G.R. No. 186312; June 29, 2010
SPOUSES DANTE CRUZ and LEONORA CRUZ, Petitioners, vs. SUN HOLIDAYS, INC., Respondent.

FACTS

Petitioners’ son, Ruelito Cruz, and his wife died on September 11, 2000, when the M/B Coco Beach III, a boat owned and operated by respondent Sun Holidays, Inc., capsized en route from its Coco Beach Island Resort to Batangas. The couple’s stay was part of a tour package that included transportation. A survivor’s account stated that despite windy conditions, guests were directed to board the vessel. During the voyage, strong winds and waves caused the boat to capsize. The captain allegedly told passengers to just save themselves. Eight passengers perished.
Petitioners demanded indemnity, but respondent refused, claiming the incident was a fortuitous event. Petitioners filed a complaint for damages, alleging respondent, as a common carrier, was negligent for allowing the boat to sail despite storm warnings. Respondent denied being a common carrier, asserting its boats only ferried resort guests and that it exercised due diligence, having secured Coast Guard clearance. The RTC and the Court of Appeals dismissed the complaint, ruling respondent was a private carrier and the proximate cause was a squall, a fortuitous event.

ISSUE

Whether respondent Sun Holidays, Inc. is a common carrier and, if so, whether it is liable for damages arising from the death of petitioners’ son.

RULING

Yes, respondent is a common carrier and is liable. The Supreme Court held that respondent is a common carrier under Article 1732 of the Civil Code. The transportation of guests was an integral part of its resort business and tour package, offered to the public indiscriminately. It is engaged in “public service,” not a private carrier merely incidental to its resort operations. As a common carrier, it is bound to observe extraordinary diligence in ensuring passenger safety.
The Court found respondent failed to exercise such diligence. The captain’s admission that a “subasco” or squall occurred indicates the presence of known weather risks. The decision to sail, despite survivor testimony of pre-existing adverse conditions, constituted negligence. The sudden squall was not a fortuitous event, as it was not entirely unforeseeable, and respondent’s negligence was a contributing factor. The defense of fortuitous event fails when concurrent negligence exists. Consequently, respondent is liable for damages for breach of contract of carriage. The case was remanded to the trial court for the proper computation of damages, including loss of earning capacity and moral damages.