1990.06.28

1988 (O) 35

Minshu Vol. 44, No. 4

Judgment concerning the case regarding the time when a demand for share distribution referred to in Article 22, paragraph (5) of the National Tax Collection Act should be made in a real property auction procedure

Case of opposition to a distribution

Judgment of the First Petty Bench, dismissed

Tokyo High Court, Judgment of September 28, 1987

In order to receive a distribution based on a demand for share distribution under Article 22, paragraph (5) of the National Tax Collection Act in a real property auction procedure, the demand for share distribution must be made before the time limit for a distribution demand.

Articles 22 and 82 of the National Tax Collection Act and Article 49, Article 87, paragraph (1), and Article 188 of the Civil Execution Act



National Tax Collection Act

Article 22 (1) Where a taxpayer does not have other sufficient assets that should be allocated to a national tax, if the taxpayer transfers an asset: on which a pledge or mortgage registered after the statutory due date for payment, etc. of the national tax is created, the national tax may be collected from the pledgee or mortgagee out of the amount for which the pledgee or mortgagee should receive a distribution for a claim secured by the pledge or mortgage in the compulsory selling-out procedure with regard to the asset pertaining to the transfer, provided that the result of execution of the delinquent tax collection procedure for the taxpayer's assets is still found to be insufficient for payment of the national tax.

(2) The amount that may be collected pursuant to the provisions of the preceding paragraph may not exceed the amount obtained by deducting the amount set forth in item (ii) from the amount set forth in item (i):

(i) the amount that should be distributed to the claim provided in the preceding paragraph out of the proceeds of the sale of the asset pertaining to the transfer referred to in the preceding paragraph;

(ii) the amount that should be distributed to the claim provided in the same paragraph in the case of deeming that the asset referred to in the preceding item is the taxpayer's asset and that a demand for share distribution to the national tax referred to in the preceding paragraph was made with regard to the proceeds of the sale of the asset.

(3) The district director of the tax office may exercise the pledge or mortgage of the pledgee or mortgagee referred to in paragraph (1) in subrogation thereof for the purpose of collecting a national tax pursuant to the provisions of paragraph (1).

(4) Where the district director of the tax office intends to collect a national tax pursuant to the provisions of paragraph (1), he/she must notify the pledgee or mortgagee to that effect.

(5) Where a compulsory selling-out procedure is taken with regard to the asset pertaining to the transfer referred to in paragraph (1), the district director of the tax office may make a demand for share distribution to the executive agency with regard to a national tax in the amount that may be collected pursuant to the provisions of the same paragraph.



Article 82 (1) Where a compulsory selling-out procedure is taken with regard to a delinquent taxpayer's asset, the district director of the tax office must make a demand for share distribution to the executive agency with a written demand for share distribution with regard to a delinquent national tax.

(2) Where the district director of the tax office made a demand for share distribution, he/she must notify the delinquent taxpayer to that effect.

(3) The provisions of Article 55 (Notice of Seizure to Pledgee, etc.) apply mutatis mutandis to the case where a demand for share distribution was made.



Civil Execution Act

Article 49 (1) In cases where a seizure pertaining to a commencement order for a compulsory auction has become effective (excluding cases where another commencement order for a compulsory auction or an auction has been issued prior to said commencement order), the execution court shall set the time limit for a demand for liquidating distribution by taking into consideration the period required for the procedure for preparation of the description of property.

(2) A court clerk shall, when having set the time limit for a demand for liquidating distribution, give public notice of the fact that a commencement order has been issued and the time limit for a demand for liquidating distribution, and give a notice to the following persons or entities that they are to notify the execution court of the presence or absence of claims (including interests and any other incidental claims) and the basis and amounts of such claims by the time limit for a demand for liquidating distribution:

(i) Obligees set forth in Article 87(1)(iii)

(ii) Obligees set forth in Article 87(1)(iv) (in cases of holders of mortgage securities, limited to known holders)

(iii) Government agencies or public offices that have jurisdiction over tax and any other public charges

(3) The execution court may, when he/she finds it to be particularly necessary, extend the time limit for a demand for liquidating distribution.

(4) A court clerk shall, when he/she has extended the time limit for a demand for liquidating distribution pursuant to the provisions of the preceding paragraph, give public notice of the extended time limit.



