Servicewide Specialists v. The Hon. Court of Appeals

Summary

This case involves a dispute over a chattel mortgage on an Isuzu Gemini car purchased by the Trinidad spouses. After fully paying the car through installments to Filinvest Credit Corporation, the assignee Servicewide Specialists demanded additional payment claiming unpaid installments. However, these installments had been converted to insurance premium payments without notice to the buyers. The Supreme Court affirmed the dismissal of the complaint, ruling that while the mortgagee could renew insurance for the mortgagor's account under the chattel mortgage terms, there was no authorization to apply existing car payments to insurance premiums without notice. The Court emphasized that proper notice was required before converting payments, and since the Trinidads had fully paid for the car as evidenced by receipts and released ownership documents, petitioner's claim was unjustified. The decision was modified only to delete the attorney's fees award, finding insufficient bad faith.