NATURE

Petition for review on certiorari of a decision of the Court of Appeals

FACTS
Tomasa Sarmientos friend, Dra. Virginia Lao, requested her to fi nd
someone toreset a pair of diamond earrings into two gold rings. Sarmiento
sent Tita Payag withthe earrings to Dingdings Jewelry Shop, owned and
managed by spouses Luis andRose Cabrido, which accepted the job order for
P400. Petitioner provided 12 gramsof gold to be used in crafting the pair of
ring settings. After 3 days, Payag deliveredto the jewelry shop one of the
diamond earrings which was earlier appraised as worth .33 carat and
almost perfect in cut and clarity. Respondent Marilou Sun wenton to
dismount the diamond from original settings. Unsuccessful, she asked
theirgoldsmith, Zenon Santos, to do it. He removed the diamond by twisting
the settingwith a pair of pliers, breaking the gem in the process.
Petitioner required therespondents to replace the diamond with the
same size and quality. When theyrefused, the petitioner was forced to
buy a replacement in the amount of P30,000.Rose Cabrido, manager, denied
having any transaction with Payag whom she metonly after the latter
came to seek compensation for the broken piece of jewelry.Marilou,
on the other hand, admitted knowing Payag to avail their services
andr e c a l l e d t h a t w h e n S a n t o s b r o k e t h e j e w e l r y , P a y a g t
urned to her for
reimbursement thinking she was the owner. Santos also recalled
that Payagrequested him to dismount what appeared to him as sapphire
and that the stoneaccidentally broke. He denied being an employee of the
Jewelry shop. The MTCC
of Ta g b i l a r a n C i t y re n d e r e d a d e c i s i o n i n f a v o r o f t h e p e t i t i o n
e r. O n a p p e a l , Respondents conceded to the existence of an agreement
for crafting a pair of goldrings mounted with diamonds but denied they
had obligation to dismount thediamonds from the original setting.
Petitioner claims that dismounting the diamondsfrom the original setting was
part of the obligation assumed by respondents underthe contract of service.
The RTC ruled in favor of the respondents. CA affirmed the judgment of the
RTC.
ISSUES
1. WON dismounting of the diamond from its original setting was
part of theobligation2. WON respondents are liable for damages3. WON
respondents are liable for moral damages
HELD

1. YESRatio
The contemporaneous and subsequent acts of the parties reveal the scope
of obligation assumed by the jewelry shop to reset the pair of earrings.
Reasoning
Marilou expressed no reservation regarding the dismounting of
thediamonds. She could have instructed Payag to have the diamonds
dismounted first,but instead, she readily accepted the job order and
charged P400. After the new settings were completed, she called
petitioner to bring the diamond earrings to bereset. She examined one of
them and went on to dismount the diamond from theoriginal setting. After
failing to do the same, she delegated it to the goldsmith. Having
acted the way she did, she cannot deny that the dismounting was part of the
shops obligation to reset the pair of earrings.
2. YES Ratio
Those who, in the performance of their obligations are guilty
of fraud,negligence or delay and those who in any manner contravene the
tenor thereof, areliable for damages. The fault or negligence of the obligor
consists in the omission of that diligence which is required by the
nature of the obligation and corresponds with the circumstances of the
persons, of the time and of the place.
Reasoning
Santos acted negligently in dismounting the diamond from its originalsetting.
Instead of using a miniature wire, which is the practice of the trade, he useda
pair of pliers. Marilou examined the diamond before dismounting and found
thesame to be in order. The subsequent breakage could only have
been caused bySantos negligence in using the wrong equipment. Res
ipsa loquitur. Facts show thatMarilou, who has transacted with Payag on at
least 10 occasions, and Santos, whohas been accepting job referrals through
respondents for 6 mos. now, are employedat the jewelry shop.
The jewelry shop failed to perform its obligation with theordinary
diligence required by the circumstances.
3. YES Ratio
Moral damages may be awarded in a breach of contract when there is
proof that defendant acted in bad faith, or was guilty of gross negligence
amounting tobad faith, or in wanton disregard of his contractual obligation.
Reasoning
Santos was a goldsmith for more than 40 years. He should have knownthat
using a pair of pliers would have entailed unnecessary risk of breakage. The
g r o s s n e g l i g e n c e o f t h e i r e m p l o y e e m a ke s t h e r e s p o n d e n t s l i a
b l e o f m o r a l damages.
Disposition
Petition was granted and CA decision was reversed. Respondents
wereordered to pay P30,000 as actual damages and P10,000 as moral
damages.