Ruling No. 07/2018/DS-ST dated may 15, 2018 regarding credit contract dispute

PEOPLE’S COURT OF QUANG BINH PROVINCE

RULING NO. 07/2018/DS-ST DATED MAY 15, 2018 REGARDING CREDIT CONTRACT DISPUTE

On May 15, 2018, at its headquarter, the People's Court of Quang Binh province held a public first instance trial for the civil case No. 16/2017/TLST-DS entertained on June 20, 2017 regarding “credit contract dispute” under the Decision to bring the case before court No. 119/2018/QDXXST-DS dated March 5, 2018 between litigants:

1. Plaintiff: Vietnam Commercial Joint Stock Bank V, address: No. 72D, ward D, district K, Hanoi city.

Legal representative: Mr. Ngo Chi D – Governing Board's President.

Authorized representative: Mr. Pham Anh T – Vice Director of the Legislation Center for Banks, SMEs and Individuals of the Bank V’s headquarter.

Reauthorized representatives: Mr. Tran Duc H (Vice Director of Bank V’s branch B), Mr. Tran Tien L, Mr. Nguyen Manh S, Mr. Dao Duy T (debt settlement officers working for Bank V’s AMC). According to the Letter of Authorization No. 63/2017/UQ-VPB dated March 6, 2017; Address: 108 D, H city, Quang Binh province. Mr. L was present at trial.

2. Defendant: Mr. Nguyen Manh T, born in 1972; Registered permanent residence: A neighborhood, L ward, H city, Quang Binh province and Mrs. Truong Thi Ngoc H; birth year: 1982; registered permanent residence:  A neighborhood, L ward, H city, Quang Binh province – Currently, Mrs. H is living abroad. Mr. L and Mrs. H were absent at trial.

3. Persons with associated rights and obligations:  Mr. Nguyen Duc T and Mrs. Le Thi H – Permanent residence: A neighborhood, L ward, H city, Quang Binh province. Mr. T and Mrs. H were absent at trial.

CASE DESCRIPTION

According to the petition to sue dated December 16, 2014, the self-declaration, and at the first-instance court, the authorized representative of the plaintiff Vietnam Commercial Joint Stock Company V gave the following testimony:

On June 15, 2012, Vietnam Commercial Joint Stock Bank V’s Branch B represented by Mr. Dau Quang T - Director (Letter of Authorization No. 43/2010/UQ-TGDT dated 31/12/2010 issued by General Director V) concluded a credit contract number LD1216700009 with Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H, including contractual terms and conditions under which the Bank grants Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H a loan of VND 600,000,000 to buy a car with 60-month loan term; 3-month moratorium of installment repayment and the first installment; the first principal repayment due on 25/4/2013; the monthly interest payment due on 25^th; the loan interest rate: 19.5%/year, and the interest rate adjustment interval: every 3 months; the interest rate on overdue debt or late payment: 150% greater than the usual interest rate. At the time of conclusion of the contract, Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H were married.

Property provided as security for fulfillment of loan repayment obligations under the mortgage on the right to use land and associated property No. 0086/12/HD-TCTS dated June 14, 2012 between Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H (mortgagor), on one side, and Vietnam Commercial Joint Stock Bank V’s branch B (mortgagee), on the other side.  Such collateral was the right to use the land parcel No. 113 on the map sheet No. 106, L ward, H city, Quang Binh province which was under the ownership/management of Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H. The property was defined in the certificate of land tenure No. AI843537 issued by the People's Committee of H city, Quang Binh province on May 9, 2008 and the mortgage on the right to use land and associated property with the Bank No. 0086/12 / HD-TCTS signed and notarized on June 14, 2012 at the Notary Public Office V, number 782, book number 01 TP / CC-SCC / HDGDK, obtaining the registration for secured transaction on June 15, 2012.

During the contract performance process, because Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H defaulted on their debt repayment obligations to the Bank, they must bear penalty interest on overdue debt as agreed upon in the credit contract. Despite the lender Bank insisted on them repaying loan debts, Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H have not fulfilled their committed obligations yet. Currently, the creditor Bank has discovered that Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H completed divorce procedures at the People's Court of H city from December 2012. Mrs. Truong Thi Ngoc H has also gone abroad without informing the Bank while Mr. Nguyen Manh T stated that there was no information about Mrs. H’s new residence.

Therefore, Vietnam Commercial Joint Stock Bank V sued Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H to request the repayment of principal amount of VND 600,000,0000, and interest debt owed (as of the date of the first instance trial) of VND 786,175,619. In case Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H is unable to repay the debt, it is requested that the Court allows the disposal of the collateral under the mortgage contract with the Bank in effect to secure their debt repayment obligation.

