Cui vs. Arellano University

EMETERIO CUI, plaintiff-appellant,
vs.
ARELLANO UNIVERSITY, defendant-appellee.

G.R. No. 15127
May 30, 1961

FACTS:

Emetrio Cui (plaintiff) took up preparatory law course in Arellano University (defendant) and pursued his law studies in the said university up to and including the first semester of the fourth year. During all the time he was studying law in defendant university, plaintiff’s uncle was the dean of the College of Law and Legal counsel. Also, he was awarded scholarship grants for scholastic merit so that his semestral tuition fees were returned to him after the ends of semester and when his scholarship grants were awarded to him. He was made to sign a contract covenant whereas he waived his right to transfer to another school without refunding the equivalent of his scholarship in cash.

When he enrolled for the last semester of his law studies, he failed to pay his tuition fee because he had to transfer to Abad Santos University where his uncle accepted deanship and chancellorship of the College of Law. After graduating in law from Abad Santos University, he applied to take the bar examination. Plaintiff petitioned the defendant to issue his transcript but the latter refused not until he paid back the P1003.87-­ the amount refunded by Arellano University. As he could not take the bar examination without those transcripts, plaintiff paid to defendant the said sum under protest. This is the sum which plaintiff seeks to recover from defendant in this case.

ISSUE:

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

HELD:

The provision is not valid. If Arellano University understood clearly the real essence of scholarships and the motives which prompted the issuance of Memorandum No. 38, it should have not entered into a contract of waiver with Cui which is a direct violation of our Memorandum and an open challenge to the authority of the Director of Private Schools because the contract was repugnant to sound morality and civic honesty. And finally, in Gabriel vs. Monte de Piedad, In order to declare a contract void as against public policy, a court must find that the contract as to consideration or the thing to be done, contravenes some established interest of society, or is inconsistent with sound policy and good morals or tends clearly to undermine the security of individual rights. The policy enunciated in Memorandum No. 38, s. 1949 is sound policy. Scholarship are awarded in recognition of merit not to keep outstanding students in school to bolster its prestige. In the understanding of that university scholarships award is a business scheme designed to increase the business potential of an education institution. Thus conceived it is not only inconsistent with sound policy but also good morals.

Manresa defines morals as good customs;; those generally accepted principles of morality which have received some kind of social and practical confirmation. The practice of awarding scholarships to attract students and keep them in school is not good customs nor has it received some kind of social and practical confirmation except in some private institutions as in Arellano University. The University of the Philippines which implements Section 5 of Article XIV of the Constitution with reference to the giving of free scholarships to gifted children, does not require scholars to reimburse the corresponding value of the scholarships if they transfer to other schools. So also with the leading colleges and universities of the United States after which our educational practices or policies are patterned. In these institutions scholarships are granted not to attract and to keep brilliant students in school for their propaganda mine but to reward merit or help gifted students in whom society has an established interest or a first lien.

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