Practice question
A bank seeks protection as an innocent mortgagee after accepting land as collateral. Its file contains only a photocopy of the title and a price estimate, although the responsible officers knew that unrelated occupants asserted adverse rights. The bank argues that professional lending institutions enjoy a lower inquiry standard because transactions must be fast. Which answer is sound?
- Commercial speed lowers the standard automatically
- The bank must prove the heightened diligence applicable to its business; the stated omissions cannot be excused by speed or bare title reliance
- Every mortgage becomes invalid whenever someone occupies land
- A photocopy conclusively resolves all competing rights
- A bank’s public importance immunizes its omissions
Legal references
- G.R. 247868, October 12, 2022, main opinion: https://lawphil.net/judjuris/juri2022/oct2022/gr_247868_2022.html
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