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CASE 20: SARMIENTO v. SPS LUIS ACTION: Breach of Contract MTCC: damage RTC: no damage CA: no damage SC: fo!nd for "et#t#oner $ %AMA&ES a'arded FACTS 1. Sarm#ento 'a re(!e ted )* a certa#n Lao to f#nd ome)od* to re t a "a#r of d#amond r#ng #nto + go,d r#ng - the "a#r 'a o'ned )* Lao +. Sarm#ento #n t!rn a .ed Pa*ag to end the + d#amond r#ng to %#ngd#ng/ 0e'e,r* Sho"$ Sarm#ento "rov#ded 1+ gram of go,d 1. %#ngd#ng/ Managed )* Re "ondent Ro e Ca)r#do Re "ondent S!n 'a a d# mo!nter Santo a go,d m#th 2. Pa*ag de,#vered to %#ngd#ng/ ONE of the d#amond earr#ng 'h#ch 'a 'orth . 11 and a,mo t "erfect #n c!t and c,ar#t* 3. S!n d# mo!nted the d#amond from or#g#na, ett#ng )!t 'a !n !cce f!,$ o he a .ed go,d m#th Santo to do #t$ Santo 4 attem"ted to do #t '#th a "a#r of ",#er )!t ended !" )rea.#ng the gem #n the "roce 5h#,e t#,, there Pa*ag demanded 134666 from Santo $ )!t #nce he had no mone*4 t!rned to S!n4 th#n.#ng the ,atter 'a the o'ner of %#ngd#ng/ Santo tho!ght the gem 'a Sa""h#re$ den#ed )e#ng an em",o*ee of %#ngd#ng/ 7. Pet#t#oner Sarm#ento re(!#red re "ondent to re",ace #t '#th the ame th#ng 8. Re "ondent ref! ed o "et#t#oner Sarm#ento 'a forced to )!* a re",acement 'orth 164666 9. Re "ondent Manager Ca)r#do den#ed hav#ng entered #nto an* tran act#on '#th Pa*ag 'hom he c,a#med he on,* a' after the c,a#m for com"en at#on :. %# mo!nter S!n adm#tted to .no'#ng Pa*ag 'ho came to %#ngd#ng/ )!t den#ed acce"t#ng offer

+ 16.B!t on a""ea,4 re "ondent conceded the e;# tence of the contract << MTCC: fo!nd for Pet#t#oner$ a'arded damage RTC: Rever ed$ no damage from )reach of contract CA: Rever ed$ no )reach of contract Arg!ment ! ta#ned: the agreement 'a for craft#ng 'h#ch d#d not #nc,!de d# mo!nt#ng << ISSUE 5hether re "ondent are ,#a),e for )reach of contract HOLDING: YES 1. A "erfected contract to re et the "a#r of d#amond earr#ng aro e )et'een the "et#t#oner4 thro!gh Pa*ag4 and %#ngd#ng/ 0e'e,r* Sho"4 thro!gh Mar#,o! Th! 4 'h#,e o ten #),* adm#tt#ng the e;# tence of the a#d agreement =on a""ea,>4 "r#vate re "ondent 4 nonethe,e den#ed a !m#ng an* o),#gat#on to d# mo!nt the d#amond from the#r or#g#na, ett#ng $ th# to "rec,!de damage a,, the ame Mar#,o! e;"re ed no re ervat#on regard#ng the dismounting of the d#amond 'h#ch4 after a,,4 'a an #ntegra, "art of "et#t#oner/ ?o) order She ho!,d have #n tr!cted Pa*ag to have them d# mo!nted f#r t #f Mar#,o! had act!a,,* #ntended to "are the ?e'e,r* ho" of the ta . )!t he d#d not$ In tead4 "et#t#oner 'a charged P266 After the ne' ett#ng 'ere com",eted #n 1 da* 4 he ca,,ed !" the "et#t#oner to )r#ng the d#amond earr#ng to )e re et +. O),#gat#on ar# #ng from contract have the force of ,a' )et'een the contract#ng "art#e .++ Coro,,ar#,*4 tho e 'ho #n the "erformance of the#r o),#gat#on are g!#,t* of fra!d4 negligence or de,a* and tho e 'ho #n an* manner contravene the tenor thereof4 are ,#a),e for damage .+1 The fa!,t or neg,#gence of the o),#gor con # t #n the omission of that dilig n! 'h#ch # re(!#red )* the nat!re of the o),#gat#on and corresponds with the circumstances of the persons, of the time and of the place.+2 )e*ond do!)t that Santo acted neg,#gent,* #n d# mo!nt#ng the d#amond from #t or#g#na, ett#ng4 #.e.4 he ! ed ",#er #n tead of a m#n#at!re '#re a' 'h#ch # norma,,* ! ed for d# mo!nt#ng "rec#o! gem

1 It ho!,d )e "o#nted o!t that Mar#,o! e;am#ned the d#amond )efore d# mo!nt#ng #t from the or#g#na, ett#ng and fo!nd the ame to )e #n order The ?e'e,r* ho" fail d to " #fo#m its o$ligation %ith th o#dina#& dilig n! # '(i# d $& th !i#!(mstan! s. It !) e(!ent )rea.age #n the hand of Santo co!,d on,* have )een ca! ed )* h# neg,#gence #n ! #ng the 'rong e(!#"ment. Res ipsa loquitur 1. The fact of the ca e a, o ?! t#f* the a'ard of mora, damage A a genera, r!,e4 moral damages are not recoverable in actions for damages predicated on a breach of contract for #t # not one of the #tem en!merated !nder Art#c,e ++1: of the C#v#, Code Mora, damage may be awarded #n a )reach of contract onl& %h n th # is "#oof that defendant #. acted in bad faith4 ##. or 'a guilty of gross negligence amounting to bad faith4 =a #n the ca e> ###. or #n wanton disregard of his contractual obligation. Santo 'a a go,d m#th for more than 26 *ear . 11 &#ven h# ,ong e;"er#ence #n the trade4 he ho!,d have .no'n that ! #ng a "a#r of ",#er #n tead of a m#n#at!re '#re a' #n d# mo!nt#ng a "rec#o! tone ,#.e a d#amond 'o!,d have enta#,ed an !nnece ar* r# . of )rea.age