Defendant’s testimonies: As for Mrs. Truong Thi Ngoc H, through verification from relatives and the Immigration Department, it is determined that Mrs. Truong Thi Ngoc H is currently abroad. However, since there has not been information about the exact residence of Mrs. H in the foreign country where she is living, the Court has conducted the procedures to publicize the case and spread the news about details of the case via mass media at the former residence of Mrs. Truong Thi Ngoc H but, up to now, there is still no report on Mrs. H’s appearance. At today's trial, although Mrs. H is not present, the Court decides to proceed to conduct the procedures to post written documents on the Court's legal action against Mrs. H in accordance with the law to bring the case to trial.

At the self-declaration statement and the mediation sessions, Mr. Nguyen Manh T gave his statement: Mr. T admitted that he and his wife Mrs. Truong Thi Ngoc H borrowed money from Vietnam Joint Stock Commercial Bank V’s Branch B according to the terms and conditions of the credit contract and the mortgage that the Bank stated. Due to their business loss, the debt has not been repaid yet. Currently, he and Mrs. Truong Thi Ngoc H have been completely divorced and Mrs. H has gone abroad and he is not having any information about her. He committed himself to repaying the above-stated debt to the Bank. At the trial today, Mr. Nguyen Manh T was not present, the Court’s staff came to his house to serve the procedural documents many times, but no one received them. So the Court proceeded to post documents on the court proceedings according to the provisions of law.

The representative of the People's Procuracy of Quang Binh province expressed his/her opinions:

* Regarding legal process:

- Judge and the trial panel strictly abode by the procedural law provisions in the course of implementation of legal proceedings and settlement of the case.

- For the case that the defendant Mrs. Truong Thi Ngoc H has gone abroad, it is considered the case where the involved party changes the place of residence or workplace in association with the exercise of contractual transaction rights and obligations without informing the Bank of the new place of residence and workplace. This is considered the case where the involved party intentionally conceals her address and the Court is requested to continue resolving the case according to the usual legal procedures.

* Regarding case contents:  It is requested that the Trial Panel accept the petition to sue regarding credit contract dispute filed by the Vietnam Commercial Joint Stock Bank V against Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H.

COURT’S COMMENTS

After studying documents and evidences in the case file which have been examined at the court session and based on the results of arguments at the court session, the trial panel shall decide:

[1]. Regarding legal process:

Because it is determined that the defendant Mrs. Truong Thi Ngoc H has gone abroad during the contract performance period, this case is considered the case where the involved party changes the place of residence and workplace associated with the exercise of their rights and obligations arising in the contractual transaction without notifying the Bank of the new place of living or workplace as prescribed in Clause 3, Article 40, Point b Clause 2 Article 277 of the Civil Code 2015 in Viet Nam. This is considered a deliberate concealment of her address. Pursuant to Point a, Clause 2, Article 6 of Resolution 04/2017/NQ-HDTP in Viet Nam dated May 5, 2017 of the Panel of Judges of the Supreme People's Court on guidance on a number of provisions laid down in Clause 1 and 3, Article 192 of the 2015 Civil Procedure Code regarding return of the lawsuit petition, the right to file a petition to resue, the Court continues to settle the case according to the usual general procedures.

After entertaining the case, the Court has posted the Notice of Entertaining of the case at the last residence of Mrs. Truong Thi Ngoc H in Vietnam and informed it on the mass media in accordance with the law. However, up to now, there has been no response from Mrs. Truong Thi Ngoc H. According to Point a, Clause 1, Article 37 of the Civil Procedure Code, the case falls under the jurisdiction of the People's Court of Quang Binh province.

[2]. Regarding the trial in absentia of the defendant and persons with associated rights and obligations:

At the trial, the defendant Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H, persons with related rights and obligations, Mr. Nguyen Duc T and Mrs. Le Thi H, were all absent but received the decision to bring the case to trial served and posted by the Court, and the valid summons were valid and the trial was delayed twice on March 21, 2018 and April 20, 2018. Pursuant to Articles 227 and 228 of the Civil Procedure Code in Viet Nam, the Trial Panel proceeds to hear the case in the absence of the defendant and persons with related rights and obligations.

