Civil Law, 2016 Bar — Question XI

ESSAY

Ellen entrusted her title over the lot where she is residing to Patrick, her nephew, for safekeeping because of her poor eyesight. Patrick, a gambler, prepared a Special Power of Attorney empowering him to mortgage the lot. Ellen's signature was forged. With the help of Julia who represented herself as Ellen, Mega Bank granted a loan to Patrick secured by a mortgage on Ellen's lot. Due to non-payment, Mega Bank foreclosed the mortgage and was declared the highest bidder. Title was later registered in the name of the bank. When Ellen was notified that she should vacate the premises, she filed a complaint to nullify the loan with mortgage, the auction sale and the title of Mega Bank on the ground that the bank is not a mortgagee in good faith. Decide the case with reasons. (5%)

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