“Fuck you, I got mine” Western Mentality on Philippine Jurisprudence and How It Should be Tempered with Filipino Psychology
A Critique of Pryce Corporation v. China Banking Corporation
A Philosophy of Law 101 critique paper by Mychal Phillip Sajulga
I. INTRODUCTION
What happens when everyone acting in their own self-interest ends up destroying what they're all fighting for? This is the core problem in Pryce Corporation v. China Banking Corporation (G.R. No. 172302, February 18, 2014). The case deals with corporate rehabilitation, essentially what happens when a company is about to go bankrupt and creditors are scrambling to recover their money. Justice Leonen held that rehabilitation courts can force creditors to accept a reorganization plan even when they don't want to, using the "cram-down principle." The Court said this was necessary to prevent the prisoner's dilemma, where everyone's rational self-interest leads to outcomes that hurt everyone.
Pryce Corporation was in serious financial trouble with debts to multiple creditors. On July 9, 2004, they filed for rehabilitation with the Makati court. Days later, the court issued a stay order freezing all creditor actions. On January 17, 2005, the court approved a rehabilitation plan requiring China Banking Corporation and Bank of the Philippine Islands to accept payment through dacion en pago (exchanging real estate for cash), with all penalties waived and interest frozen. The creditors were furious, arguing this violated their contractual rights and the Constitution's non-impairment clause. Nearly a decade of legal battles followed before the Supreme Court finally settled things.
Justice Leonen's decision uses economic theory you don't normally see in Philippine cases. He explained that corporate insolvency creates a prisoner's dilemma where "individual resource appropriators receive the full benefit of their use and bear only a share of their cost." Each creditor wants to grab whatever assets they can, but if everyone does this, they collectively destroy the company's value. The Court used Garrett Hardin's "tragedy of the commons" concept, which says that without regulation, people will overuse and destroy shared resources.
This paper evaluates the decision using Western libertarian theory (Robert Nozick's property rights ideas), utilitarian frameworks (Roscoe Pound's "social engineering" and John Finnis' common good theory), and Filipino indigenous psychology concepts like kapwa (shared identity) and pakikisama versus pakikipagkapwa (superficial harmony versus genuine equality). The question is whether the Court got the balance right between protecting individual freedom and preventing collective disaster.
II. CASE SUMMARY
Pryce Corporation filed for rehabilitation on July 9, 2004, with the Regional Trial Court of Makati. They had substantial debts and couldn't pay. The court quickly issued a stay order on July 13, 2004, appointing Gener T. Mendoza as receiver and stopping all creditor lawsuits. On September 13, 2004, the court told the receiver to evaluate Pryce's proposed plan. The receiver submitted an amended version, which the court approved on January 17, 2005.
The rehabilitation plan had controversial terms that changed what creditors originally agreed to. China Banking and BPI would be paid through dacion en pago (real estate instead of cash). All penalties were waived, and interest would only accrue until July 13, 2004. No more interest would accumulate during rehabilitation, and dollar loans would be converted to pesos at that day's rate. These changes fundamentally altered what creditors bargained for.
China Banking and BPI separately filed petitions with the Court of Appeals. On July 28, 2005, the Seventh Division sided with China Banking and reversed all rehabilitation orders. However, in BPI's separate appeal, the First Division initially agreed with BPI on May 3, 2006, but then changed its mind on May 23, 2007, dismissing BPI's challenge. BPI appealed to the Supreme Court (G.R. No. 180316), which denied their petition with finality on April 28, 2008. Meanwhile, Pryce Corporation also appealed. This created a bizarre situation: the same rehabilitation order was simultaneously invalid in one case and valid in another.
This legal mess illustrates the same coordination problem the case addresses. Two Court of Appeals divisions made opposite rulings on identical issues, creating massive legal uncertainty. The Supreme Court acknowledged this recurring problem, emphasizing that courts must remain "constantly vigilant" to "ensure against judicial confusion."
