Judgment No. 11/2021/DS-ST dated May 06, 2021 on dispute over credit agreement and collateral disposition

THE PEOPLE’S COURT OF QUANG BINH PROVINCE

JUDGMENT NO. 11/2021/DS-ST DATED MAY 06, 2021 ON DISPUTE OVER CREDIT AGREEMENT AND COLLATERAL DISPOSITION

On May 06, 2021, a public first-instance trial is conducted at the People’s Court of Quang Binh Province to hear the handled civil case No. 34/2020/TLST-DS dated July 01, 2020 in the matter of “Dispute over credit agreement and collateral disposition”, according to the Decision to bring the case to the trial No. 440/2021/QD-ST dated March 22, 2021 between the following litigants: 

- Plaintiff:  Bank B;

Address:  No. 25, Street V, District H, Ha Noi City; Legal representative: Mr. Phan Duc T - Chairman of the Board of Directors; Person authorized to initiate the lawsuit and participate in legal proceedings: Mr. Ha Thanh H - Director of BQB Branch of Bank B; address: No. 368, Street Q, Ward B, Town B, Quang Binh Province, according to the Decision to authorize participation in legal proceedings No. 804/QD dated August 22, 2019 issued by Bank B’s legal representative; Mr. H authorized Mr. Le Thanh O - a Specialist of Risk Management Department of Bank B - BQB Branch according to Decision No. 127/QD-BIDV.BQB dated February 03, 2021. Mr. Oat was present at the trial.

- Defendant: Mr. Nguyen Chi C, born in 1976, and Mrs. Phan Thi H1, born in 1980;

Address: Hamlet C, Commune B, District B, Quang Binh Province;

Mr. Nguyen Chi C is residing aboard (Russian Federation) and has been absent for the second time; Mrs. Phan Thi H has been lawfully summoned for the second time but she is still absent.

CONTENTS OF THE CASE

According to the petition and opinions specified in the written statement as well as at this trial, the plaintiff’s representative states:

According to the credit agreement No. 01/2017/9336156/HDTD dated January 05, 2017 signed between Bank B - BQB Branch and Mr. Nguyen Chi C and Mrs. Phan Thi H1, Bank B - BQB Branch has granted Mr. C and Mrs. H a loan with details as follows: Total loan amount of VND 350.000.000 (Three hundred fifty million dongs); Loan purpose: Buying materials for house repair; Loan term: 60 months; preferential interest rate applied for the first 12 months from the date of conclusion of the credit agreement: 10,0%/year.

Since January 06, 2018, the interest rate applied to the loan has been adjusted to the normal lending interest rate, and has been adjusted every 03 months to the actual interest rate on VND savings deposit of 12-month term and term-end interest payment announced by Bank BQB at the time of adjustment plus a fee rate of 4%/year but shall not be lower than the floor lending interest rate of the same loan type applied by Bank V, the floating interest rate has been adjusted every 03 months, and the interest rate on overdue debt shall be 150% of the interest rate charged on due repayment determined at the date of such debt becoming delinquent, and date of adjustment of lending interest rate under terms and conditions of the credit agreement. During debt repayment period, Mr. C and Mrs. H1 have paid a part of the loan principal and interest. The remaining amount payable includes VND 170.013.000 of the loan principal and the interest charged up to the date of the first-instance trial, i.e. May 06, 2021, as VND 78.746.202 (including VND 73.653.809 of the interest charged on due repayment and VND 5.092.393 of overdue debt interest).

Mr. C and Mrs. H1 have provided the collateral for the loan, including: the rights to use the land plot No. 180, map sheet No. 48, located at Hamlet C, District B, area: 317,9 m2, including 243 m2 of residential land and 74,9 m2 of annual crop land, and the property on land which is a grade-4 house with building area of 150 m2 (house structure: house with no upstairs, quarry-stone foundation, brick wall, porcelain patterned floor, color painted ceiling, wooden doors with jambs, auxiliary works: toilet situated outside the house, and tiled roof) according to the Certificate of Land Use Rights No. 578876, entered into register as No.: CH 01809, issued by the People’s Committee of Bo Trach District, on December 20, 2016, under the names of Nguyen Chi C and Phan Thi H1; the property built on the abovementioned land plot is the house (the mortgage agreement No. 01/2017/9336156/HDBD dated January 04, 2017, signed between one side, comprising of Mr. C and Mrs. H1, and the other side, the Bank), and has been registered for secured transaction at the Office for registration of land use rights of District B on January 04, 2017.

