Judgment no. 04/2018/KDTM-ST dated november 22, 2018 on dispute over a credit agreement

THE PEOPLE’S COURT OF QUANG BINH PROVINCE

JUDGMENT NO. 04/2018/KDTM-ST DATED NOVEMBER 22, 2018 ON DISPUTE OVER A CREDIT AGREEMENT

On November 22, 2018, at the headquarters of the People's Court of Quang Binh province, a first instance trial is conducted to hear the commercial case No. 01/2018/TLST-KDTM dated January 22, 2018 on dispute over a credit agreement under the Decision to Bring the Case to Trial No. 153/2018/QDXXST-KDTM dated October 1, 2018, among the involved parties:

1. Petitioner: Commercial Joint Stock Bank D Vietnam; Address: No. N, District H, Hanoi city.

- Legal representative: Mr. Phan Duc T - General Director.

- Authorized representative: Authorized representative: Mr. Le H - Branch Manager of Commercial Joint Stock Bank D in Quang Binh province (Decision on authorization to participate in legal proceedings No. 8695/QD dated October 28, 2016).

- Mr. Le H re-authorizes Mr. Nguyen Phuc B - Head of Risk Management Department, Branch of Commercial Joint Stock Bank D Quang Binh to participate in the proceedings (Decision on authorization to participate in proceedings and judgment enforcement No. 464/QD. QB on March 1, 2018). Mr. B appears in court hearing.

2. Respondent: Mr. Nguyen Van M and Ms. Phan Thi B; Permanent residence: Village L, commune D, district B, Quang Binh province. Both Mr. M and Ms. B have gone abroad since March 21, 2016 (where the address is unknown). Both do not appear in court.

FACTUAL AND PROCEDURAL BACKGROUND

According to the lawsuit petition, documents and evidence provided by the petitioner to the court as well as the presentation of the authorized representative of the petitioner at the court hearing, the contents of the lawsuit are as follows:

On March 11, 2016 and March 14, 2016, the married couple Mr. Nguyen Van M and Mrs. Phan Thi B signed with Commercial Joint Stock Bank D Vietnam, Quang Binh Branch - Transaction Office B (hereinafter referred to as the Bank) two credit agreements to borrow money for goods trading, in which the credit agreement No. 01/2016/535971/HD gives a loan amount of VND 450,000,000 (four hundred and fifty million VND) and the credit agreement No. 02/2016/535971/HD gives a loan amount 650,000,000 VND (six hundred and fifty million VND). The total of both agreements is 1,100,000,000 VND (one billion one hundred million). The loan term is 08 months from the drawdown date; the normal interest rate: 9.7%/year; overdue interest rate: 150% of the normal interest rate; fees are applied for each specific time, the fee rate is in accordance with the Bank's regulations, in accordance with the provisions of law and the guidance of the State Bank.

To secure their debt repayment obligations, Mr. Nguyen Van M and Mrs. Phan Thi B put their own property as collateral for their bank loan, which is the land use right according to the Land Use Right Certificate No. I 906838 , bearing the name of Mr. Nguyen Van M, certificate book No. 599 QSDD/68 QD-UB, issued by the People's Committee of District B on September 1, 1998, land plot No. 398, map sheet No. 13, area of ​​1,133 m2, including 200 m2 of residential land and 933 m2 of mixed garden land; all properties are houses and other construction works attached to the above-said land plot, in commune D, district B, Quang Binh province. According to the real estate mortgage agreement No. 01/2015/535971/HDBD dated March 23, 2015, the secured transaction was registered at the Land Registration Office of District B on March 24, 2015.

After signing the agreement, Mr. M and Mrs. B only paid interest until June 30, 2016. From July 1, 2016 up to now, Mr. M and Mrs. B have not fulfilled their debt repayment obligations as committed. By the end of November 22, 2018, Mr. Nguyen Van M and Mrs. Phan Thi B still owed the Bank (for both agreements) the total amount: 1,469,734,931 VND (in which: principal debt: 1,100,000,000 VND); balance of normal interest: 260,185,556 VND; balance overdue interest: 109,549,375 VND). Therefore, the Bank requests the Court to force Mr. Nguyen Van M and Mrs. Phan Thi B to immediately pay the debt amount of VND 1,469,734,931 to the Bank, and continue to bear the interest accrued after the first-instance trial date until the debt is fully repaid. In case Mr. M and Mrs. B fail to pay or fail to pay all debts under the order of the Court, the Bank will deal or realize the property according to the real estate mortgage agreement signed by Mr. M and Mrs. B. Bank for debt recovery.

