G.R. No. 209544 - Spouses Miles vs. Lao

Petitioners Spouses Ellis R. Miles and Carolina R. Ronquillo-Miles (Petitioners) filed a complaint against Spouses Ricardo and Cresencia Ocampo (Spouses Ocampo), Spouses Rodora and Reynaldo Jimenez, respondent Bonnie Bautista Lao, Atty. Mila Flores (Register of Deeds, Makati City), and Atty. Engracio M. Escasinas, Jr. (Clerk of Court and Ex-Officio Sheriff, RTC Makati).
Petitioners claimed ownership in fee simple over a parcel of land in Makati City covered by Transfer Certificate of Title (TCT) No. 120427 since March 28, 1983.
Prior to their departure for the United States, petitioners entrusted the duplicate TCT to their niece, Rodora Jimenez, to offer the property to interested buyers but did not execute any written Special Power of Attorney (SPA) to sell.

Petitioners alleged a conspiracy by Rodora and Spouses Ocampo to falsify a Deed of Donation dated April 21, 1998, implying petitioners donated the property to Spouses Ocampo.
As a consequence, TCT No. 120427 was cancelled and a new TCT No. 212314 was issued in Spouses Ocampo’s name.
Later, Spouses Ocampo, through alleged forgery and bad faith, executed a falsified Real Estate Mortgage in favor of respondent Lao securing a loan of Php2,500,000, which was eventually foreclosed due to non-payment.

Defendants denied collusion. Rodora asserted she was authorized by an SPA dated July 10, 1997, communicated via overseas call by petitioners to sell the property.
Spouses Ocampo claimed they purchased the property in good faith and for value, presenting a SPA and Deed of Sale executed by Rodora.
Respondent Lao maintained she entered into the mortgage contract in good faith, relying on the then-registered title in Spouses Ocampo’s name, and that she conducted an ocular inspection confirming no occupants on the property.

The RTC, in a Decision dated January 14, 2009, ruled in favor of petitioners, declaring the following:

TCT No. 212314 in Spouses Ocampo’s name is null and void; TCT No. 120427 in petitioners’ name is restored.
The Deed of Donation, SPA, Deed of Sale, and Real Estate Mortgage executed in favor of respondent Lao were nullified.
The Register of Deeds was ordered to cancel relevant entries and respondent Lao was ordered to surrender the duplicate TCT.
Defendants were jointly and severally ordered to pay airfare, moral and exemplary damages, and attorney’s fees to petitioners.

Respondent Lao appealed to the Court of Appeals (CA).
A writ of execution implementing parts of the RTC Decision was issued on July 8, 2010.

Whether the Court of Appeals erred in ruling that respondent Bonnie Bautista Lao was a mortgagee in good faith.