1) Determination on the exclusion period Do and argument

According to the provisions of Articles 10(2) and 5(5) of the Real Estate Real Name Act, Article 3(5) of the Enforcement Decree of the same Act, Article 30-4(1) of the Local Tax Act (amended by Act No. 7013 of Dec. 30, 2003), and Article 14-2(1)2 of the Enforcement Decree of the Local Tax Act, the exclusion period of imposition of a penalty surcharge under Article 10(1) of the Real Estate Real Name Act shall be five years, and the initial date thereof shall be the establishment date of the liability for payment of the penalty surcharge. In light of the fact that the establishment date of the liability for payment of a penalty surcharge due to non-registration of real estate has continued to be in violation of the obligation unless the actual right holder has completed registration in his name, it shall be interpreted that the period of imposition of the penalty surcharge is when the actual right holder terminates the status of violation by completing registration in his name, and there is no reason for the plaintiff's assertion that the disposition of imposition of the penalty surcharge in this case is within 20 years from 19.5 years prior to the expiration date.

(2) Determination as to the assertion on the expiration of extinctive prescription

First, in full view of each of the provisions of Articles 10(2) and 5(5) of the Real Estate Real Name Act, and Articles 30-4 and 30-5 of the Local Tax Act as to the allegation that the imposition of the penalty surcharge in this case was made after the expiration of the extinctive prescription period, the imposition of the penalty surcharge in this case does not become final and conclusive before the imposition of the penalty surcharge in this case, and thus, the imposition of the penalty surcharge in this case is not subject to the extinctive prescription period system, but only the exclusion period system is applicable.

Next, the period of extinctive prescription of the right to collect penalty surcharges under Article 10(1) of the Real Estate Real Name Act is five years, and the initial date is the following day of the payment period of the penalty surcharges. The period of the penalty surcharges under Article 10(2) of the Enforcement Decree of the Local Tax Act can be acknowledged as the lawful date of November 30, 200 according to the record of evidence No. 1-2 of the same Act. Since each of the dispositions of this case is invalid after the expiration of the period of extinctive prescription, the period of the imposition of penalty surcharges under Articles 10(2), 5(5) of the Real Estate Real Name Act, Article 30-5(1) of the Enforcement Decree of the Local Tax Act, and Article 14-3 of the Enforcement Decree of the Local Tax Act, the period of the imposition of the penalty surcharges under Article 10(1) of the Real Estate Real Name Act shall be 5 years after the lapse of five years from December 1, 200 following the above payment period of the penalty surcharges under Article 16(2).

(3) Determination on the allegation that the obligation to pay penalty surcharges ceases to exist

Article 28 of the Local Tax Act provides that delinquent taxes shall be imposed in the same manner as delinquent taxes are collected, except as otherwise provided for in the Local Tax Act. Article 41(2) of the National Tax Collection Act provides that when the chief of a tax office has notified a debtor of the attachment of claims, he/she shall subrogates the creditor within the scope of national taxes, additional dues, and expenses for disposition on default (national taxes in arrears). The attachment of claims under the National Tax Collection Act has the effect of prohibiting all acts such as repayment, collection, etc. of claims subject to attachment as a result of compulsory execution, but it is merely acquiring a collection right on behalf of a delinquent taxpayer (see Supreme Court Decisions 79Da662 delivered on June 12, 1979, 82Meu849 delivered on April 9, 1985, etc.). Thus, the plaintiff's above assertion is without merit.

(4) Determination on the assertion on the application of the amended provisions

In cases where the Constitutional Court rendered a ruling of inconsistency with the Constitution on May 31, 2001, the main sentence of Article 10(1) of the Real Estate Real Name Act, which provides that a penalty surcharge equivalent to 30/100 of the value of real estate shall be imposed uniformly on a person who has not registered for a long time, violates the principle of inconsistency with the Constitution or the principle of equality. If the above provision of the Act loses its validity by simply rendering a ruling of unconstitutionality, the legislators shall be deemed to have failed to enforce the above provision in accordance with the purport of the unconstitutionality after a certain period of time and until the amendment of the provision is made, and the legislative branch shall be deemed to have decided that the above provision of the Act would become invalid for the first time from July 1 of the same year to June 30, 2002, and thus, Article 10(1) of the former Act, which provides that a new provision of the Act shall be applied to a court or other government institution and a local government within the scope of 30/100 of the amended Act.

According to the evidence No. 1 of this case, the plaintiff filed an administrative appeal with the Busan Metropolitan City Mayor on December 26, 200 against the disposition of the penalty surcharge of this case, but the Busan Metropolitan City Mayor dismissed the appeal on December 26, 200 and served the written ruling on the plaintiff around that time. The facts that the disposition of the penalty surcharge of this case became final and conclusive prior to the decision of the above Constitutional Court due to the plaintiff's failure to appeal are not disputed between the parties. Thus, the revised Act does not apply to the disposition of the penalty surcharge of this case. In addition, when the penalty surcharge of this case is not paid, the provisions of Articles 10 (2) and 5 (5) of the Real Estate Real Name Act, which the collection of the penalty surcharge of this case was made in the same manner as delinquent local taxes are collected, are not subject to the unconstitutional or unconstitutionality

Therefore, the plaintiff's above assertion is without merit.

(5) Determination on the assertion of comparative negligence

The Act on the Registration of Real Estate under Actual Titleholder’s Name aims to contribute to the sound development of the national economy by preventing any anti-social acts, such as speculation, evasion of taxes, evasion of laws, etc. which abuse the real estate registration system, normalization of real estate transactions, and stabilization of real estate prices, by having the ownership and other real rights to real estate registered under the name of the actual titleholder so as to conform to the substantive legal relationship. As such, the purport or purpose of imposing and collecting penalty surcharges under the same Act differs from the system that compensates for damages caused by illegal acts or nonperformance of obligations, the principle of comparative negligence shall not apply to the obligation to pay penalty surcharges under the same Act. In addition, there is no evidence to acknowledge that there is any negligence, as argued by the Plaintiff, by

4. Conclusion

Therefore, the plaintiff's claim is dismissed in entirety as it is without merit. It is so decided as per Disposition.

Judges Choi Sung-sung (Presiding Judge)