G.R. No. 26337 - Ledesma vs. Municipality of Iloilo

Plaintiff Celso Ledesma initiated a civil action in the Court of First Instance of the Province of Iloilo.
The purpose of the action was to recover from the defendant—the Municipality of Iloilo—the sum of ₱15,780 as the value of two lots (Nos. 537 and 703) allegedly illegally appropriated by the municipality, plus an additional ₱5,000 for damages and costs.
The defendant Municipality of Iloilo and the other appellants contended that the plaintiff was not, and never had been, the owner of the disputed lots.

Prior to March 9, 1915, Concepcion Lopez owned lots 228-A, 228-B, 537, and 703 as shown in the pertinent map.
On March 9, 1915, all these lots were consolidated into lot No. 228.

On March 9, 1915, Concepcion Lopez sold a part of lot No. 228—comprising what would later be designated as lots 537 and 703—to the City of Iloilo for the sum of ₱25,000, with a promise to pay within ten years.
This transaction was executed for the purpose of widening adjoining streets.

On November 10, 1915, a certificate of title (No. 464) was issued in favor of Concepcion Lopez, which erroneously included lots 537 and 703.
This inclusion was later recognized as a clerical or administrative error.

On April 27, 1918, Concepcion Lopez sold lot No. 228—including the erroneously included lots 537 and 703—to Maximo M. Kalaw and his wife (as evidenced by Transfer Certificate No. 617 and exhibits).
On August 11, 1919, Concepcion Lopez, acting on behalf of Maximo M. Kalaw, sold lot No. 228 (including lots 537 and 703) to Julio Ledesma; this sale was later ratified on August 15, 1919.
A Transfer Certificate of Title (No. 908) was subsequently issued in favor of Julio Ledesma, where the inclusion of lots 537 and 703 was admitted to be a mistake by Julio Ledesma himself.

After subdividing lot No. 228 into lots 228-A and 228-B, Julio Ledesma retained lots that still included numbers 537 and 703 as per the transfer records.
On August 2, 1922, Julio Ledesma sold lots 228-A, 537, and 703 to Celso Ledesma, the current appellant, with Julio Ledesma again admitting that the inclusion of lots 537 and 703 was an error.

As early as April 1915, the lots in question had been turned over by Concepcion Lopez to the City of Iloilo under a contract for street widening, thereby designating them as part of the public highway.
The lots were segregated from the remainder of lot No. 228 as they became incorporated into the city’s street system—a fact well known to all parties and recorded in subsequent transactions.
The error in including these lots in the various certificates of title did not change their fundamental status as public land designated for highway purposes under section 39 of Act No. 496.

Does the erroneous inclusion of lots 537 and 703 in Concepcion Lopez’s certificate of title and in subsequent transfers under the Torrens system confer true ownership upon the plaintiff?
Is the mere possession of a certificate of title sufficient to establish ownership when it includes land that is ineligible for registration due to its public use?

Given that the lots had been turned over for public purposes (street widening), is the City of Iloilo justified in claiming that such lands are part of the public highway and not subject to private ownership?
Can the plaintiff sustain his claim for recovery of the lot value and additional damages despite the presence of an error in the Torrens system?

What is the effect of the mistakes admitted in the various certificates and transfer documents on the legal status and ownership of the disputed lots?
How do established legal precedents interpret the erroneous inclusion of lands intended for public use within a title?