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Palileo v Cosio Date: November 28, 1955 Ponente: Bautista Angelo Facts:

On December 18, 1951, Palileo obtained from Cosio a loan of P12, 000. To secure payment, Cosio required Palileo to sign a document known as conditional sale of residential building, purporting to convey to Cosio, with a right to repurchase (on the part of Palileo), a two-story building of strong materials belonging to Palileo. After execution of the document, Cosio insured the building against fire with Associated Insurance & Surety Co. (Associated) for P15,000. The insurance policy was issued in the name of Cosio. The building was partly destroyed by fire and after proper demand, Cosio was able to collect from the insurance company an indemnity of P13,107. Palileo demanded from Cosio that she be credited with the necessary amount to pay her obligation out of the insurance proceeds, but Cosio refused to do so. TC found that the debt had an unpaid balance of P12,000. It declared the obligation of Palileo to Cosio fully compensated by virtue of the proceeds collected by Cosio and further held that the excess of P1,107 (P13,107 P12,000) be refunded to Palileo. Issue: WON LC was justified in considering obligation of Palileo fully compensated by the insurance amount received by Casio Held: No. Ratio: Where a mortgage, independently of the mortgagor, insures the mortgaged property on his own name and for his own interest, he is entitled to the proceeds in case of loss but in such a case he is not allowed to retain his claim against the mortgagor but is passed by subrogation to the insurer to the extent of the money paid (majority rule). * Procedural: WON LC committed a grave abuse of discretion in not reopening the case to give defendant an opportunity to present her evidence considering that the failure of her original counsel to appear was due to mistake or execusable negligence which ordinary prudence could not have guarded against. No. In denying the motion for reopening the trial court said: After going over the same arguments, this Court is of the opinion, and so holds that the decision of this Court of January 18, 1954 should not be disturbed. Considering the stature, ability and experience of counsel Leon Ma. Guerrero (now DFA Undersecretary), and the fact that he was given almost one month notice before the date set for trial.