On February 18, 2014, the Supreme Court En Banc resolved everything. The Court said res judicata applied since BPI's case was decided with finality. More importantly, Justice Leonen gave a sophisticated economic justification for the cram-down principle. He invoked the tragedy of the commons, explaining that corporate insolvency creates a collective action problem where "coercive government regulation is necessary to prevent the degradation of common-pool resources." Without judicial intervention, each rational creditor would race to grab assets, collectively destroying the company's value.
The Court rejected arguments about violating the constitutional non-impairment clause, holding that "property rights and contractual rights are not absolute." The cram-down principle allows courts to approve plans "even over the opposition of creditors holding a majority of the total liabilities" if rehabilitation is feasible and opposition is "manifestly unreasonable." Once approved, these plans bind everyone affected.
III. WHAT I APPRECIATE FROM THE COURT’S RULING
Economic Theories
The Pryce decision represents something new in Philippine jurisprudence: explicit use of economic theory in legal reasoning. Justice Leonen's analysis of the prisoner's dilemma shows he understands collective action problems. By framing corporate insolvency as a strategic game where individually rational choices produce collectively irrational outcomes, the Court moved beyond merely citing laws to explain the existence of rehabilitation law. The prisoner's dilemma reveals why creditors can't coordinate voluntarily: each creditor has a dominant strategy to defect regardless of what others do, yet mutual defection leaves everyone worse off.
Garrett Hardin's tragedy of the commons enriches this by explaining how value gets destroyed. The company's remaining assets are like a common-pool resource: each creditor captures the full value of assets seized, but shares the cost of collapse across all creditors (Pryce Corporation v. China Banking Corporation, 2014). This creates perverse incentives for aggressive collection even when forbearance would preserve more total value.
Pound's Social Engineering
The decision fits well with Roscoe Pound's idea of law as "social engineering" aimed at "eliminating friction and precluding waste" (Curzon, 2023, p. 158). Pound argued that law functions to balance competing interests, securing the greatest number possible with the least sacrifice of others. The Court does this balancing by recognizing that creditors' individual interests in immediate recovery conflict with their collective interest in maximizing long-term recovery.
The utilitarian logic is compelling: rehabilitation aims to preserve the going-concern value that liquidation would destroy. Even creditors who oppose the plan might fare better under coordinated rehabilitation than under mutual defection, where everyone races to seize assets. The prisoner's dilemma reveals that creditors who prefer unilateral defection while others cooperate can't sustain that outcome when all creditors reason identically.
Finnis on the Common Good
The decision resonates with John Finnis' theory of practical reasonableness. Finnis argues that coordination problems arise because smart people with different priorities can't agree on how to coordinate action. He says, "There are only two ways of making a choice. There must be either unanimity, or authority" (Finnis, 2011, p. 232). Corporate rehabilitation presents exactly this problem: multiple sophisticated creditors with competing priorities can't achieve unanimity. Since unanimity is "particularly far beyond the bounds of practical possibility" (Finnis, 2011, p. 233), authority becomes necessary, not as a violation of justice but as its fulfillment.
The rehabilitation court's authority fulfills what Finnis calls the eighth requirement of practical reasonableness: one "must foster the common good of his community" (Finnis, 2011, p. 126). The creditors, employees, suppliers, and stakeholders form a community bound by economic interdependence. Their common good consists of maximizing total value preserved, which requires coordinated forbearance that voluntary action can't achieve.
IV. WHAT I DON’T APPRECIATE FROM THE COURT’S RULING
Nozick and Property Rights
Despite its utilitarian appeal, the Pryce decision conflicts with Robert Nozick's entitlement theory. Nozick holds that individuals possess inviolable rights over legitimately acquired property that no collective welfare calculation can override. He argues that "interference with justice in holdings without the individual's consent is unjust and insupportable" (Curzon, 2023, p. 195). China Banking acquired its rights through voluntary lending, a textbook example of just acquisition. The rehabilitation court's forced modification constitutes exactly the rights violation Nozick condemns.
The Court's utilitarian framing obscures a fundamental point: China Banking never consented to modified terms, regardless of whether rehabilitation theoretically maximizes aggregate recovery. The bank negotiated specific loan terms that reflected its risk assessment. By retroactively modifying these terms, the court transfers wealth from creditors to the debtor without compensation. This parallels the taxation objection Nozick raises: just as forced taxation is partial slavery, forced debt restructuring compels creditors to provide more favorable terms than those they initially contracted.
