G.R. No. L-32116. April 21, 1981.
RURAL BANK OF CALOOCAN, INC. and JOSE O. DESIDERIO, JR., petitioners, vs. THE COURT OF APPEALS and MAXIMA CASTRO, respondents.

FACTS

Respondent Maxima Castro applied for and was granted a P3,000.00 industrial loan from petitioner Rural Bank of Caloocan. Accompanied by Severino Valencia, who facilitated the transaction, she signed a corresponding promissory note. On the same date, the Valencia spouses obtained their own separate P3,000.00 loan from the bank. Castro was made to sign as a co-maker on the Valencias’ promissory note, and a single real estate mortgage on her property was executed to secure the aggregate obligation of P6,000.00 for both loans. Castro alleged she only discovered the full P6,000.00 encumbrance when notified of the foreclosure.
After defaults, the bank initiated extrajudicial foreclosure. The sheriff set the auction for April 10, 1961. That date was declared a special holiday, so the sheriff conducted the sale on the next business day, April 11, 1961. Castro filed a suit seeking annulment of her co-maker signature and the mortgage insofar as it exceeded P3,000.00, and to nullify the foreclosure sale, depositing P3,383.00 with the court to cover her personal loan.

ISSUE

The core issues were: (1) whether Castro’s signature as co-maker on the Valencias’ note and the mortgage securing P6,000.00 was vitiated by fraud or mistake; and (2) whether the foreclosure sale held on April 11, 1961, was valid despite the original date (April 10) being a holiday.

RULING

The Supreme Court affirmed the Court of Appeals’ decision, ruling in favor of Castro. On the first issue, the Court found the contract voidable. Applying Article 1332 of the Civil Code, it held that Castro, who was unable to read the English-language documents, was not fully informed that she was signing as a co-maker for another’s loan, effectively doubling the mortgage on her property. The bank failed to discharge its duty to explain the terms, making the contract assailable for fraud or mistake.
On the second issue, the foreclosure sale was declared null and void. The Court distinguished between a period granted by law to perform an act and a specific date fixed by a public officer. The rule that a holiday moves a deadline to the next business day applies only to the last day of a legal period. Here, April 10 was a specific date set by the sheriff for the sale, not the last day of a statutory period. Since it was a holiday, the sale could not automatically be held the next day without recommencing the publication and posting notices as required by Act No. 3135 . The sale on April 11 violated the mandatory notice requirements and was therefore invalid. The deposit by Castro extinguished her personal P3,000.00 obligation.