According to the victims' friend, they were returning home to Taman Jaya Diri in Sepanggar from Jesselton Point then.
It was learnt that the trio, who were neighbours, worked as part time waiters at a cafeteria in Universiti Malaysia Sabah.
The friend identified the deceased as SPM leaver, Alvin Uslan Madayou, whose family originally from Kuala Penyu now stayed at Sepanggar.
City Police Chief ACP Jauteh Dikun said preliminary investigations showed the trio was heading towards Sepanggar from the city centre when the tragedy occurred at about 1am.
It was learnt that the 20-year-old driver lost control of the vehicle at a corner just after the Rural Development Corporation market, resulting in the vehicle swerving, skidding over a roadside drain and crashing into a palm tree before plunging into the water some 40 metres away.
He said the impact resulted in the 17-year-old passenger, from Kg Sepanggar who was sitting on the rear seat, getting thrown out of the vehicle before hitting the rock, causing him to sustain severe bodily injuries.
Jauteh said the driver and another passenger, aged 21, managed to climb out of the car before it was totally submerged. All three were subsequently sent to hospital.
He said the victim succumbed to his injuries at the hospital, while the other two who sustained slight injuries were discharged from the hospital at about 9am the same day.
The case, he said, is probed under Section 41(1) of the Road Transportation Act 1987.
A total of two fire engines and three motorcycle units manned by 16 personnel from the Fire and Rescue Department arrived moments after the mishap, however, the victims had already been sent to hospital by passers-by.
The vehicle was only salvaged from the water by a tow truck at about 2pm.