G.R. No. 35504 ; March 31, 1932
CHARTERED BANK OF INDIA, AUSTRALIA AND CHINA, plaintiff-appellee, vs. DIONISIO CONSTANTINO AND 111 OTHERS, defendants-appellants.

FACTS

The Pananbutan Lumber & Plantation Company sold lumber to the Chartered Bank. When the bank attempted to export the lumber, the company’s employees (the defendants-appellants) prevented it, claiming unpaid salaries. The bank obtained an injunction from the Court of First Instance of Zamboanga. The employees counterclaimed for unpaid wages. The lower court upheld the injunction and absolved the bank from the counterclaim. The employees appealed, invoking a retention right under Article 1600 of the Civil Code and a preferred credit under Article 1922(1).

ISSUE

Whether the defendant-employees have a right to retain the lumber as security for their unpaid wages under Article 1600 of the Civil Code, or a preferred credit over it under Article 1922(1).

RULING

No. The Supreme Court affirmed the lower court’s judgment.
1. Article 1600 (on retention right or pledge) does not apply to salaried employees. The article covers artisans or workers paid for specific work on personal property, where the price is for the finished product. Salaried employees are paid for services rendered, irrespective of the result of their labor. The defendants were salaried, not artisans working on a specific contract.
2. Article 1922(1) (on preferred credits) is also inapplicable. The credits for unpaid wages do not fall under the specific credits preferred by that article (e.g., construction, repair, preservation, or purchase price). Furthermore, the bank was a bona fide purchaser of the lumber and took the property free from any lien.
The employees’ proper remedy was legal action, not self-help. The injunction was legally issued. Any payment by the bank for the wages would be an act of grace, not a legal obligation.

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