Aranilla v. Insular Life - Concealment

69 OG No. 4 637

Facts:

>  In 1959, Jose Aranilla applied for life insurance with Insular.  In his application, these 2 questions appeared:

o    WON he has suffered from any disease of the kidney and urinary tract, to which he answered NO.

o    WON he has been confined in a hospital for consultation and treatment, to which he answered that in 1947, he was confined due to influenza.

>  The truth however, was that a few months prior to his application, he was confined and treated for nephritis, a disease of the kidney and urinary tract, and he was accordingly informed of the cause.

>  When Aranilla died of cirrhosis of the liver, Insular refused to pay the proceeds due to concealment.

Issue:

Whether the contract can be rescinded.

Held:

Yes.

If an answer given by the insured to a specific question asked by the insurer in an application for life insurance turns out to be false, it is a concealment of a material fact which entitles the insurer to rescind, even if the insured died of an ailment which has NO connection with the specific questions falsely answered by him.  This is because materiality is to be determined NOT by the event but ONLY by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the disadvantages of the proposed contract or in making his inquiries.