You can start this quest by talking to seraph who standing in front of the Lastonbell Church. He will tell you that the lord of the land of this town had gone to the lake on Cambria Caverns.
On Cambria Caverns, go to area marked on the screenshot above. Take the iris gem and the Seraph will appear. However, she won’t come back with you. Your party decide to learn why she won’t come back to Lastonbell. So, go back to Lastonbell for now.
Go to the inn and talk to the inn keeper (“!” above his head). Now get out from the inn and open your map, see the light-blue circle on your map. Go talk to all people with “!” on the town to learn more about Margaret.
Note: One of them (men with light-blue circle) will sell you gramp’s pipe, if you have sold it before (for 5000 Gald).
Go back to the inn and sleep, it will trigger a conversation with your party. On the night, get out from the inn. You will fight a wolf. Defeat it and then chase it to Meadow of Triumph.
At Meadow of Triumph, open your map and head to “!” (make sure you save the game first!!!)
Boss: Breed Wolf
Use Edna and Lailah on this battle. It has Therian attribute which weak against Tiger blade (Sorey 2nd attack; up + O) and fire armatization attack.
Once the battle end, you will automatically back to inn and the blessing for Lastonbell will be restored.