Precedent No. 36/2020/AL was adopted by the Council of Justices of the Supreme People’s Court on February 05, 2020, and published under Decision No. 50/QD-CA dated February 25, 2020, by the Chief Justice of the Supreme People’s Court.
1. What is a precedent?
Precedents are arguments and rulings in legally effective judgments or decisions of the Courts regarding a specific case, selected by the Council of Justices of the Supreme People’s Court and published by the Chief Justice of the Supreme People’s Court as precedents for Courts to study and apply in adjudication. (Article 1 of Resolution 04/2019/NQ-HĐTP)
A selected precedent must meet the following criteria:
– Possesses value in clarifying legal provisions that have different interpretations; analyzes and explains legal issues and events; and identifies principles, handling orientations, and legal norms to be applied in a specific case or demonstrates equity toward issues not yet specifically regulated by law;
– Possesses standard characteristics;
– Possesses value in guiding the uniform application of law in adjudication.
2. Precedent No. 36/2020/AL on the validity of land use right mortgage contracts when the land use right certificate is revoked or canceled
2.1. Source of the precedent
Cassation Decision No. 05/2018/KDTM-GĐT dated May 18, 2018, of the Council of Justices of the Supreme People’s Court regarding the commercial case “Dispute over a credit contract” in Ba Ria – Vung Tau province between the plaintiff, Joint Stock Commercial Bank V, and the defendants, Mr. Nguyen Van C and Mrs. Vu Thi T.
Location of the precedent content:
Paragraphs 2 and 3 of the “Court’s Assessment” section.
2.2. Summary of the precedent content
– Precedent situation:
A land use right mortgage contract complies with legal regulations, but subsequently, the land use right certificate is revoked or canceled due to errors in land area and the order and procedures for issuing the land use right certificate. The revocation or cancellation of the land use right certificate does not terminate the legal land use rights of the land user.
– Legal solution:
In this case, it must be determined that the land use right mortgage contract is legally effective.
Legal provisions related to the precedent:
– Articles 322 and 343 of the Civil Code of Vietnam 2005; Articles 342 and 411 of the Civil Code of Vietnam 2005 (corresponding to Articles 317 and 408 of the Civil Code of Vietnam 2015);
– Articles 61 and 62 of the Land Law of Vietnam 2003; Articles 46 and 106 of the Land Law 2003 (corresponding to Articles 95 and 167 of the Land Law of Vietnam 2013).
Keywords of the precedent:
“Revoked or canceled land use right certificate”; “Validity of the mortgage contract”.
CASE CONTENT:
In the lawsuit petition dated May 18, 2011, and during the proceedings, Joint Stock Commercial Bank V stated: On March 22, 2010, Bank V entered into Credit Contract No. 10.36.0015 with Mr. Nguyen Van C and Mrs. Vu Thi T. Accordingly, Bank V granted a loan of 900,000,000 VND to Mr. C and Mrs. T with an in-term interest rate of 12%/year; an overdue interest rate equal to 150% of the in-term rate; and a loan term of 12 months. To secure the loan, Mr. C and Mrs. T mortgaged the land use right of a land plot with an area of 3,989.7m2 belonging to plot No. 12, map sheet No. 05, H Commune, B Town (Land Use Right Certificate No. Đ544493 issued by the People’s Committee of B Town on July 14, 2004) according to Mortgage Contract No. 10.36.0015 dated March 18, 2010. The secured transaction was registered at the Land Use Right Registration Office of B Town on March 19, 2010.
After borrowing the money, Mr. C and Mrs. T failed to fulfill their payment obligations to Bank V. Therefore, Bank V requested Mr. C and Mrs. T to pay the entire debt of 1,449,537,500 VND (including 900,000,000 VND principal and 549,537,500 VND interest calculated tentatively until July 17, 2013, plus interest arising until the debt is paid).
While the Mortgage Contract was in effect, the People’s Committee of B Town issued Decision No. 3063/QD-UBND dated August 31, 2011, revoking Land Use Right Certificate No. Đ544493. However, Bank V determined that although Land Use Right Certificate No. Đ544493 no longer existed, the land use right for the area of 2,400m2 that Mr. C and Mrs. T had previously received through transfer (after adjustment according to reality) had been completed and therefore still possessed value to secure the loan for Mr. C and Mrs. T. Bank V would request the Civil Judgment Enforcement Bureau of B City to prioritize the liquidation and payment to Bank V.
The defendant, Mr. Nguyen Van C, presented: He confirmed that the information regarding the Credit Contract and Mortgage Contract as presented by Bank V was correct. After borrowing, he paid Bank V a portion of the interest amounting to 122,775,000 VND but had not yet paid the principal, and he agreed with Bank V’s lawsuit request.
He and Mrs. T had filed an administrative lawsuit against Decision No. 3063/QD-UBND dated August 31, 2011, of the People’s Committee of B Town. However, both the first-instance court and the appellate court did not accept their request. Therefore, he requested the Court to resolve the case according to the law because the security asset no longer exists.
