G.R. No.

L-18287 March 30, 1963

TRINIDAD J. FRANCISCO, plaintiff-appellee, vs. GOVERNMENT SERVICE INSURANCE SYSTEM,

Facts

Trinidad J. Francisco, acquired a loan from GSIS and to secure it, she mortgaged a parcel of land known as Vic-Mari
Compound, located at Baesa, Quezon City.

The GSIS extrajudicially foreclosed the mortgage on the ground that Francisco was not able to pay her monthly
installments. GSIS itself was the buyer in said sale.

Trinidad’s father, Atty. Vicente, sent a letter to the general manager of GSIS Mr. Andal, to propose for an
arrangement for the payment of the unpaid installments for the redemption of the property . 30, 000 would be
initially paid and the balance will be taken from the rentals earned by the land.

On the same date, Atty. Vicente received a telegram:

"VICENTE FRANCISCO

SAMANILLO BLDG. ESCOLTA .

GSIS BOARD APPROVE, YOUR REQUEST RE REDEMPTION OF FORECLOSED PROPERTY OF YOUR DAUGHTER,

ANDAL'

Said telegram did not contain any condition or qualification.

GSIS received the 30,000 payment for the unpaid installments and this was followed by remittances amounting 60,
000 coming from the rentals from the land. GSIS issued official receipts for all those payments.

Later on, GSIS sent a letter to Francisco informing of her indebtedness and that the 1 year period of redemption
has expired. GSIS argued that the telegram sent to Francisco saying that GSIS has approved the request in
redeeming the property is incorrect due to clerical errors made by the board secretary.

ISSUE

Whether or not GSIS is bound by the act of its employees regarding the telegram.

Ruling

Yes

There was nothing in the telegram that hinted at any anomaly, or gave ground to suspect its veracity. Atty Vicente,
therefore, cannot be blamed for relying upon it.

There is no denying that the telegram was within Mr. Andal’s apparent authority. Even assuming that the said
telegram was sent without his consent or knowledge, how would Francisco know about it.

It is familiar doctrine that if a corporation knowingly permits one of its officers, or any other agent,

 to do acts within the scope of an apparent authority,

 and thus holds him out to the public as possessing power to do those acts,

the corporation will, as against any one who has in good faith dealt with the corporation through such agent, be
estopped from denying his authority; and where it is said "if the corporation permits" this means the same as "if
the thing is permitted by the directing power of the corporation."

Hence, even if it were the board secretary who sent the telegram, the corporation could not evade the binding
effect produced by the telegram.