G.R. No. 28609, October 31, 1928
FLORENCIO GONZALEZ DIEZ, plaintiff-appellee, vs. ROMARICO AGCAOILI, ET AL., defendants. ANGEL A. ANSALDO, appellant.

DOCTRINE:
The registration of a real estate mortgage under the Torrens system (Act No. 496) serves as constructive notice to the whole world of the existence of the encumbrance. However, such registration does not constitute constructive notice of the *fulfillment* or *payment* of the obligation secured by the mortgage. A subsequent purchaser of the mortgaged property is bound by the mortgage lien for the full unpaid amount, regardless of any presumption he might have from the lapse of payment deadlines stated in the registered document.

FACTS

1. Romarico Agcaoili executed a first mortgage on his urban property in favor of Florencio Gonzalez Diez to secure a loan of P16,000. The mortgage deed was registered under Act No. 496 (Land Registration Act).
2. Agcaoili defaulted, paying only P500. Diez filed an action to collect the balance, foreclose the mortgage, and collect interest and penalty.
3. The property was subsequently sold at public auction to Teodoro R. Yangco, who then sold his interest to Angel A. Ansaldo. Both were impleaded as defendants.
4. The trial court rendered a judgment ordering both Agcaoili and Ansaldo to pay the debt (P15,500 balance, interest, and penalty), and in case of non-payment within three months, to sell the mortgaged property.
5. Ansaldo appealed, arguing that: (a) the judgment incorrectly held him personally liable; (b) he only acquired the property subject to the mortgage, not the personal obligation; and (c) the registration of the mortgage terms (including payment deadlines) should have constructively notified him that by a certain date, some installments would have been paid, thus reducing the mortgage lien.

ISSUE

1. Whether the trial court erred in holding appellant Ansaldo personally liable for the mortgage debt.
2. Whether the registration of the mortgage deed, including its terms on payment periods, constitutes constructive notice that the debt has been partially paid upon the lapse of those periods, thereby reducing the lien amount for a subsequent purchaser.

RULING

1. YES, the trial court erred in holding Ansaldo personally liable. The action was an *action in rem* for the foreclosure of the mortgage. Ansaldo, as a mere successor-in-interest to the mortgagor (having acquired the property at a sheriff’s sale), is liable only to the extent of the mortgaged property. He did not assume the personal obligation of the original debtor. The appellee admitted this error. The Supreme Court MODIFIED the judgment by absolving Ansaldo from personal liability. Only the original debtor, Agcaoili, remains personally liable for the money judgment.

2. NO, the registration does not constitute constructive notice of payment. The Court rejected Ansaldo’s argument that the registration of the payment schedule meant that, upon the lapse of the deadlines, the world was constructively notified that those payments *should have been made*, and thus the lien was reduced. The registration gives notice of the existence of the mortgage and the terms of the obligation, but not of its fulfillment. Whether the obligation is fulfilled depends on the debtor’s will and capacity, not on the creditor’s diligence. The very existence of the mortgage indicates that non-payment was a foreseen contingency. Therefore, a subsequent purchaser is bound by the mortgage for the full unpaid amount as determined by the actual facts, not by a presumption arising from lapsed payment dates.

DISPOSITIVE PORTION:
The judgment appealed from is MODIFIED. Appellant Angel A. Ansaldo is absolved from all personal liability for the sums of money claimed. His liability is limited to the mortgaged property. The judgment is AFFIRMED in all other respects. No costs.