The False Promise of Making Everyone Better Off
The Court's framing of the prisoner's dilemma subtly misrepresents who actually benefits. While the decision presents forced coordination as making "everyone better off," this hides significant distributional inequities. Not all creditors are similarly situated: secured creditors face different risks than unsecured creditors; large institutions have different resources than small suppliers. The rehabilitation plan's uniform treatment fails to respect these differences.
More fundamentally, the supposed improvement proves illusory. An actual Pareto improvement leaves no one worse off, yet China Banking explicitly objected, presumably because it believed itself worse off under forced restructuring. The Court dismisses this by invoking the "manifestly unreasonable" standard, but this assumes the court knows China Banking's interests better than China Banking itself. By overriding this preference, the Court doesn't solve a coordination problem but imposes one party's conception of optimal outcomes on another.
Constitutional Text Means Something
The Court's treatment of the non-impairment clause risks reducing explicit constitutional protections to suggestions. Article III, Section 10 states: "No law impairing the obligation of contracts shall be passed." The framers included this precisely to prevent post-hoc modification like the Pryce plan implements. While rights aren't absolute, this truism can't justify unlimited discretion. Every regulatory intervention could be characterized as serving "the common good," rendering the clause meaningless.
The Court's reliance on police power elides crucial distinctions between prospective regulation (establishing rules for future contracts) and retrospective modification (changing existing obligations). When the state prohibits specific future terms, parties can adjust pricing. But when courts retroactively modify already-executed contracts, parties can't adapt, and the intervention operates as a wealth transfer undermining legal commitments.
Slippery Slope Problems
The Pryce logic extends far beyond corporate rehabilitation. If courts may override contracts whenever collective action problems threaten value destruction, what limits this power? The Court provides no coherent limiting principle beyond the vague "manifestly unreasonable" standard. This grants judges enormous discretion to substitute their judgments for commercial actors who bear actual consequences.
If commercial actors anticipate courts will retroactively modify unfavorable contracts, commercial lending faces adverse selection. Creditors will demand higher interest rates, decline to lend to distressed borrowers, or structure transactions to minimize override risk. These defensive strategies may produce greater social costs than the prisoner's dilemma rehabilitation law claims to solve. These critiques reveal a deeper problem: both Nozickian libertarianism and Poundian utilitarianism assume individuals are ontologically separate entities whose competing claims must be adjudicated through either rights-absolutism or welfare-maximization. Neither framework adequately captures the relational dimension of economic interdependence.
V. A FILIPINO INDIGENOUS SUGGESTION FOR INTEGRATION
The Pryce Court employed exclusively Western frameworks (game theory, tragedy of the commons, police power) and never referenced Filipino indigenous concepts. Yet Philippine jurisprudence need not remain confined to imported categories. These Western frameworks share a fundamental limitation: they assume individuals are ontologically separate entities whose claims must be resolved through either rights-balancing or welfare-maximization. While the Court never explicitly invoked Filipino concepts, Philippine jurisprudence faces a unique opportunity to develop an alternative framework that transcends this Western binary.
Virgilio Enriquez's concept of kapwa offers a fundamentally different starting point that neither the Court nor the parties considered, yet which speaks directly to the tensions the case raises. Enriquez defines kapwa not as "others" in the Western sense (where others are "recognized as a separate identity"), but as "shared identity," where "the ako (ego) and the iba-sa-akin (others) are the same" (Maninang, 2025, p. 8). If Philippine courts were to consciously engage with this indigenous framework, rehabilitation might be reconceptualized not as zero-sum conflict between creditor rights and collective welfare, but as recognition of shared identity among stakeholders whose fates are genuinely intertwined.
This is not to suggest the Court implicitly applied kapwa consciousness. It did not. Instead, this section explores what Philippine rehabilitation jurisprudence might look like if it moved beyond uncritical adoption of Western frameworks to develop distinctly Filipino legal reasoning. When Enriquez explains that "kapwa is a recognition of shared identity," he articulates a relational worldview that challenges both libertarian and utilitarian premises. In this perspective, the creditor-debtor distinction, while legally operative, doesn't erase the fundamental unity of persons bound together in an economic community.
