Cui v. Arellano University

G.R. No. L-15127, 30 May 1961

FACTS:

Emetrio Cui took his preparatory law course at Arellano University.  He then enrolled in its College of Law from the first year until the first semester of his 4th year.  During these years, he was awarded scholarship grants of the said university amounting to a total of P1,033.87.  He then transferred and took his last semester as a law student at Abad Santos University.   To secure permission to take the bar, he needed his transcript of records from Arellano University.  The defendant refused to issue the TOR until he had paid back the P1,033.87 scholarship grant which Emetrio refunded as he could not take the bar without Arellano’s issuance of his TOR.

On August 16, 1949, the Director of Private Schools issued Memorandum No. 38 addressing all heads of private schools, colleges, and universities. Part of the memorandum states that “the amount in tuition and other fees corresponding to these scholarships should not be subsequently charged to the recipient students when they decide to quit school or to transfer to another institution. Scholarships should not be offered merely to attract and keep students in a school”.

ISSUE:

Whether the provision of the contract between plaintiff and defendant, whereby the former waived his right to transfer to another school without refunding to the latter the equivalent of his scholarship in cash, is valid or not.

RULING:

Not valid. Memorandum No. 38 issued by the Director of Private Schools provides that “When students are given a full or partial scholarship, it is understood that such scholarship is merited and earned. The amount in tuition and other fees corresponding to these scholarships should not be subsequently charged to recipient students when they decide to quit school or to transfer to another institution.” Scholarship should not be offered merely to attract and keep students in a school.

Memorandum No. 38 merely incorporates a sound principle of public policy. The defendant uses the scholarship as a business scheme designed to increase the business potential of an educational institution. Thus, conceived, it is not only inconsistent with sound policy but also, good morals. The practice of awarding the scholarship to attract students and keep them in school is not a good custom nor has it received some kind of social and practical confirmation except in some private institution as in Arellano University. Any contract entered into between parties which is against the law, morals, good custom, public policy, or public order is void.

 * Case digest by Immanuel Y. Granada, LLB-1, Andres Bonifacio Law School, SY 2017-2018

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