EMETERIO CUI, plaintiff-appellant vs.

ARELLANO UNIVERSITY, defendant-appellee

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

FACTS: Emeterio Cui enrolled in the defendant university where plaintiff finished his law studies in the up to and
including the first semester of the fourth year. During all the school years in which plaintiff was studying law in
defendant Law College, he was awarded scholarship grants and his semestral tuition fees were returned to him after
ends of the semester. Plaintiff left the defendant's law college and enrolled for the last semester of his fourth year
law in the college of law of the Abad Santos University graduating from the college of law of the latter university.
He applied to take the bar examination in which he needed the transcripts of his records in defendant Arellano
University. The defendant refused until after he had paid back the P1,033 87, noting the contract that he signed
which stated that in consideration of the scholarship granted to him by the University, he waives his right to transfer
to another school without having refunded to the defendant the equivalent of the scholarship cash and followed by
Memorandum No. 38 that the Director of Private Schools issued.

ISSUE: Whether or not the contract between Cui and the respondent university, whereby the former waives his right
to transfer to another school without having refunded to the defendant the equivalent of the scholarship cash valid or
not?

HELD: The contract of waiver between the plaintiff and respondent on September 10, 1951, is a direct violation of
Memorandum No. 38 and hence null and void. The contract was contrary to sound policy and civic honesty. The
policy enunciated in Memorandum No.38, s. 1949 is sound policy. When students are given full or partial
scholarships, it is understood that such scholarships are merited and earned. 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.