FACTS: Emeterio Cui enrolled in the defendant university where plaintiff finished

his law studies up to the first semester of his fourth year. Plaintiff was awarded with
scholarship grants and his tuition fees were returned to him at the end of each
semester. Plaintiff left the defendant’s law school and enrolled for the last semester of
his fourth year at the College of Law of Abad Santos University where he graduated.

He applied to take the bar examination in with which he needed the transcript of
records from defendant Arellano University. The defendant demanded that he had
paid back the P1, 033.87, noting the contract that he signed 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.

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 is 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, 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.