In a blender chop the tomatoes with juice and garlic until chunky. In a medium sized pot, heat oil on medium high heat. Put onion and mushroom in and sauté for about 5 minutes.
Place in pot with onion and mushrooms, the blended tomatoes, crushed tomatoes, tomato paste, chopped green peppers, oregano and basil. Bring to boil, then lower to medium low, cover and stir periodically. Cook and reduce about 1 to 2 hours or to your liking.