Santos B. Areola v. Court of Appeals

Summary

This case involves the wrongful cancellation of an insurance policy by Prudential Guarantee and Assurance, Inc. due to the fraudulent act of its branch manager who received premium payments but failed to remit them to the company. Santos Areola, a lawyer, had fully paid for his personal accident insurance policy but the company cancelled it seven months later for non-payment. When the company discovered its error, it offered reinstatement, but the insured had already filed suit for breach of contract. The Supreme Court held that corporations are liable for the fraudulent acts of their agents acting within the scope of their authority under Article 1910 of the Civil Code. While the subsequent reinstatement showed good faith, it could not absolve the company from liability for damages already caused. However, since no substantial injury was proven, the Court awarded nominal damages of P30,000.00 instead of the substantial damages awarded by the trial court, recognizing that a legal right was violated even without actual loss.