On the defendant’s side, Mr. Nguyen Chi C is absent, so he gives no statements, but Mrs. Phan Thi H1 (Mr. C’s wife) states: she and her husband have got loan from Bank B - BQB Branch with the loan amount of VND 350.000.000 which has been used for repairing house, and have provided their house and land located at Hamlet C, Commune B, as collateral. They have paid a part of loan debt to the Bank, and still owe the bank an amount of loan principal and interest as announced by the Bank.  They accept responsibility to repay the Bank. However, after Mr. C (her husband) did business abroad (Russian Federation) (unknown address), due to prolonged pandemic, his business was unsuccessful. Thus, they have no incomes for repaying the Bank.  When the Bank filed the lawsuit to request them to repay the loan principal and interest, her husband, Mr. C, was also notified of the lawsuit but, due to prolonged pandemic and difficulties in his business, they could not repay the Bank and requested the Bank to allow them to make deferred payment and agreed that the Bank may carry out procedures for disposition of collateral in accordance with regulations of law in case of their failure to repay debts.

According to results of the appraisal conducted at the trial by the Court in the presence of Mrs. Phan Thi H1, the collateral, including the house and land use rights, is conformable with the agreement on mortgage of property which has been registered for secured transaction.

At the trial, the plaintiff’s representative still keeps their petition unchanged and requests the Court to force Mr. C and Mrs. H1 to make payment of the loan principal and interest or, in case of their failure to make such payment, follow collateral disposition procedures as prescribed.

Representative of the People's Procuracy of Quang Binh Province expresses opinions about the case as follows:

Regarding the court procedures:  During the case settlement process from accepting the case until the deliberation session of the trial panel, the Judge, trial panel, court clerk and participants in legal proceedings have strictly and fully complied with regulations of the civil procedure code.

Regarding contents of the case: The trial panel is requested to accept the Bank’s petition and request Mr. C and Mrs. H1 to make payment of the loan principal and interest amount of VND 248.759.202 (including VND 73.653.809 of the interest charged on due repayment and VND 5.092.393 of overdue debt interest) to Bank B. In case Mr. C and Mrs. H1 are unable to repay the bank, the collateral should be disposed of in accordance with regulations of law.

JUDGMENTS OF THE COURT 

After examining documents included in the case file, which have been verified at the trial, and based on questioning results obtained at the trial, the trial panel finds that: 

[1] Regarding the court procedures:

According to the petition submitted by Bank B to request Mr. Nguyen Chi C and Mrs. Phan Thi H1 to repay under the credit agreement No. 01/2017/9336156, the legal relationship determined in this case is dispute over the credit agreement; According to the Official Dispatch No. 6733/QLXNC-P5 dated May 19, 2020 and the Official Dispatch No. 7207/QLXNC-P5 dated March 30, 2021 of the Immigration Department affiliated to the Ministry of Public Security, Mr. Nguyen Chi C, born on June 06, 1976, has successfully followed immigration procedures for 16 times, his last immigration was made on March 29, 2018, and currently, no information about his return to Vietnam is recorded. Hence, the co-defendant, Mr. Nguyen Chi C is living abroad. Pursuant to Point a Clause 1 Article 37, Point a Clause 1 Article 469 of the Civil Procedure Code, this case is under the jurisdiction of the People's Court of Quang Binh Province.

After handling the case, the People's Court of Quang Binh Province has delivered and conveyed the documents of the lawsuit to the litigants but the defendant, Mr. C, was absent because Mr. C migrated to a foreign country. Hence, the court received no response from the defendant. The Court has posted the documents of the lawsuit at Mr. C’s residence, and notified Mr. C of the fact that the case has been handled and considered by the Court on the National External Information Channel - Voice of Vietnam (VOV5) on 03 consecutive times but received no response from Mr. C. Mrs. H1 stated that Mr. C (her husband) is residing in Russia and she has notified him of Bank B's request for debt repayment.

The People’s Court of Quang Binh has conducted the first first-instance trial on April 08, 2021 which has been suspended because the defendant, Mr. Nguyen Chi C was not present at the trial. After the trial suspension, the Court has directly delivered the trial suspension decision and the subpoena to Mrs. Phan Thi H1 on May 06, 2021. Mr. C and Mrs. H1 were still absent from the second trial conducted by the Court without giving legitimate reasons. Thus, the People’s Court of Quang Binh decides to hear the case in default of Mr. C and Mrs. H1 according to Point b Clause 2 Article 227 of the Civil Procedure Code in Viet Nam.