[3] Regarding case contents:

Documents and evidence included in the case file examined at the court hearing showed that: The credit contract No. LD1216700009 dated June 15, 2012 between Vietnam Commercial Joint Stock Bank V’s Branch B, on one side, and Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H, on the other side, includes terms and conditions under which Mr. T and Mrs. H agreed to borrow an amount of VND 600,000,000 from the Vietnam Commercial Joint Stock Bank. The loan is secured by the collateral which is the right to use the land and associated property at the land parcel No. 113 on the map sheet No. 106, L ward, H city, Quang Binh province which was owned/used by Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H. The property was defined in the certificate of land tenure No. AI843537 issued by the People's Committee of H city, Quang Binh province on May 9, 2008 and the mortgage on the right to use land and associated property with the Bank No. 0086/12 / HD-TCTS signed and notarized on June 14, 2012 at the Notary Public Office V, number 782, book number 01 TP / CC-SCC / HDGDK, obtaining the registration for secured transaction on June 15, 2012.

Considering the form, content and purpose of the loan under the credit contract, the mortgage on property for the loan between Vietnam Commercial Joint Stock Bank V, on one side, and Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H, on the other side, in compliance with the provisions of the law is a legal civil transaction taking legal effect. Therefore, after conclusion of the contract, rights and obligations of contracting parties arise. Although Mrs. Truong Thi Ngoc H was not present during the process of resolving the case, Mr. Nguyen Manh T admitted the aforesaid debt. After receipt of the borrower’s disbursement of VND 600,000,000, Mr. T and Mrs. H failed to fulfill their obligations to repay the Bank's debt which became delinquent from February 25, 2013.

On the other hand, the fact that Mr. T and Mrs. H completed the divorce procedures and Mrs. H then went abroad without notifying the Bank constituted a violation against the commitments that both parties made in the Contract. The Bank's initiation of legal proceedings against Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H to request the disposal of collateral to recover the outstanding principal and interest in case of their solvency is grounded in accordance with Article 721 of the 2005 Civil Code in Viet Nam.

According to the case file, in the Land Tenure Certificate No. AI 843537 issued by the People's Committee of H city, Quang Binh province on May 9, 2008 to Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H, the property put up as collateral is the land covering an area of 93.6m² at the land parcel number 113, map sheet 106, ward L, city H, Quang Binh province. In the on-the-spot inspection report dated January 31, 2018 of the council for on-the-spot inspection of the above-stated land parcel, the land parcel No. 113 (created after the legal transition of the land parcel No. 106, map sheet No. 106, ward L, approved by Quang Binh province’s Department of Land Administration approved on April 20, 1998 into the land parcel No. 62, map sheet No. 116, ward L) is measured to cover an area of ​​91.2 m². Compared with the land tenure certificate granted to Mr. T and Mrs. H, the actual used area was nearly the same and the four sides of the land parcel did not change. However, according to the current status map which is drawn by the surveying officer of the Land Registration Office under the control of the Department of Natural Resources and Environment, who is a member of the Inspection Council, coordinates of the abovementioned land parcel overlaps those of the land parcel No. 07 of Mr. Nguyen Duc T and Mrs. Le Thi H (Mr. T’s natural parents). Mr. Nguyen Duc T and Mrs. Le Thi H gave written permission to Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H to have such overlapping dealt with according to the law. They did not have any opinion.

According to the interest calculator spreadsheet presented by the representative of Vietnam Commercial Joint Stock Bank V shown at the trial, till the date of the first instance trial (May 15, 2018), Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H owed Vietnam Commercial Joint Stock Bank V’s Branch B total amount of VND 1,386,175,619, including VND 600,000,000 as the outstanding principal and VND 786,175,619 as the outstanding debt. Pursuant to Articles 474 and 476 of the 2005 Civil Code, as the Bank correctly calculates the interest not in breach of the provisions of the law, such calculation is accepted. As Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H are divorced but have not had their marital property settled, have not yet managed to distribute their community property, including debts, according to this judgment, both must be liable for their debt.

The collateral provided as security for the loan of Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H at Vietnam Commercial Joint Stock Bank V's Branch B, including the right to use the land and associated property at the land parcel No. 113 on the map sheet No. 106, L ward, H city, Quang Binh province, is under the ownership/management of Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H. The certificate of land tenure No. AI843537 issued by the People's Committee of H city, Quang Binh province on May 9, 2008 according to the mortgage on the right to use land and associated property with the Bank No. 0086/12 / HD-TCTS signed and notarized on June 14, 2012 at Hai Vuong Notary Public Office, number 782, book number 01 TP / CC-SCC / HDGDK, obtaining the registration for the secured transaction on June 15, 2012 must be disposed of to secure the obligations to repay debt assumed by Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H.

