G.R. No. 35504 - Chartered Bank of India, Australia, and China vs. Constantino

On November 26, 1929, the Pananbutan Lumber & Plantation Company sold and delivered a considerable quantity of lumber to the Chartered Bank of India, Australia & China.
The bank subsequently sought to export approximately 250,000 board feet of this lumber on December 11, 1929.

During the export attempt, employees of the lumber company obstructed the bank from proceeding with the exportation of the lumber.
As a result, the bank initiated an action in the Court of First Instance of Zamboanga, seeking a writ of injunction to prevent the employees from impeding the exportation, which was granted as a preliminary injunction upon the filing of a bond.

In their answer to the bank’s complaint, 112 individual employees (defendants) requested the dissolution of the injunction, dismissal of the bank’s complaint with costs, and recovery of unpaid salaries and wages amounting to P30,495.91 covering October, November, and part of December 1929.
In parallel, these employees also filed a separate action against their employer, the Pananbutan Lumber & Plantation Company, to recover unpaid wages aggregating around thirty thousand pesos, which eventually led to a judgment against the company by default.

Article 1600 of the Civil Code – asserting that a person who has done work on personal property is entitled to retain it as a pledge until payment is made.
Article 1922, paragraph 1, of the Civil Code – pertaining to the priority of credits for construction, repair, preservation, or purchase price of personal property in the debtor’s possession.

It was conceded that although the employees had performed work on the lumber, the nature of their work as salaried services did not fall within the ambit of article 1600, since this right applies only to artisans engaged in specific contractual work on personal property.

The jurisprudence noted that the distinction between the right of a servant to retain his master’s property and the right to retain only that property on which he has directly labored is largely theoretical and does not alter the fundamental principle of the civil law.
The case also highlighted that the bank, as a bona fide purchaser, acquired the lumber free from any liens or encumbrances despite the pending wage claims of the employees.
The judge emphasized that any grievance regarding the priority of the employees’ wage claims should be resolved through proper judicial proceedings rather than through interference with commercial transactions.

Whether salaried employees, as opposed to artisans paid for specific work, fall within the protection of article 1600 of the Civil Code which allows one to retain possession of personal property until payment is received.

Whether the provision of article 1922, paragraph 1, which prioritizes credits related to the construction, repair, or purchase of personal property, can extend to cover the wage claims of the employees.
Whether the employees’ wage claims have any statutory basis to affect the bank’s right to export the lumber.

Whether the issuance of the preliminary injunction in favor of the bank was proper given the counterclaims of the employees.
Whether the self-help measures adopted by the employees (i.e., their interference with the commercial transaction) were legally justifiable.