Explanation:

The sentence is in the past tense, and the verb that fits the blank space is "saw." Here's why:

- Simple past tense: The sentence is in the simple past tense, which means that the action happened in the past and is complete. In this tense, regular verbs take the "-ed" form (e.g., walked, talked), but irregular verbs have their own unique past tense forms (e.g., saw, went).

- Subject-verb agreement: The subject of the sentence is "we," which is a plural pronoun. In English, plural subjects take plural verbs (e.g., we saw, they saw).

- Context: The sentence provides some context about when the action happened ("in town a few days ago"). This reinforces the idea that the action is in the past and has already happened.

- Alternative verb choices: There are some other verbs that could fit in the blank space, such as "spotted" or "encountered." However, these verbs don't fit as well as "saw" because they imply a more specific type of seeing (e.g., noticing something unusual or unexpected). "Saw" is a more general verb that simply means to see with one's eyes.

In short, the correct answer is "saw" because it fits the context, the subject-verb agreement, and the requirements of the simple past tense.