Francisco spent parts of three seasons with the Phillies, hitting .259 with 17 home runs and 75 RBI in 225 games. He hit a three-run, pinch-hit homer to lead the Phillies past St. Louis in Game 3 of the 2011 NL division series. The Cardinals won the series in five games.
Gailey, a 26-year-old native of Philadelphia, split last season between Class-A Dunedin and Double-A New Hampshire. He was 5-6 with a 3.41 ERA in 45 relief appearances. He is 23-15 with a 2.45 ERA in 175 games in his minor league career.
Francisco was acquired by the Phillies from Cleveland in July 2009 in a trade that also brought Cliff Lee to Philadelphia.
In other moves, Toronto signed catcher Jeff Mathis ($1.5 million) and right-handers Jesse Litsch ($975,000) and Dustin McGowan ($600,000) to one-year contracts. All three were eligible for arbitration.
Litsch went 6-3 with a 4.44 ERA in 28 games with the Blue Jays this year. McGowan returned late in the season after undergoing two shoulder operations and finished 0-2 with a 6.43 ERA in five games. He had not appeared in a game since 2008.
Mathis was acquired from the Los Angeles Angels this month for left-hander Brad Mills. A strong defensive catcher, Mathis batted just .174 with three homers and 22 RBIs in 2011.
The Blue Jays also claimed right-hander Jim Hoey off waivers from Minnesota, outrighted catcher Brian Jeroloman and right-hander Drew Carpenter to Triple-A Las Vegas and designated right-hander Jesse Chavez for assignment.