In the First-instance Commercial Judgment No. 04/2013/KDTM-ST dated December 10, 2013, the People’s Court of Ba Ria – Vung Tau province decided:
Compel Mr. Nguyen Van C and Mrs. Vu Thi T to pay Joint Stock Commercial Bank V – B Branch the amount of 1,449,537,500 VND, including 900,000,000 VND principal and 549,537,500 VND interest.
Declare Mortgage Contract No. 10.36.0015 dated March 18, 2010, entered into between Joint Stock Commercial Bank V – B Branch and Mr. Nguyen Van C and Mrs. Vu Thi T regarding the mortgage of a land area of 3,989.7m2 belonging to plot No. 12, map sheet No. 05, H Commune, B Town, according to Land Use Right Certificate No. Đ544493 issued by the People’s Committee of B Town (now the People’s Committee of B City) on July 14, 2004, under the names of Mr. Nguyen Van C and Mrs. Vu Thi T, as void. Therefore, it has no value in securing the debt payment for Credit Contract No. 10.36.0015 dated March 22, 2010.
On December 23, 2013, Joint Stock Commercial Bank V – B Branch filed an appeal.
In the Appellate Commercial Judgment No. 48/2014/KDTM-PT dated August 15, 2014, the Court of Appeal of the Supreme People’s Court in Ho Chi Minh City decided:
Reject the appeal request of Joint Stock Commercial Bank V – B Branch; uphold the First-instance Commercial Judgment No. 04/2013/KDTM-ST dated December 10, 2013, of the People’s Court of Ba Ria-Vung Tau province.
Accept the lawsuit request of Joint Stock Commercial Bank V – B Branch regarding the credit contract dispute against Mr. Nguyen Van C and Mrs. Vu Thi T.
– Compel Mr. Nguyen Van C and Mrs. Vu Thi T to pay Joint Stock Commercial Bank V – B Branch the amount of 1,449,573,500 VND, of which the principal is 900,000,000 VND and the interest is 549,573,500 VND.
– Declare mortgage contract No. 10.36.0015 dated March 18, 2010, entered into between Joint Stock Commercial Bank V – B Branch and Mr. Nguyen Van C and Mrs. Vu Thi T regarding the mortgage of an area of 3,989.7m2 belonging to plot No. 12, map sheet No. 5, H Commune, B Town according to Land Use Right Certificate No. Đ544493 issued by the People’s Committee of B Town (now B City) on July 14, 2004, under the names of Mr. Nguyen Van C and Mrs. Vu Thi T, as void. It has no value in securing the debt payment for credit contract No. 10.36.0015 dated March 22, 2010.
Other decisions of the first-instance judgment not appealed or protested against have taken legal effect as of the expiry date of the appeal or protest period.
After the appellate trial, Bank V filed a petition for cassation review of the aforementioned Appellate Judgment.
On August 15, 2014, the Chief Justice of the Supreme People’s Court protested the Appellate Commercial Judgment No. 48/2014/KDTM-PT of the Court of Appeal of the Supreme People’s Court in Ho Chi Minh City regarding the part declaring Mortgage Contract No. 10.36.0015 dated March 18, 2010, as void; requested the Council of Justices of the Supreme People’s Court to conduct a cassation trial to annul part of the aforementioned Appellate Commercial Judgment and part of the First-instance Commercial Judgment No. 04/2013/KDTM-ST dated December 10, 2013, of the People’s Court of Ba Ria – Vung Tau province regarding the part declaring Mortgage Contract No. 10.36.0015 dated March 18, 2010, as void; and transfer the case file to the People’s Court of Ba Ria – Vung Tau province for a first-instance retrial in accordance with the law.
At the cassation hearing, the representative of the Supreme People’s Procuracy requested the Council of Justices of the Supreme People’s Court to accept the Protest of the Chief Justice of the Supreme People’s Court.
COURT’S ASSESSMENT:
[1] Bank V and Mr. Nguyen Van C both confirmed that Bank V and Mr. Nguyen Van C and Mrs. Vu Thi T entered into Credit Contract No. 10.36.0015 dated March 22, 2010, and Mortgage Contract No. 10.36.0015 dated March 18, 2010. The mortgaged asset is the land area of 3,989.7m2 belonging to plot No. 12, map sheet No. 05, H Commune, B Town, according to Land Use Right Certificate No. Đ544493 issued by the People’s Committee of B Town on July 14, 2004, under the names of Mr. Nguyen Van C and Mrs. Vu Thi T. The asset was registered for secured transaction at the Land Use Right Registration Office of B Town on March 19, 2010. According to Article 343 of the Civil Code 2005; point c, clause 1, Article 10 and point a, clause 1, Article 12 of Decree No. 163/2006/ND-CP dated December 29, 2006, of the Government on secured transactions, the mortgage of the aforementioned land use right was in accordance with the law.