[2] Regarding contents of the case:

[2.1] On January 05, 2017, Mr. Nguyen Chi C, Mrs. Phan Thi H1 and Bank B - BQB Branch have entered into the credit agreement No. 01/2017/9336156/HDTD with total loan amount: VND 350.000.000, loan purpose: buying materials for house repair, loan term: 60 months, preferential interest rate applied for the first 12 months from the date of conclusion of the credit agreement: 10,0%/year. Since January 06, 2018, the interest rate applied to the loan has been adjusted to the normal lending interest rate, and has been adjusted every 03 months to the actual interest rate on VND savings deposit of 12-month term and term-end interest payment announced by Bank B -Bank BQB at the time of adjustment plus a fee rate of 4%/year but shall not be lower than the floor lending interest rate of the same loan type applied by Bank V, the floating interest rate has been adjusted every 03 months, and the interest rate on overdue debt shall be 150% of the interest rate charged on due repayment determined at the date of such debt becoming delinquent, and date of adjustment of lending interest rate under terms and conditions of the credit agreement. Bank B has fully disbursed the loan amount of VND 350.000.000 to Mr. C and Mrs. H1.

 [2.2] Mr. Nguyen Chi C and Mrs. Phan Thi H1 have provided the collateral for the loan, including: the rights to use the land plot No. 180, map sheet No. 48, located at Hamlet C, Commune B, District B, area: 317,9 m², including 243 m² of residential land and 74,9 m² of annual crop land, and the property on land which is a grade-4 house with building area of 150 m² (house structure: house with no upstairs, quarry-stone foundation, brick wall, porcelain patterned floor, color painted ceiling, wooden doors with jambs, auxiliary works: toilet situated outside the house, and tiled roof) according to the Certificate of Land Use Rights No. 578876, entered into register as No.: CH 01809, issued by the People’s Committee of Bo Trach District, on December 20, 2016, under the names of Nguyen Chi C and Phan Thi H1; (the mortgage agreement No. 01/2017/9336156/HDBD dated January 04, 2017, signed between one side, comprising of Mr. C and Mrs. H1, and the other side, the Bank; procedures for registration of secured transaction have been carried out at the Office for registration of land use rights of Bo Trach District on January 04, 2017. During debt repayment period, Mr. C and Mrs. H1 have paid a part of the loan principal and interest. The remaining amount payable includes VND 170.013.000 of the loan principal and the interest charged up to the date of the first-instance trial, i.e. May 06, 2021, as VND 78.746.202 (including VND 73.653.809 of the interest charged on due repayment and VND 5.092.393 of overdue debt interest).

[2.3] Hence, the parties have voluntarily entered into the credit agreement and the mortgage agreement whose contents and form are conformable with regulations of the Bank and laws.

The interest debt includes the interest charged on due repayment and overdue debt interest calculated by the Bank at the interest rate agreed upon in the credit agreement signed by and between the parties in accordance with regulations of law. During the execution of the credit agreement, the defendant has partially fulfilled their debt liability. The remaining loan principal and interest are still not yet paid and become delinquent. The defendant fails to pay debt although Bank B has given many notices of debt payment. Therefore, the petition submitted by the plaintiff to request the Court to force Mr. Nguyen Chi C and Mrs. Phan Thi H1 to pay the amount of VND 248.759.202 (including VND 170.013.000 of the loan principal and VND 78.746.202 of interest) and carry out procedures for disposition of collateral for recovering debts in case the defendant fails to repay or insufficiently repays the bank is well-grounded, complies with regulations of law, and so is accepted.

[5] Regarding the court fees:  The plaintiff is not required to pay the court fees for solving the first-instance civil case; the defendant is liable to pay the first-instance civil case in accordance with regulations of law.

[6] Regarding procedural expenses: Bank B shall fully pay the amount of VND 1.500.000 which is the costs for publishing information on VOV5.

