Filinvest Credit Corporation v. The Court of Appeals

Summary

This case involved a financing arrangement between Filinvest Credit Corporation and the Sy Bang spouses for the acquisition of a rock crusher. While structured as a lease with option to purchase, the Supreme Court determined it was actually a sale on installments. The spouses complained that the machinery underperformed and sought rescission when they stopped payments. The lower courts favored the spouses, but the Supreme Court reversed, holding that despite the true nature of the transaction being a sale, Filinvest was not liable for machinery defects due to an express warranty waiver clause and the spouses' responsibility for equipment selection and inspection. The decision emphasized the validity of warranty waivers in financing transactions and the application of caveat emptor principles, ultimately protecting the financing institution from liability for product defects when buyers independently choose and inspect the equipment.