- Respondents Mr. Nguyen Van M and Mrs. Phan Thi B:

After accepting the case, the People's Court of Quang Binh province carried out verification in the residence of Mr. M and Mrs. B, then it was known that Mr. M and Mrs. B had gone abroad. But they did not apply for permission of temporary absence, so the local authority does not know which country Mr. M and Mrs. B are in.

According to the presentation of Ms. Nguyen Thi Thanh H, the daughter of Mr. M, Mrs. B (Mrs. H is married and lives separately), her father and mother have been traveling abroad since March 2016 so far. Ms. H does not know the address where her father and mother are), Ms. H has informed her father and mother that the Provincial People's Court is handling the case filed by the Bank to claim debt against her parents (notified by phone), however, her parents have no opinion; Ms. H does not know when her father and mother will return home.

According to the Official Dispatch No.198/CAT-PA72 dated February 26, 2018 of the Quang Binh Police "on providing immigration information", on March 21, 2016, both Mr. M and Mrs. B exited Vietnam through Tan Son Nhat International Airport and no information on their re-entry is recorded. On the entry and exit database system, no information about the country of destination is recorded.

- Opinions of the representative of the People's Procuracy of Quang Binh province at the first-instance court session:

During the settlement of the case as well as at the court session, the judge, the people's jurors, the clerk of the court session and the petitioner in the case have strictly complied with the provisions of law. The evidence has been taken in accordance with regulations, ensuring the interests of the litigants. The respondents have been duly summoned by the Court but is absent for the second time, so it is recommended that the Trial Panel conducts the trial in the respondents’ absence. With reference to content: It is proposed that the Trial Panel accepts the petitioner's petition, forcing the respondents Mr. Nguyen Van M and Mrs. Phan Thi B to be obliged to pay the Bank, by November 22, 2018, the amount of: 1,469,734,931 VND (in which: principal debt: 1,100,000,000 VND); balance of normal interest: 260,185,556 VND; balance overdue interest: 109,549,375 VND). and continue to bear the interest accrued after the first-instance trial date until the debt is fully repaid In case Mr. M and Mrs. B fail to pay or fail to pay all debts under the order of the Court, the Bank will deal or realize the property according to the real estate mortgage agreement signed by Mr. M and Mrs. B. Bank for debt recovery.

JUDGEMENT OF THE COURT

 [1] In terms of court procedures: After accepting the case, the People's Court of Quang Binh province proceeded to serve the court's procedural documents to the respondents at the correct address provided by the petitioner, but because the respondent Mr. Nguyen Van M and Mrs. Phan Thi B have gone abroad, so the service of process fails. The court has posted the procedural documents at the residence of Mr. M and Mrs. B, at the Cultural House of Village L and at the headquarters of the People's Committee of Commune D, and at the same time gave a notice to Mr. M and Mrs. B that the Court was accepting and settling the case on the External News - Voice of Vietnam (VOV5) for three consecutive issues but still did not receive any information from Mr. M, Mrs. B.

The fact that Mr. M and Mrs. B changed the address of their residence without notifying the Bank of the new address of their residence as prescribed in Clause 3, Article 40 and Point b, Clause 2, Article 277 of the Civil Code 2015 was considered an intentional concealment of address and the Court will continue to handle the case according to the general procedure.

The People's Court of Quang Binh province opened the first instance court on October 22, 2018 but due to the respondent's absence (Mr. M, Mrs. B), the Court adjourned the trial. After the adjournment of the court session, the Court conducted a public posting of the decision to adjourn the court session and the summons to the involved parties at the residence of Mr. M and Mrs. B (the residence before they left the country) and at the headquarters of the People’s Committee of commune D to notify Mr. M and Mrs. B of the time and place of reopening the second court session. However, at the second court session, the respondents (Mr. M, Mrs. B) continue to be absent without reason. Therefore, the People's Court of Quang Binh province conducts the trial in the absence of Mr. M and Mrs. B according to the provisions of Point b, Clause 2, Article 227 of the Civil Procedure Code 2015 in Viet Nam.

