CUI v.

ARELLANO
Facts: Plaintiff was a law student at Arellano University (AU). His
uncle was law dean and Cui received many scholarship grants. For
these grants, Cui executed a document stating that he would refund
in full the amount received by him in scholarships should he transfer
to another school. Due to the transfer of his uncle to Abad Santos
University, plaintiff opted to complete his law degree there. When
he was applying to take the Bar exams, AU refused to hand over his
transcripts because he had not yet refunded the amount of
P1033.87. Plaintiff paid in order to be able to take the bar exam.

Held: AU must return the amount to Cui. 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 stipulation in question is contrary to public
policy and, hence, null and void. Scholarships are awarded in
recognition of merit not to keep outstanding students in school to
bolster its prestige.