TRINIDAD FRANCISCO

VS.
GSIS
March 30,1963
G.R. No. L-18287 , G.R. No. L-18155

BACKGROUND
OF
THE CASE
Consolidated
separate
appeals of both parties.

GSIS prayed for the

reversal of judgement of
the lower courts.

Francisco prayed for the

award of damages and
attorneys fees.

FACTS:

October 10, 1956, Trinidad Francisco loaned

400,000.00 php from GSIS.

Francisco mortgaged her 18,232 sqm lot as security

for the loan.

Payable in 10 years, through monthly instalments of

3,902.00 php .

January 6, 1959, GSIS extrajudicially foreclosed the

mortgaged property for non-payment of instalments.

Unpaid instalments totalled 52,000.00 php, equivalent

of 13 months of non-payment.

GSIS purchased the property in the foreclosure sale.

February 20, 1959, Atty. Vicente Francisco sent a letter

to Rodolfo Andal, General Manager of GSIS.

Atty. Francisco proposed that they pay an initial

amount of 30,000.00php, and that GSIS take
administration over the property, and collect the rent
of its tenants until debt is fully paid.

Said property collects 5,000 php monthly rentals.

On the same day, Atty. Francisco received a telegram

from Andal, relaying the boards acceptance of the
proposal.

The telegram was signed, R.P. Andal GM. by

Leovigildo Monasterial, Legal Counsel.

Atty. Francisco immediately paid the 30,000.00, and

GSIS issued a receipt for the payment.

GSIS, however, did not assume administration over the

property,

Nevertheless, the Franciscos faithfully remitted the

monthly agreed upon amount.

Each remittance was accompanied by a letter by atty.

Francisco, and for each remittance GSIS issued a
receipt.

A year after the acceptance of the proposal GSIS,

through Andal, sent 3 letters to atty. Francisco.

All 3, requested for a proposal for the redemption of

the foreclosed property, since the period of
redemption has supposedly lapsed.

Atty. Francisco protested, stating that there was

already an agreement that they were already faithfully
complying with.

GSIS replied that the telegram of acceptance sent on

February 20, 1959 should be disregarded due to the
error of its minor employee in transmitting the
message.

A copy of the board resolution was attached to the

reply.

The board resolution stated a condition for the

approval of the proposal.

The condition was that Trinidad Francisco pay all the

expenses incurred in the foreclosure of the mortgage.

Atty. Francisco then filed an action with the CFI.

ISSUE:

Whether the telegram that is allegedly erroneous is

binding upon GSIS.

RULING:

Yes, it is binding. The telegram sent did not contain

any irregularities that would prompt a reasonably
cautious man to inquire further.

Acceptance of such proposal, or the relaying of such

message is under mr. Andals apparent authority.

Additionally, the signature contained in the telegram

impressed upon atty. Francisco the validity of the reply.

The defendants claim is further weakened by the fact

that they only addressed the mistake after a year of
continuous transaction with Trinidad and Vicente
Francisco.

Acceptance of monthly remittance ratified the

agreement.

DOCTRINE OF APPARENT AUTHORITY:

If a corporation knowingly permits one of its officers,

or any other agent, to do acts within the scope of its
apparent authority, holding him out to the public as
possessing power to do those acts, the corporation will
be ESTOPPED from denying his authority to any person
he dealt with in good faith.