[4]. Regarding first-instance court costs:

Pursuant to Clause 1, Article 147 of the 2015 Civil Procedure Code; Pursuant to Clause 2, Article 26 of the Resolution No. 326/2016/UBTVQH14 in Viet Nam dated December 30, 2016 on the rates, exemption, reduction, collection, management and use of court costs and fees, the defendant Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H must bear court costs for the plaintiff's request accepted by the Court; as Vietnam Joint Stock Commercial Bank V’s petition to sue is accepted by the court, they are exempted from court costs.

In light of the aforesaid arguments,

HEREBY DECIDES

Upon application of Articles 121, 122, 471, 474, 476, 715, 717, 720, 721 of the 2005 Civil Code; point a, Clause 1, Article 37, Clause 1 Article 147; Clause 2 of Article 155; Point e Clause 1 Article 192, Article 227, Article 228, Article 273, Article 479 of the 2015 Civil Procedure Code;

Pursuant to Point a, Clause 2, Article 6 of Resolution 04/2017/NQ-HDTP dated May 5, 2017 of the Panel of Judges of the Supreme People's Court on guiding a number of provisions in Clauses 1 and 3, Article 192 of the 2015 Civil Procedure Code on return of the petition to sue, the right to file the petition to resue;

Pursuant to clause 2 of Article 26 in the Resolution No. 326/2016 / UBTVQH14 dated December 30, 2016, stipulating rates, exemption, reduction, collection, payment, management and use of court costs and fees, the Court hereby rules that:

1. Accepting Vietnam Commercial Joint Stock Bank V’s petition to sue: Forcing Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H to repay the amount of VND 1,386,175,619, including the outstanding principal of VND 600,000,000 and the outstanding debt of (as of the date of the first instance trial held on May 15, 2018) of VND 786,175,619.

The right to use the land and associated property at the land parcel No. 113 on the map sheet No. 106, L ward, H city, Quang Binh province under the ownership/management of Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H. The property which is defined in the certificate of land tenure No. AI843537 issued by the People's Committee of H city, Quang Binh province on May 9, 2008 and the mortgage on the right to use land and associated property with the Bank No. 0086/12 / HD-TCTS signed and notarized on June 14, 2012 at the Notary Public Office V, number 782, book number 01 TP / CC-SCC / HDGDK, obtaining the registration for the secured transaction on June 15, 2012 are those property provided as collateral to Vietnam Commercial Joint Stock Bank’s Branch B and are now used as security for their obligations to comply the court’s award.

Vietnam Commercial Joint Stock Bank V shall be responsible for transferring the papers related to such collateral to the Civil Judgment Execution Department of Quang Binh province for further action when there is any request for judgment execution, or disposal of collateral fir fulfillment of the judgment execution obligation in accordance with the Law on Civil Judgment Execution.

Following the date of pronouncement of the first-instance judgment until the date on which the the obligor to the judgement pays off the principal, the obligor must also pay the monthly interest arising from the unearned principal amount at the interest rate stated in the credit contract No. LD1216700009 dated June 15, 2012 between Vietnam Joint Stock Commercial Bank V’s Branch B, on one side, and Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H, on the other side.

2. In terms of court costs:

Mr. Nguyen Manh T and Mrs. Truong Thi Ngoc H are liable for an amount of VND 53,585,268 as the first-instance civil court cost; must repay Vietnam Joint Stock Commercial Bank V the court cost of VND 19,732,000 paid in advance according to the receipt of the advance payment of court costs No. 04823 dated April 9, 2015 at the Civil Judgment Execution Department of Dong Hoi city, Quang Binh province.

In cases where the judgement is executed under the provisions of Article 2 of the Law on Civil Judgment Execution in Viet Nam, the obligee and obligor to the civil judgment may negotiate about how the judgment is executed, the right to request judgment execution, voluntary execution of the court judgement or shall be subject to law enforcement processes under Articles 6, 7 and 9 of the Law on Civil Judgment Execution. Time limit for execution of the court judgement shall be subject to regulations laid down in Article 30 in the Law on Civil Judgement Execution.

Vietnam Joint Stock Commercial Bank V shall be entitled to appeal against this judgment within 15 days from the date of judgment pronouncement; Mr. Nguyen Manh T, Mr. Nguyen Duc T and Mrs. Le Thi H who were absent from the court hearing should be entitled to appeal against the judgment within 15 days of receipt of the judgment or from the date on which the judgment is posted. Particularly, Mrs. Truong Thi Ngoc H shall have the right to appeal within 01 month from the date on which the judgment is properly served or from the date on which the judgment is duly posted in accordance with the law.