G.R. No. L-15026, November 17, 1920
JOHN G. KNUST, plaintiff-appellant, vs. J.P. MORSE, doing business under the name and style of “French-American Import Company,” defendant-appellant.

FACTS:
John G. Knust filed an action to recover damages amounting to P15,000 for alleged breach of a contract of services, claiming he was wrongfully dismissed without just cause by J.P. Morse of the French-American Import Company. The contract, which was to expire on March 1, 1919, fixed Knust’s salary at P500 per month plus a share in profits estimated at a minimum of P150 per month. Knust was dismissed on August 8, 1917. The defendant, Morse, contended that the dismissal was justified and filed a counterclaim for a debt of P8,229.14 allegedly owed by Knust to the company. The trial court found that Knust was wrongfully discharged and awarded him P1,169.84 with interest, while absolving him from the counterclaim. Both parties appealed the decision.

ISSUE:
1. Whether the dismissal of Knust was wrongful.
2. What is the proper measure of damages for wrongful dismissal?
3. Whether the defendant’s counterclaim for Knust’s debt should be deducted from the damages awarded.

RULING:
1. On the Wrongful Dismissal: The Supreme Court affirmed the trial court’s finding that Knust was wrongfully discharged. The Court held that in employments involving a high order of services and discretion, employees cannot be subject to the whim and caprice of employers and are entitled to protection against dismissals for minor omissions without serious consequence.

3. On the Counterclaim: The Court upheld the defendant’s counterclaim based on paragraph 12 of the contract, which made Knust’s debt absolute upon the contract’s termination. The debt of P8,229.14 was ordered deducted from the damages awarded to Knust.

DISPOSITIVE PORTION:
The judgment was reversed. Knust was awarded damages of P12,350, from which his debt of P8,229.14 was deducted, resulting in a net award of P4,120.86 in favor of Knust, without interest and without costs.