Case Summary (G.R. No. L-15127)
Petitioner and Respondent
Petitioner: Emeterio Cui
Respondent: Arellano University
Key Dates
– School year 1948–1949: Cui begins preparatory law, then law studies at Arellano University
– August 16, 1949: Director of Private Schools issues Memorandum No. 38 on scholarships
– September 10, 1951: Cui executes scholarship agreement containing a waiver clause
– 1953: Cui applies for bar examination; denied transcript unless he refunds P1,033.87
– September 1, 1954: Cui files suit for recovery of P1,033.87 plus damages
– May 30, 1961: Supreme Court decision
Applicable Law
– 1935 Philippine Constitution (operative at decision date)
– Memorandum No. 38, s. 1949, Bureau of Private Schools, prescribing that scholarship recipients should not be charged for transferring institutions
– Principles of public policy in contract law, as recognized in both Philippine and American jurisprudence
Facts
Cui completed the first semester of his fourth year of law at Arellano University under full or partial scholarships, which entitled him to tuition refunds each semester. When his uncle, Dean Capistrano, left Arellano University, Cui transferred to Abad Santos University for his final semester, graduated there, and sought his transcripts from Arellano University to qualify for the bar examination. Arellano University conditioned issuance of the transcripts on Cui’s repayment of P1,033.87—the total value of his prior scholarships—pursuant to a signed agreement waiving Cui’s right to transfer without refunding the equivalent scholarship value. Despite a favorable opinion from the Bureau of Private Schools declaring the waiver provision contrary to the policy in Memorandum No. 38, Arellano University refused to comply. Cui paid the amount under protest and then sued to recover it, plus moral and exemplary damages, attorney’s fees, and litigation expenses. Arellano University counterclaimed for damages and attorney’s fees.
Issue
Whether a contract provision requiring a scholarship recipient to refund the value of his scholarship before transferring to another institution is valid or void as contrary to public policy.
Ruling
The Supreme Court held the waiver clause void for contravening public policy and ordered Arellano University to refund P1,033.87 with legal interest, dismissing the counterclaim.
Rationale
- Public Policy and Scholarship Principles
Scholarships recognize merit and are not instruments to insure student retention for institutional prestige. A contract that compels repayment of scholarship value upon transfer undermines the principle that scholarships are earned rewards. - Authority of Government Practice
While Memorandum No. 38 itself is not a law, the Court treated its policy pronouncements as reflective of prevailing public policy, alongside constitutional provisions, statutes, judici
Case Syllabus (G.R. No. L-15127)
Facts of the Case
- Emeterio Cui pursued a preparatory law course and subsequently enrolled in the College of Law at Arellano University beginning in the 1948–1949 school year.
- He completed his law studies at Arellano through the first semester of his fourth year.
- Francisco R. Capistrano, plaintiff’s maternal uncle, served as dean of the College of Law and legal counsel of Arellano University during Cui’s tenure.
- When Dean Capistrano accepted a deanship at Abad Santos University, Cui withdrew from Arellano, failed to pay his last-semester tuition there, and completed his fourth-year, last-semester work at Abad Santos University, from which he graduated.
- Throughout his law studies at Arellano, Cui received tuition‐refund scholarships for scholastic merit, totaling ₱1,033.87 by the end of his first semester of the fourth year.
Contractual Scholarship Agreement
- Prior to receiving any scholarship grant, Cui signed a written waiver:
“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 the equivalent of my scholarship cash.” - Arellano University relied on this contract to demand reimbursement of scholarship amounts if a student transferred.
Memorandum No. 38, Series of 1949
- On August 16, 1949, the Director of Private Schools issued Memorandum No. 38 addressing private‐school scholarship practices:
- Scholarships should reward merit, not serve as retention devices.
- Scholarship recipients must not be charged back tuition or fees upon transfer.
- The Bureau of Private Schools would intervene if credentials were wrongfully withheld.
- Arellano University received a copy of this memorandum but maintained that it was merely advisory and not binding.