Case name Cui v.

Arellano University
Topic Contracts: What may not be stipulated – Contrary to public
policy
Case Number G.R. No. L-15127
Date May 30, 1961
Ponente Concepcion J.
Nature of action Action for Recovery of amount
Parties and their Emeterio Cui – plaintiff
roles Arellano University - defendant
Nature of Emeterio and Arellano Univ. signed a contract stipulating that
obligation/ he will receive a scholarship from Arellano University.
contract However, if he transfers from the school, he must refund the
equivalent of his scholarship in cash.
Prestation Scholarship
Controversy, and Emeterio transferred to Abad Santos Univ., and Arellano will
Classification not release his transcript until he has paid back the P1,033.87
which was the equivalent of his tuition fees. Emeterio paid it
so he can take the bar exams.

Remedies Sought Recovery of P1,033.87 (amount paid for tuition fees) P2,000
as moral damages, P500 as exemplary damages, P2,000 as
attorney's fees, and P500 as expenses of litigation.
Remedies Defendant Arellano University must pay back the P1,033.7
Granted by SC with legal interests and costs

RELEVANT FACTS

Plaintiff Emeterio Cui took his preparatory law course in the Arellano University and
then enrolled in its College of Law. His uncle, Francisco Capistrano was the dean of the
College of Law and the legal counsel of defendant of Arellano University during the
years that Emeterio was studying law.

During all the time he was studying law in Arellano University, he was awarded
scholarship grants for scholastic merit, so that his semestral tuition fees were returned
to him after the ends of semesters. The whole amount of tuition fees paid by Emeterio
and refunded to him by the school from the first semester up to and including the first
semester of his fourth year, is in total P1,033.87.

Before the University awarded to plaintiff Emeterio the scholarship grants as above
stated, he was made to sign the following contract, covenant and agreement: “In
consideration of the scholarship granted to me by the University, I hereby waive my
right to transfer to another school without having refunded to the University
(defendant) the equivalent of my scholarship cash. (Sgd.) Emeterio Cui'."

However, in the last semester of his 4th year in the College of Law, Emeterio was able to
enroll but failed to pay his tuition fees because his uncle dean Francisco Capistrano
accepted the deanship and chancellorship of the College of Law of Abad Santos
University. Thus, Emeterio left Arellano University and enrolled for the last semester of
his fourth year of law in the college of law of the Abad Santos University.

After graduating in law from Abad Santos University, he needed the transcripts of his
records from Arellano University in order to take the bar examination. Plaintiff Emeterio
petitioned Arellano University to issue to him the needed transcripts. The defendant
refused until after he had paid back the P1,033.87 which the University initially

the Director of Private Schools issued Memorandum No. is valid or not. with interest thereon at the legal rate from September 1.87.033. stating that schools which offered scholarships cannot charge the recipient students the tuition fees or other amount if the scholars decide to quit school or transfer to another institution. 38. The trial court ruled in favor of Arellano University. and dismissing defendant's counterclaim. as well as the costs. As he could not take the bar examination without those transcripts. and because it had been neither approved by the corresponding department head nor published in the official gazette. date of the institution of this case. because scholarships are school without refunding awarded in recognition of merit and to help to the university the gifted students in whom society has an equivalent of his established interest or a first lien. 1954. null and void. its prestige and increase its business potential.refunded to him. RULING Defendant Arellano University was ordered to pay Emeterio the sum of P1. to transfer to another hence. This is the sum which plaintiff seeks to recover from defendant in this case. NO SEPARATE OPINION . It is also worth noting that on August 16. ISSUES Whether the provision of the contract wherein Emeterio waived his right to transfer to another school without refunding to the university the equivalent of his scholarships in cash. RATIO DECIDENDI ISSUE DECISION Whether the provision of NO. IT IS NULL AND VOID. and not to scholarships in cash. is keep outstanding students in school to bolster valid or not. Arellano University maintains that the memorandum of the Director of Private Schools is null and void because said officer had no authority to issue it. plaintiff paid the said amount to the University under protest. 1949. the contract wherein Emeterio waived his right The provision is contrary to public policy and.