Case Digest No.

32
Case: Valenzuela vs. Court of Appeals and Arturo S. Miranda
G.R. No. L-56169 | June 26, 1992
Ponente: J. Paras

FACTS:

Carlos Telosa, a fisherman and farmer with limited formal education, obtained a loan from the Rural
Bank of Lucena. In exchange for this loan, he mortgaged his property spanning fifty thousand square
meters, located in Bo.Amugeria, Malunay, Quezon. Some months later, the Rural Bank of Lucena
encountered financial difficulties and was subsequently ordered for liquidation by the Monetary Board.
During the inventory of assets, Carlos Telosa's mortgaged property was among them. The bank's records
indicated that Carlos Telosa owed them a principal amount of P5000.00, though he was fully aware that
the correct amount was only P300.00. In response to a demand letter, Carlos Telosa submitted an
affidavit, protesting the incorrect amount. The Central Bank, asserting that the payments made did not
cover the entire balance of P9,032.22, proceeded to foreclose on the mortgaged property and auction it
publicly. In an effort to halt the auction, the widow and children of Carlos Telosa filed a complaint before
the Court of First Instance of Quezon, contending that the mortgage executed by Carlos Telosa should
be declared null and void.

ISSUE:

1. Whether the extra judicial foreclosure of the property should continue?

HELD:

1. The court has rendered a verdict in favor of Carlos Telosa's heirs, affirming their right to the
appeals they submitted. This decision is grounded in the fact that the contract entered into by Carlos
Telosa was highly irregular in nature. This irregularity was substantiated by a receipt, presented as
evidence, which clearly indicated that the received amount was only P300.00. Additionally, Ponciano
Mendoza's testimony, who was a witness to the transaction, confirmed that Carlos Telosa had been
compelled to sign blank documents by the Rural Bank of Lucena. This compelling evidence underscores
the exploitation of Carlos Telosa's limited educational background by the said bank..