[2] On August 31, 2011, the People’s Committee of B Town issued Decision No. 3063/QD-UBND on the revocation and cancellation of Land Use Right Certificate No. Đ544493 issued by the People’s Committee of B Town on July 14, 2004, under the names of Mr. Nguyen Van C and Mrs. Vu Thi T. The revocation and cancellation of the aforementioned Land Use Right Certificate were due to errors in land area and the order and procedures for issuing the Land Use Right Certificate to the couple Mr. C and Mrs. T. However, the revocation and cancellation of the Land Use Right Certificate did not terminate the legal land use rights for the portion of land that Mr. C and Mrs. T had received through transfer, as the transfer of land use rights between the couple Mrs. Tran Thi Ngoc H and Mr. Tran Huynh L and the couple Mr. C and Mrs. T had been completed, and the parties had no dispute regarding this Transfer Contract.
[3] Furthermore, before the Land Use Right Certificate of Mr. C and Mrs. T was revoked, Mr. C and Mrs. T had mortgaged this land use right to the Bank multiple times to borrow money, the most recent being March 19, 2010. The land use right mortgage contract between Mr. C and Mrs. T and the Bank complied with legal regulations, so this Contract is legally effective. The first-instance court and the appellate court based on Article 411 of the Civil Code 2005 to claim that Mortgage Contract No. 10.36.0015 dated March 18, 2010, was void because the object of this mortgage contract no longer existed is incorrect.
[4] In Official Dispatch No. 887/CNVPĐK-ĐKCG dated March 28, 2017, the B City Land Registration Office Branch identified: After the People’s Committee of B Town issued Decision No. 3063/QD-UBND on the revocation and cancellation of Land Use Right Certificate No. Đ544493 and the Appellate Administrative Judgment No. 01/2013/HC-PT dated January 04, 2013, of the People’s Court of Ba Ria – Vung Tau province took legal effect, the Civil Judgment Enforcement Bureau of B City issued Enforcement Decisions according to legally effective civil judgments that Mrs. Tran Thi Ngoc H was obligated to execute. Accordingly, an auction was organized for the land area of 2,741.1m2 belonging to plot 386, map sheet No. 05, H Commune. Mr. Bui Van C1 was the winner of the auction for the 2,747.1m2 land use right. On March 14, 2016, the People’s Committee of B City issued Land Use Right Certificate No. CA959055 for the aforementioned auctioned area to Mr. Bui Van C1.
[5] Therefore, to ensure the rights and obligations of the litigants, when re-settling the case, the first-instance court needs to base on clause 4, Article 68 of the Code of Civil Procedure to bring the Civil Judgment Enforcement Bureau of B City, Mrs. Tran Thi Ngoc H, Mr. Bui Van C1, and the People’s Committee of B City into the proceedings as persons with related rights and obligations to resolve the case comprehensively and thoroughly.
For the above reasons;
DECISION:
Pursuant to point a, clause 2, Article 137, clause 3, Article 343, and Article 345 of the Code of Civil Procedure 2015;
1. Accept Cassation Protest Decision No. 17/2017/KN-KDTM dated August 04, 2017, of the Chief Justice of the Supreme People’s Court.
2. Annul part of the Appellate Commercial Judgment No. 48/2014/KDTM-PT dated August 15, 2014, of the Court of Appeal of the Supreme People’s Court in Ho Chi Minh City and annul part of the First-instance Commercial Judgment No. 04/2013/KDTM-ST dated December 10, 2013, of the People’s Court of Ba Ria-Vung Tau province regarding the “Credit contract dispute” case between the plaintiff, Joint Stock Commercial Bank V, and the defendants, Mr. Nguyen Van C and Mrs. Vu Thi T, specifically the part declaring Mortgage Contract No. 10.36.0015 dated March 18, 2010, as void.
3. Transfer the case file to the People’s Court of Ba Ria – Vung Tau province for retrial according to first-instance procedures, in accordance with the law.
PRECEDENT CONTENT
“[2] On August 31, 2011, the People’s Committee of B Town issued Decision No. 3063/QD-UBND on the revocation and cancellation of Land Use Right Certificate No. Đ544493 issued by the People’s Committee of B Town on July 14, 2004, under the names of Mr. Nguyen Van C and Mrs. Vu Thi T. The revocation and cancellation of the aforementioned Land Use Right Certificate were due to errors in land area and the order and procedures for issuing the Land Use Right Certificate to the couple Mr. C and Mrs. T. However, the revocation and cancellation of the Land Use Right Certificate did not terminate the legal land use rights for the portion of land that Mr. C and Mrs. T had received through transfer, as the transfer of land use rights between the couple Mrs. Tran Thi Ngoc H and Mr. Tran Huynh L and the couple Mr. C and Mrs. T had been completed, and the parties had no dispute regarding this Transfer Contract.
[3] Furthermore, before the Land Use Right Certificate of Mr. C and Mrs. T was revoked, Mr. C and Mrs. T had mortgaged this land use right to the Bank multiple times to borrow money, the most recent being March 19, 2010. The land use right mortgage contract between Mr. C and Mrs. T and the Bank complied with legal regulations, so this Contract is legally effective. The first-instance court and the appellate court based on Article 411 of the Civil Code 2005 to claim that Mortgage Contract No. 10.36.0015 dated March 18, 2010, was void because the object of this mortgage contract no longer existed is incorrect.”