 [2]. Regarding the lawsuit:

- Based on documents and evidence in the file that were examined at the court hearing and the petitioner's presentation, the Trial Panel finds that: In 2016, the married couple Mr. Nguyen Van M and Mrs. Phan Thi B had signed with the Bank two credit agreements to borrow money for the purpose of trading in goods, in which the credit agreement No. 01/2016/535971/HD, dated 11/3/2016, the amount of 450,000,000 VND (four hundred and fifty million dong) is borrowed and credit agreement No. 02/2016/535971/HD dated March 14, 2016, the amount of VND 650,000,000 (six hundred and fifty million dong) is borrowed. The total of both agreements is 1,100,000,000 VND (one billion one hundred million).

To secure their debt repayment obligations, Mr. Nguyen Van M, Mrs. Phan Thi B put up their property including house and land as collateral for the Bank according to the law as stated in the real estate mortgage agreement No. 01/2015/535971/HDBD dated March 23, 2015, the secured transaction was registered at the Land Registration Office of District B on March 24, 2015.

Considering that the signing of credit agreements and real estate mortgage agreements by the parties is completely voluntary; the content and form of the agreements are strictly in compliance with the provisions of the State Bank and the provisions of law. Promptly after signing the agreements, the Bank disbursed to Mr. M and Mrs. B the amount of VND 1,100,000. During the performance of the agreement, Mr. Nguyen Van M and Mrs. Phan Thi B violated the debt repayment obligation. In specific, Mr. M and Mrs. B only performed the obligation to pay interest until June 30, 2016. From July 1, 2016 up to now, Mr. M and Mrs. B have not fulfilled their debt repayment obligations (both principal and interest) to the Bank. Until the first instance trial date (November 22, 2018), Mr. Nguyen Van M and Mrs. Phan Thi B still owed the Bank an amount of VND 1,469,734,931 (including: principal debt: 1,100,000,000 VND); balance of normal interest: 260,185,556 VND; balance overdue interest: 109,549,375 VND). The amount of interest owed (normal interest and overdue interest) is calculated by the Bank according to the agreed interest rate in the credit agreement signed by the parties. Therefore, the petitioner filed a lawsuit to ask the Court to force Mr. M and Mrs. B to pay the principal and interest, and in case the respondent fails to perform the debt payment obligation (or does not perform it fully), they request the disposition of the collateral for debt recovery. This request is grounded and in accordance with regulations of the law, so it is accepted.

- On March 28, 2018, the People's Court of Quang Binh province established a council to undertake a verification visit to the property that Mr. M and Mrs. B mortgaged to the Bank (land plot No. 398, map sheet No. 13, with an area of ​​1,133 m2, granted a certificate of land use right by the People's Committee of District B No. I906838 dated September 1, 1998 bearing the name of Mr. Nguyen Van M).

The measurement results show that the actual measured area is 27 m2 lower than the area stated in the land use right certificate (the area stated in the certificate is 1,133 m2 and the actual measured area is 1,106 m2). On the land plot of Mr. M, Mrs. B has 01 house of class 3, two floors, construction area of 137.5m2, usable area is 265 m2, this house was built by Mr. M, Mrs. B (as their marital property). Through inspection and examination, it is found that currently the land plot of Mr. M and Mrs. B has no dispute, the land plot has its own campus (with a fence built around it by Mr. M and Mrs. B), does not encroach on the land of other people. In other words, the decrease in the land area of ​​27 m2 is due to the error between the two measurements, not because of encroachment.

In 2012, Mr. M and Mrs. B submitted an application for the replacement of certificate of land use rights, ownership of houses and other property on land according to the result of regular cadastral mapping. On December 12, 2012, the People's Committee of District B has re-issued the certificate of land use rights, ownership of houses and other property on land No. BM529815, issuance book No. CH,08393, bearing the name of Mr. Nguyen Van M and Mrs. Phan Thi B with an area of ​​1,106 m2. However, because Mr. M and Mrs. B have not fulfilled their debt repayment obligations to the Bank, they have not yet obtained the old certificate of land use right (certificate No. I906838 dated September 1, 1998) in exchange for the new certificate, so when signing the mortgage agreement, the property will continue to use the old land use right certificate to sign.

