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SPS. DANTE CRUZ v. SUN HOLIDAYS

FACTS:

The Spouses Dante and Leonora Cruz filed a Complaint against Sun Holidays, Inc. for damages arising from the death of their son Ruelito C. Cruz and his wife, who perished when the boat they were on capsized. The couple stayed at the Coco Beach Island Resort owned and operated by Sun Holidays, and their stay included transportation to and from the Resort. On the day of the incident, strong winds and heavy rains were present when the boat sailed. As the boat moved farther away, it capsized, putting all passengers underwater. Eight passengers, including the petitioners' son and his wife, died during the incident. The petitioners demanded indemnification from Sun Holidays, but the latter denied any responsibility and offered only a small amount as an act of commiseration. The trial court dismissed the complaint, ruling that Sun Holidays is a private carrier and the incident was a fortuitous event. The Court of Appeals affirmed the decision. The petitioners filed a Petition for Review, arguing that Sun Holidays is a common carrier. They relied on the De Guzman v. Court of Appeals case to support their argument. The Supreme Court agreed with the petitioners and held that Sun Holidays is a common carrier.

ISSUES:

  1. Whether the respondent, Sun Holidays, Inc., is a common carrier or a private carrier.

  2. Whether respondent exercised extraordinary diligence in ensuring the safety of its passengers on board M/B Coco Beach III.

  3. Whether the incident involving the capsizing of M/B Coco Beach III can be considered a fortuitous event exempting respondent from liability.

RULING:

  1. Common Carrier Status The Supreme Court ruled that respondent Sun Holidays, Inc. is a common carrier. The ferry services provided by the respondent are considered ancillary to its resort operations, and the services are available to anyone who can afford to pay the tour package price. The lack of a separate charge for ferry services does not change this classification.

  2. Exercise of Extraordinary Diligence The Court found that the respondent did not exercise extraordinary diligence required of common carriers. Given the expected weather conditions, a very cautious person exercising utmost diligence would not have risked the voyage.

  3. Fortuitous Event The Court held that the incident was not caused solely by a fortuitous event. The squall experienced was predictable under the existing weather conditions, and the boat also suffered engine trouble. Thus, the respondent’s claim of fortuitous event did not fully absolve it from liability.

PRINCIPLES:

  1. Common Carrier Definition (Article 1732, Civil Code) Common carriers are individuals or entities engaged in the business of transporting passengers or goods for compensation, making no distinction between main or ancillary business or the regularity of the service.

  2. Extraordinary Diligence Requirement (Article 1733, Civil Code) Common carriers must observe extraordinary diligence for the safety of passengers, using the utmost care and caution that prudent persons would exercise under similar circumstances.

  3. Presumption of Fault (Article 1756, Civil Code) When a passenger dies or is injured, the common carrier is presumed to be at fault or negligent. This presumption can only be overcome with evidence of extraordinary diligence.

  4. Fortuitous Event Doctrine To completely absolve from liability, the fortuitous event must be the proximate and only cause of the loss, and the carrier must have exercised due diligence to prevent or minimize the loss.

  5. Compensation for Death (Article 1764, Civil Code) Liability for a breach of contract resulting in death includes indemnity for death, loss of earning capacity, and moral damages.

  6. Interest and Damages Upon the court's judgment, interest on the amount awarded may be imposed, and if the judgment becomes final and executory, the rate of legal interest shall be 12% per annum until satisfaction (Eastern Shipping Lines, Inc. v. Court of Appeals).