Article 87, paragraph (1)

(1) Obligees who are to receive liquidating distribution, etc. of the proceeds of the sale shall be the following:

(i) The obligee(s) effecting a seizure (limited to an obligee effecting a seizure who filed a petition for a compulsory auction or an auction for exercise of a general statutory lien by the time limit for a demand for liquidating distribution)

(ii) Obligees who made a demand for liquidating distribution by time limit for a demand for liquidating distribution

(iii) The obligee in any provisional seizure that was registered prior to registration of the seizure (meaning the seizure pertaining to the first commencement order for a compulsory auction; the same shall apply in the following item)

(iv) Obligees holding any statutory lien (excluding general statutory liens held by the obligees set forth in item (i) or item (ii)), pledge or mortgage which was registered prior to registration of the seizure and which shall be extinguished through the sale (including the holder of mortgage securities pertaining to such mortgage)



Article 188 The provisions of Article 44 and Chapter II, Section 2, Subsection 1, Division 2 (excluding Article 81) apply mutatis mutandis to a real property auction.

The final appeal is dismissed.

The costs of the final appeal shall be borne by the appellant of final appeal.

Reasons for a final appeal stated by the counsels for final appeal

Article 22, paragraph (1) of the National Tax Collection Act (hereinafter referred to as the "Collection Act") provides as follows: Where a taxpayer does not have other sufficient assets that should be allocated to a national tax, if the taxpayer transfers an asset: on which a pledge or mortgage registered after the statutory due date for payment, etc. of the national tax is created, the national tax may be collected from the pledgee or mortgagee out of the amount for which the pledgee or mortgagee should receive a distribution for a claim secured by the pledge or mortgage in the compulsory selling-out procedure with regard to the asset pertaining to the transfer, provided that the result of execution of the delinquent tax collection procedure for the taxpayer's assets is still found to be insufficient for payment of the national tax. Paragraph (5) of the same Article provides that where a compulsory selling-out procedure is taken with regard to said asset pertaining to the transfer, the district director of the tax office may make a demand for share distribution to the executive agency with regard to a national tax in the amount that may be collected pursuant to the provisions of paragraph (1) of the same Article. It is reasonable to consider that where the compulsory selling-out procedure with regard to said asset is a real property auction procedure, said demand for share distribution must be made before the time limit for a distribution demand set by the execution court under the Civil Execution Act and that if said demand for share distribution is made after said time limit for a distribution demand, the State may not receive a distribution from the proceeds of the sale of the relevant real property. With certainty, the demand for share distribution prescribed in Article 22, paragraph (5) of the Collection Act grants the special power to collect a national tax with regard to the amount which the aforementioned pledgee or mortgagee should receive as a distribution. However, it is not intended to allow the district director of the tax office to take a compulsory selling-out procedure for him/herself for the purpose of collecting tax claims in the same manner as the demand for share distribution provided in Article 82 of the same Act, but it is intended to have tax claims be satisfied by participating in a compulsory selling-out procedure where the compulsory selling-out procedure taken by another executive agency is ongoing. Therefore, in such case, it is understood that procedural restrictions in the relevant compulsory selling-out procedure should be followed unless otherwise provided by any law or regulation.

When this is applied to this case, according to the facts lawfully determined by the court of prior instance, [i] on June 7, 1983, the appellee paid 15,241,686 yen to Non-Party Housing Loan Stock Company D under a housing loan guarantee insurance contract and thereby acquired a reimbursement claim in the amount equal thereto against Non-Party E, and also received the transfer of the mortgage (establishment thereof was registered as No. 25702 accepted by the Funabashi Branch of the Chiba District Legal Affairs Bureau on May 25, 1977) stated in the List of Security Rights, Secured Claims, and Claims attached to the judgment in first instance with regard to real property 1 to 5 (hereinafter referred to as the "Real Property") stated in the Item List attached to the judgment in first instance, which was possessed by Non-Party E through insurance subrogation. However, said mortgage is one whose establishment was registered after the statutory due date for E's payment, etc. of income tax to the appellant. [ii] The Real Property was transferred from E to Non-Party F after that, [iii] the Chiba District Court issued a commencement order for auction of the Real Property in response to the appellee's petition, and [iv] the District Director of the Ichikawa Tax Office made a demand for share distribution under Article 22, paragraph (5) of the Collection Act to the same court with regard to the aforementioned income tax on E of 15,581,788 yen in total on May 13, 1985, after April 21, 1985, which was the time limit for a distribution demand in said auction case. In light of the aforementioned explanation, it is obvious that the demand for share distribution made by the same district director was made after the aforementioned time limit for a distribution demand. Therefore, the appellant may not receive a distribution from the proceeds of the sale of the Real Property based on said demand for share distribution. The determination of the court of prior instance to the same effect is legitimate and can be accepted, and the judgment in prior instance contains no illegality as argued by the counsels. The arguments made by the counsels are not acceptable.

Accordingly, in accordance with Articles 401, 95, and 89 of the Code of Civil Procedure, the Court unanimously decides as set forth in the main text.

Justice OUCHI Tsuneo

Justice TSUNODA Reijiro

Justice YOTSUYA Iwao

Justice OHORI Seiichi

Justice HASHIMOTO Shirohei