G.R. No. 197923 - Serrano Mahilum vs. Spouses Ilano

Petitioner Ruby Ruth S. Serrano Mahilum is the registered owner of a parcel of land under TCT No. 85533. In September 2003, she entrusted the duplicate title to real estate broker Teresa Perez to secure a loan. Perez later admitted the title was lost, prompting petitioner to execute an Affidavit of Loss, annotated on October 7, 2004 (Entry No. 1668-24).
In June 2006, the Registry of Deeds of Las Piñas City informed petitioner that respondents Spouses Edilberto and Lourdes Ilano presented the duplicate title and filed an Affidavit of Non-Loss (Entry No. 1875-27), claiming they had purchased the property.

Respondents showed petitioner a notarized Agreement with right of repurchase dated December 4, 2003 and an undated, unnotarized Deed of Absolute Sale bearing petitioner’s purported signatures, reflecting a sale for ₱250,000 with repurchase within 90 days.
Petitioner denied executing these documents, asserted forgery, and demanded return of the title. Respondents refused, alleging the sale was made by Perez and an accomplice posing as petitioner. Title remained in petitioner’s name as respondents never registered the sale.

On June 20, 2007, petitioner and her husband filed Civil Case No. LP-07-0109 for annulment of the Agreement and Deed of Sale, specific performance, recovery of the duplicate title, moral damages (₱50,000), attorney’s fees (₱20,000), and costs. One of the pre-trial issues was whether respondents were purchasers in good faith.
Respondents filed an Answer with Counterclaim alleging good-faith purchase from an impersonator, and a Demurrer to Evidence for failure to allege bad faith. The RTC denied the demurrer by Orders dated January 5, 2010 and February 24, 2010.

Respondents petitioned for certiorari in CA-G.R. SP No. 113782, arguing the complaint stated no cause of action for annulment of sale due to absence of bad faith allegations. On February 2, 2011, the CA nullified the RTC Orders and dismissed the complaint for lack of cause of action.
The CA denied reconsideration on July 28, 2011. Petitioner then sought review by the Supreme Court.

Whether the failure to allege respondents’ bad faith in the complaint is a fatal defect, given that the Agreement and Deed of Sale were simulated, fictitious, and forgeries.
Whether petitioner was deprived of property without due process when the CA granted the Demurrer to Evidence, despite pre-trial agreement to resolve the issue of respondents’ good faith.
Whether petitioner was prevented from confronting respondents and their witnesses to identify the impostor and prove the documents were null and void.