The certificate of land use right, ownership of houses and other property on land issued on December 12, 2012 is currently being kept at the Land Registration Office of District B. Therefore, in case it is necessary to deal the mortgaged property for debt recovery, the judgment enforcement agency must coordinate with the land registration office of district B to realize it in accordance with regulations.

 [3] Regarding court fees: The petitioner's lawsuit claim is accepted, so the petitioner does not have to bear the first-instance commercial court fee; the respondent must bear the first-instance commercial court fee as prescribed.

 [4]. Regarding the right to appeal: The litigants have the right to appeal the judgment according to Article 479 of the Civil Procedure Code.

For the foregoing reasons,

DISPOSITION

Pursuant to Clause 1, Article 30; Clause 1 Article 37; Point b, Clause 2, Article 227; Articles 474, 477, 479 of the Civil Procedure Code 2015;

Apply Articles 290, 342, 348, 349, 350, 351, 355, 357, 471, 474, 476, 715 and Article 721 of the Civil Code 2005 in Viet Nam; Article 688 of the Civil Code 2015 in Viet Nam; Article 91 of the Law on Credit Institutions in Viet Nam; Article 306 of the Commercial Law in Viet Nam; Articles 166, 167 and 188 of the Land Law 2013; Clause 2, Article 26 of Resolution No. 326/2016/UBTCQH14 in Viet Nam dated December 30, 2016 of the National Assembly Standing Committee on collection, exemption, reduction, collection, payment, management and use of court fees and charges, the Trial Panel hereby judges as follows:

1. Accept the petition of Joint Stock Commercial Bank D Vietnam, force Mr. Nguyen Van M and Mrs. Phan Thi B to repay the debt to Joint Stock Commercial Bank D Vietnam amount of VND 1,469,734,931 (One billion four hundred six nine million seven hundred and three thousand nine hundred and thirty one dong), of which the principal debt is 1,100,000,000 dong, the interest debt until date of first instance trial (November 22, 2018) is 369,734,931 dong (in which the normal interest is 260,185,556 dong and overdue interest is 109,549,375 dong).

- The right to use land and property on land according to the certificate of land use right No. I 906838, in the name of Mr. Nguyen Van M, certificate book No. 599 QSDĐ/68 QD-UB, issued by the People's Committee People of District B on September 1, 1998 (replaced on December 12, 2012, No. BM529815, certificate book No. CH.08393, in the name of Mr. Nguyen Van M and Mrs. Phan Thi B with an area of ​​1,106 m2) ), address at commune D, district B, Quang Binh province and has been mortgaged by Mr. M and Mrs. B to the Commercial Joint Stock Bank D Vietnam  under the Real Estate Mortgage Agreement No. 01/2015/535971/HDBD dated March 23, 2015, the secured transaction was registered at the Land Registration Office of District B on March 24, 2015, which is the collateral for judgment execution obligation of Mr. Nguyen Van M amd Mrs. Phan Thi B.

In the event that Mr. Nguyen Van M and Mrs. Phan Thi B fail to repay or fully repay the debt to Joint Stock Commercial Bank D Vietnam, the Joint Stock Commercial Bank D Vietnam has the right to request the Civil Judgment Enforcement Department of Quang Binh province to realize the collateral in accordance with the provisions of the Law on Civil Judgment Enforcement in Viet Nam in order to recover the debt.

- From the next day of the first-instance trial of the case, Mr. Nguyen Van M and Mrs. Phan Thi B must continue to bear interest on overdue debt at the rate agreed in the credit agreement (agreement No. 01/2016/535971/HD dated 11/3/2016 and No. 02/2016/535971/HD dated March 14, 2016) of the outstanding principal amount until the debt is fully repaid.

2. Court fee for first-instance commercial case: Mr. Nguyen Van M and Mrs. Phan Thi B must bear 56,092,047 VND.

Refund to Commercial Joint Stock Bank D Vietnam the amount of VND 25,018,000 already paid according to the receipt of court fee advance payment No. AA/2017/0004503 dated January 11, 2018 at the Judgment Enforcement Department in Quang Binh province.

3. Commercial Joint Stock Bank D Vietnam has the right to appeal this judgment within 15 days from the date of judgment; Mr. Nguyen Van M and Mrs. Phan Thi B have the right to appeal this judgment within 1 month from the date the judgment is duly served or posted.