Notice of lessons learned from commercial business cases on credit contracts

1. Content of the court

On May 13, 2016, Asia Commercial Joint Stock Bank - Quang Binh Branch (Bank for short) signed with Vinh Thang Company Limited (Company for short) 03 credit contracts and was disbursed with a total amount of 3,520,000,000 VND. These loans are secured by the following security measures:

+ Property mortgage contract No. QBI.BDDN.

07.220415 signed between Mr. H Cong Đ, Ms. Pham Thi Q with the Bank on April 27, 2015, mortgaged the land use right at the land plot No. 19, map sheet No. 52 in Dong P Ward, Dong D City, Quang Binh Province under the ownership of Mr. H Cong Đ and Ms. Pham Thi Q under the Certificate of Land Use Rights No. 347176 issued by the People's Committee of Dong D Town on December 4, 2003.

+ Property mortgage contract No. QBI.BDDN. 03.050314 dated March 11, 2014, it is possible to accept the land use right at the land plot No. 15, map sheet No. 15 in Hai D ward, D city under the ownership of Mr. Le Quang C and Mrs. Tran Thi H under the Certificate of Land Use Right No. AC 186571 issued by the People's Committee of D city on August 9, 2005.

+ Guarantee deed of Mr. Le M and Mrs. Tran Thi H guarantee all debt repayment obligations of the creditor with the Bank.

The process of implementing credit agreements. The Company is in breach of its commitment to repay its debts. Therefore, on August 20, 2018, the Bank initiated a lawsuit requesting the Court to settle:

- Forcing the Company to pay the Bank the total outstanding balance as of December 16, 2019 is VND 4,849,554,305 (including principal of VND 3,520,000,000; interest in the term of VND 918,102,657; overdue interest of VND 375,579,965; late payment interest of VND 35,871,683).

- If the Company fails to perform or improperly performs the obligation to repay the debt, the competent agency shall dispose of the mortgaged collateral to recover the debt.

2. The process of settlement of cases

The first-instance judgment 27/2019/KDTM-ST dated December 16, 2013 of the People's Court of D city, Quang Binh province decided:

“1. Accept a portion of the ACB Bank's lawsuit claim.

4. Not accepting the petition of the Bank, on the request for realization of collateral of Mr. Đ, Ms. Q to perform the obligation to repay the debt to the Company.

5. Accept the request of the person with related rights and obligations who requests the independence of Ms. Ha Thi Hai Y, declaring the Land use right mortgage contract No. QB1.NDN, 07, 2204 15 dated April 27, 2015 signed between the mortgagee Mr. H Cong Đ, Ms. Pham Thi Q; the mortgagee of ACB Bank for the mortgaged property is land plot No. 19, map sheet No. 52, area 248.8m, in Dong P Ward, D City, Quang Binh Province under the Certificate of Land Use Rights No. 347167 issued by the People's Committee of D Town on December 4, 2003 named for Mr. H Cong Đ, Ms. Pham Thi Q is null and void."

Appellate Judgment No. 02/2020/KDTM-PT dated July 20, 2020 of the People's Court of Quang Binh province amending the first-instance judgment, adjudicating: Accepting the lawsuit petition of ACB Bank, rejecting Ms. Ha Thi Hai Y's independent claim.

After the appellate trial, the person with related interests and obligations who has made an independent request is Mrs. Y who submits an application for consideration according to cassation procedures, the superior People's Procuracy in Da Nang shall issue a decision on cassation appeal against the above-mentioned appellate commercial business judgment and request the superior People's Court in Da Nang to conduct cassation trial of the case in the direction of annulment of the appellate commercial business judgment and uphold the first-instance commercial business judgment.

In the Cassation Decision No. 21/2021/KDTM-GĐT dated November 30, 2021, the Judicial Committee of the Superior People's Court in Da Nang decided to annul the entire Judgment No. 02/2020/KDTM-PT dated July 20, 2020 of the People's Court of Quang Binh province, upholding the Judgment No. 27/2013/KDTM-ST dated December 16, 2013 of the People's Court of D city, Quang Binh province.

3. Issues to be learned from

- The land use right certificate shows the land grant to the household of Mr. Đ and Mrs. Q but when signing the mortgage contract with the bank, only Mr. Đ and Mrs. Q made, the other members did not sign, Mr. Đ is blind but when signing the mortgage contract there was only one witness; The appellate court still recognized the above mortgage contract.

- Mr. D and Mrs. Q signed a mortgage contract on land use rights only to secure a loan for Vinh Thang company; but when the appellate court decided to hold Mr. D and Mrs. Q responsible for paying more than the loan guaranteed by Mr. D and Mrs. Q if Vinh Thang company fails to pay the debt.

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