| No that is not really legal, but since they were his parents and the school most likely does not know they are not the legal guardian they would have let him in. If you informed the school that you are the legal guardian and did not permit this, then their would be an issue with him going.
First why do you have custody, what was there about him living with his parents that was not right or dangerous or what ??
Has this situation changed ?? Why is it now ok for him to live there and it was not ok before ?
The court that issued the order for you to have custody will have to return custody back to the parents, the parents will need to petition the court for custody again.
If he is injured, or harmed or even does damage and causes debts , you as his legal guardian can be held responsible since you are allowing him to live there.
Did they ask you if he could stay, did they tell you they were putting him in school. And in the end if you did not want him to stay, did you consider telling him to come home to you, calling the police that they are interfereing with legal custody.
And they now have physcial custody, just not legal custody. | 
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