For the said reasons,  

THE COURT DECIDES:

Pursuant to Article 26; Clause 1 Article 37; Point b Clause 2 Article 227; Articles 474, 477, 479 of the Civil Procedure Code;  Pursuant to Articles 280, 292, 293, 294, 295, 299, 317, 318, 319, 320, 321, 322, 323, 324, 357, 688 of the 2015 the Civil Code in Viet Nam; Article 91 of the Law on Credit Institutions in Viet Nam; Articles 166, 167, 188 of the 2013 Law on Land in Viet Nam; Clause 2 Article 26 of the Resolution No. 326/2016/UBTVQH14 in Viet Nam dated December 30, 2016 of the 14^th Standing Committee of National Assembly on court fees and charges, collection, exemption, reduction, transfer, management and use thereof. It’s judged:

1. Bank B’s petition regarding “request Mr. Nguyen Chi C and Mrs. Phan Thi H1 to pay debts under the credit agreement and collateral disposition" is accepted. Mr. Nguyen Chi C and Mrs. Phan Thi H1 is forced to repay Bank B the loan amount of VND 248.759.202 under the credit agreement (including: VND 170.013.000 of the loan principal, and the interest charged up to the date of the first-instance trial, i.e. May 06, 2021, as VND 78.746.202 (including VND 73.653.809 of the interest charged on due repayment and VND 5.092.393 of overdue debt interest).
 

2. The collateral provided by Mr. Nguyen Chi C and Mrs. Phan Thi H1 includes the rights to use the land plot No. 180, map sheet No. 48, located at Hamlet C, Commune B, District B, area: 317,9 m², including 243 m² of residential land and 74,9 m² of annual crop land, and the property on land which is a grade-4 house with building area of 150 m² (house structure: house with no upstairs, quarry-stone foundation, brick wall, porcelain patterned floor, color painted ceiling, wooden doors with jambs, auxiliary works: toilet situated outside the house, and tiled roof) according to the Certificate of Land Use Rights No. CG 578876, entered into register as No.: CH 01809, issued by the People’s Committee of Bo Trach District, on December 20, 2016, under the names of Nguyen Chi C and Phan Thi H1; the mortgage agreement No. 01/2017/9336156/HDBD dated January 04, 2017, signed between one side, comprising of Mr. C and Mrs. H1, and the other side, the Bank; procedures for registration of secured transaction have been carried out at the Office for registration of land use rights of Bo Trach District on January 04, 2017. The mentioned property is used for ensuring the judgment enforcement by Mr. Nguyen Chi C and Mrs. Phan Thi H1.

In case Mr. Nguyen Chi C and Mrs. Phan Thi H1 fail to pay debts to Bank B, Bank B is entitled to request the Civil Judgment Enforcement Department of Quang Binh Province to dispose of the mentioned collateral for recovering debts in accordance with regulations of law.

From the day following the date of the first-instance trial until completion of judgment enforcement, the judgment debt must also incur interest on the judgment debt arrears at the interest rate agreed upon between the parties in accordance with regulations of law; If no agreement on the interest rate is made, the interest rate shall be applied according to Clause 2 Article 468 of the Civil Code.

3. The first-instance civil court fees:  Mr. Nguyen Chi C and Mrs. Phan Thi H1 must pay VND 12.437.900;

Bank B is refunded an amount of VND 6.796.000 paid under the receipt of advanced law costs and court fees No. AA/2017/0003285 dated August 26, 2019 of the Civil Judgment Enforcement Sub-Department of Bo Trach District, Quang Binh Province.

4. Regarding procedural expenses: Bank B shall fully pay the amount of VND 1.500.000 which is the costs for publishing information on VOV5.

In case the judgment is enforced according to Article 2 of the Law on enforcement of civil judgments in Viet Nam, the judgment creditor and debtor are lawfully allowed to reach an agreement on judgment enforcement, request judgment enforcement, be subject to voluntary execution or coercive judgment enforcement in compliance with regulations in Articles 6, 7 and 9 of the Law on enforcement of civil judgments, and the effective period of judgment enforcement shall comply within provisions in Article 30 of the Law on enforcement of civil judgments.

The plaintiff is entitled to appeal against this judgment within 15 days from the date of pronouncement; Mrs. Phan Thi H1 who is absent from the trial is entitled to appeal against this judgment within 15 days after receiving or being served with this judgment or this judgment is duly posted. Particularly, Mr. Nguyen Chi C who is absent from the trial is entitled to appeal against this judgment within 01 month after being served with this judgment or this judgment is duly posted.