Could such a framework resolve the tensions Western philosophy struggles with? If rehabilitation courts consciously operated from kapwa consciousness, the intervention would be understood not primarily as state coercion overriding liberty (the Nozickian concern) nor as utilitarian optimization (the Poundian justification), but as legal recognition that creditors aren't truly ibang-tao (outsiders) pursuing antagonistic interests in isolation. Instead, they would be recognized as hindi ibang-tao (one of us), bound by shared vulnerability. This could resolve the libertarian-communitarian tension by rejecting the individualistic premises shared by both positions.
Pakikisama Versus Pakikipagkapwa
The distinction between pakikisama and pakikipagkapwa illuminates why forced coordination might be justified despite appearing to violate creditor autonomy, if Philippine courts were to adopt this analytical lens. Enriquez critiqued pakikisama (typically "getting along") as a superficial value that Western-oriented social scientists mistakenly elevated. He argued it represents mere "docility and conformity," rewarding "skills sold by elites" rather than reflecting authentic Filipino values (Maninang, 2025, p. 9). This shallow conformity can't ground genuine justice because it operates purely at strategic adjustment.
In contrast, pakikipagkapwa represents "much deeper" engagement, involving "accepting and dealing with the other person as an equal" with "a moral and normative aspect as a paninindigan which does not change regardless of situations" (Maninang, 2025, p. 9). Applied to Pryce, this distinction becomes crucial. If the cram-down merely imposed pakikisama (requiring creditors to accommodate Pryce for avoiding conflict), it would deserve Enriquez's critique. China Banking's objection that the plan serves management at creditors' expense resonates with this concern. However, if Philippine rehabilitation law were consciously designed to instantiate pakikipagkapwa (treating all stakeholders as equals in a shared predicament), then forced coordination would operate not as paternalistic imposition but as legal recognition of moral reality.
Enriquez emphasized that Filipinos insisting on pakikipagkapwa over pakikisama aren't conformists but principled actors: "If pakikisama were truly a value, many would outrightly say, 'Ayokong makisama' (I do not want to conform) when insisting on their pagkatao (dignity) and karapatan (right)" (Maninang, 2025, p. 9). This reveals that pakikipagkapwa accommodates resistance when it serves justice. Filipinos "know pakikibaka (joining a struggle) as a valid aspect of pakikipagkapwa in the face of injustice" (Maninang, 2025, p. 9). Through this lens, China Banking's vigorous litigation need not be read as rejecting communal solidarity; it might represent legitimate pakikibaka against terms the bank perceived as unjust.
The distinction thus provides a framework (currently absent from Philippine rehabilitation jurisprudence) for distinguishing legitimate from illegitimate forced coordination. Courts operating from pakikipagkapwa principles would impose arrangements reflecting authentic equality but would not demand mere conformity serving elite interests.
Walang Kapwa Tao
The Filipino concept of walang kapwa tao (literally "without fellow-feeling for other human beings") identifies the deepest moral failure in Filipino ethics: refusing to recognize shared humanity. Maninang explains that "walang kapwa tao" provokes "shock or disbelief" among Filipinos, as someone exhibiting this is "judged as napakasama or the worst" (Maninang, 2025, p. 9). If Philippine courts were to adopt this ethical framework, it would illuminate what's ultimately at stake in cases like Pryce: whether creditors, courts, and the legal system recognize the shared humanity binding all participants in commercial relationships.
From a hypothetical kapwa perspective, China Banking's insistence on full contractual performance despite collective value destruction might be viewed as approaching walang kapwa tao, refusing to acknowledge that the bank's fate is bound with other creditors, Pryce's employees, and the broader economic community. However, this judgment must be tempered by Enriquez's recognition that Filipinos legitimately resist when their pagkatao (dignity) and karapatan (rights) are threatened. Resistance isn't walang kapwa tao but pakikibaka (joining a struggle) for justice.
If Philippine rehabilitation law were to incorporate these concepts explicitly, courts would face the task of distinguishing legitimate contractual rights assertion from destructive coordination refusal. By maintaining rehabilitation plans must not be "manifestly unreasonable" and must treat creditors fairly, current law already attempts something resembling pakikipagkapwa, though without explicitly naming it.
VI. CONCLUSION
The Supreme Court's decision in Pryce Corporation v. China Banking Corporation represents a pivotal moment where economic theory and Western philosophy converge to address fundamental questions about individual liberty versus collective welfare. Justice Leonen's sophisticated use of game theory and the tragedy of the commons demonstrates that Philippine courts can engage with cutting-edge analysis while resolving disputes that traditional legal formalism inadequately handles.
Yet this critique reveals the decision can't be adequately understood through Western frameworks alone. The tension between Nozickian libertarianism (viewing the cram-down as an unjustifiable property rights violation) and Poundian utilitarianism (justifying state intervention through aggregate welfare maximization) reflects assumptions about individuals' ontological separateness. Filipino indigenous psychology fundamentally challenges these assumptions. Virgilio Enriquez's kapwa concept offers an alternative paradigm where the self-versus-other dichotomy gives way to shared identity. The distinction between superficial pakikisama (mere conformity) and authentic pakikipagkapwa (genuine equality and mutual recognition) offers criteria for distinguishing legitimate from illegitimate forced coordination, criteria that neither rights-absolutism nor welfare-maximization adequately captures.
Filipino Psychology concepts might be alien to Philippine Jurisprudence. But that doesn't mean Philippine jurisprudence must remain forever confined to Western categories. The decision's ultimate defensibility might depend not only on whether it maximizes creditor recovery or respects pre-existing contractual entitlements, but on whether (consciously or not) it moves toward something resembling pakikipagkapwa: treating all stakeholders as kapwa whose shared predicament requires coordinated responses that honor each party's dignity while preventing collective self-destruction.
The significance of Pryce extends beyond corporate rehabilitation, illuminating how Philippine jurisprudence might navigate the broader tension between individual autonomy and communal solidarity. As globalization integrates Philippine commerce into Western-dominated legal frameworks based on individualistic anthropologies, courts face recurring choices about whether to adopt these frameworks wholesale or develop distinctly Filipino approaches. The decision suggests a middle path might be possible: the Court employed Western economic analysis while reaching conclusions that (though not explicitly stated) resonate with Filipino communal values.
Future jurisprudence might benefit from more conscious engagement with Filipino indigenous psychology, using concepts like kapwa, pakikipagkapwa, and walang kapwa tao not merely as cultural background but as analytical tools for legal reasoning. The Pryce decision ultimately succeeds more than it fails, but its success stems less from the specific economic calculations it performs than from its implicit recognition that law serves not merely to enforce pre-existing rights or maximize aggregate welfare, but to constitute and sustain communities within which human flourishing becomes possible.
What the decision demonstrates conclusively is that Philippine jurisprudence need not choose between uncritical adoption of Western frameworks and retreat into cultural particularism. Instead, it can engage multiple philosophical traditions in creative synthesis that honors both universal principles of justice and the distinctive insights of Filipino indigenous wisdom about what it means to live together as kapwa-tao: fellow human beings bound by shared identity in the ongoing struggle for dignity, justice, and mutual flourishing.
REFERENCES
Bernardo, N. F., & Bernardo, O. B. (2014). Philawsophia: Philosophy and theory of law. Rex Bookstore.
Curzon, L. B. (2023). Jurisprudence. Routledge.
Finnis, J. (2011). Natural law and natural rights (2nd ed.). Oxford University Press.
Hardin, G. (1968). The tragedy of the commons. Science, 162(3859), 1243-1248
Maninang, J. G. (2025). On kapwa: A core concept in Filipino social psychology. Philosophia: A Journal of the Department of Philosophy Xavier University-Ateneo de Cagayan, 3(1), 5-11.
Pryce Corporation v. China Banking Corporation, G.R. No. 172302 (S.C. Feb. 18, 2014).