Friendship in Business

I. Problem: Whether or not Mr.Dy has the right to rescind the contract?

II. Facts: Mr. Dy sought to rescind the contract on the ground of breach
of contract despite acceptance of delayed payment.

III. Courses of Action: Mr. Dy must return the payment obtained from the
Corporation or to comply with the stipulations in the contract for the
sale of molasses.

The law provides that the “power to rescind obligations is implied in

reciprocal ones, in case one of the obligors should not comply with
what is incumbent upon him.

The injured party may choose between the fulfillment and the
rescission of the obligation, with the payment of damages in either
case. He may also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible” xxx (Art. 1191 Civil
Code of the Philippines)

IV. Recommendation: Mr. Dy must comply with his obligation since he

does not have the power to rescind the contract.

V. Answers to questions:

1.) Mr. Dy has no right to rescind the contract.

The court provided that the general rule is that rescission will not be
permitted for a slight or casual breach of the contract, but only for
such breaches as are so substantial and fundamental as to defeat the
object of the parties in making the agreement.

It should be noted that the time of payment stipulated for in the contract
should be treated as of the essence of the contract. There was only a
slight breach of contract when the payment was delayed for 20 days and
does not violate essential condition of the contract which warrants
rescission for non-performance. Furthermore, MR. Dy accepted the
payment of the overdue accounts and continued with the contract,
waiving its right to rescind the same.

2.) It is not appropriate to extend friendship in business transaction

because a business has a different personality to that of the
owners. Being friends with suppliers, customers, employees and
etc. could hinder decision making of a business owner. When
friendship is present in making decisions it would lead to making
 decisions that would favor the self-interest of the owner rather than of
the business and if things does not go smoothly as planned it would
only ruin the friendship of the two parties.

The Immoral Video Shop

I. Problem: Whether or not the owner be justified in selling pirated

VCDs, DVDs etc.

II. Facts: a legitimate owner of a CD shop tries to sell pirated movies and
prohibited movie clips CDs.

III. Course of Action: He should not sell or reproduce pirated movies.

IV. Recommendations: In the advent that he sells such item, he shall be

held liable under Republic Act 10088, better known as the Anti-
Camcording Act of 2010 which is now being enforced, allowing
affected private parties to file proper complaints in court and hold
illegal camcorders to strict liability. The Anti-Camcording Act
prohibits and penalizes unauthorized use, possession, and control,
with the intent or attempt to use audiovisual recording devices to
transmit or make a copy of any performance in an exhibition facility of
cinematographic film or other audiovisual work. Likewise, camcording
activities declared for private or domestic purposes is now also
punishable by law as are aiding, abetting, or conniving in such
acts.

V. Answers to the question: The owner shall be sued in violation of Anti-

Camcording Act of 2010

1.) No, it is not right to sell pirated VCDs, DVDs and X-rated tapes in the
shadow of a certified video shop. This is the reason why the showbiz
industry is dying. If no one buys the original creations of a film, later
on much of them will crumble and only a few would produce a good
one. Thus, the prohibition in the selling of pirated VCDs or DVDs, we
are supporting the industry to develop more good quality films.
2.) No, buying pirated VCDs, DVDs is contrary to the provisions of the
law. The sale of Illegal copies or downloads of CDs and DvDs
containing music, movies, or software, as well as the prolific sale of
 fake or counterfeit goods, is inextricably linked to organized crime.
Thus, one who buys pirated CDs and VCDs are violating special Laws
such Copyright law and Anti-Piracy Law

Expired Gravy
I. Problem: Whether or not the manager is justified in serving an expired
gravy?

II. Facts: The manager of the restaurant refuses to tell the customer that
the gravy served by the crew was expired.

III. Course of Action: The manager shall tell the customer that the gravy
was expired or he can choose to act with gross negligence by not
telling the truth.

IV. Recommendation: The manager must tell the deficiency of the gravy.
He shall be liable for damages that may occur on the customer
pursuant to the law. The customer, on the other hand, may file for
damages that may arise due to the expired gravy.

V. Answers to the question:

1.) The moral issue in the case is the habitual truthfulness amounting
to the existence of good faith. Every person must in the exercise of
its rights must act with justice, give everyone his due and observe
honesty and good faith (Article 19, Civil Code of the Philippines).

2.) As Bartolome, he must serve the client with utmost honesty and
good faith as conducive to principle of morality.

Shared Secrets
I. Problem: whether or not Pantaleon was justified in using the secrets
of his former employer on his new job

II. Facts: Pantaleon a former employee of a Philippine-based computer

company used inside knowledge of his previous company to make
sales.

III. Course of Action: Pantaleon can use the secrets of his previous
employer or innovate it instead.
IV. Recommendation: Pantaleon should choose not to use the secrets of
his previous company.

Although there is no direct law prohibiting the dispensing of trade

secrets, Pantaleon may be held liable for violation of Intellectual
Property Code of the Philippines. As provided by law, the State
recognizes that an effective intellectual and industrial property system
is vital to the development of domestic and creative activity, facilitates
transfer of technology, attracts foreign investments, and ensures
market access for our products. It shall protect and secure the
exclusive rights of scientists, inventors, artists and other gifted
citizens to their intellectual property and creations, particularly when
beneficial to the people, for such periods as provided in this Act.
Thus, any act contrary to this shall be deemed punishable.

V. answers to the questions:

1.) Yes, trade secrets remain as an ethical issue in the Age of

Globalization. Protecting trade secrets is important to encourage
innovation and technological development by assuring the inventor
or creator that he or she will have the first chance to reap the
benefits of the investment. Trade secret law promotes the sharing
of knowledge, and the efficient operation of industry; it permits the
individual inventor to reap the rewards of his labor by contracting
with a company large enough to develop and exploit it. In doing so,
trade secret law protects an economic investment against "free
riders" by discouraging unfair competition by those who might
otherwise attempt to gain unauthorized access to and use of the
information through improper means. (Eden Hannon& Co. v.
Sumitomo Trust & Banking Co)

2. The action of Pantaleon is unethical since upon using the

information he has gained from his previous company, he enriched
himself at the expense of the latter. Trade secrets are ought to be
assets of its inventor, thus any act of stealing its idea or by way
using it without the consent of its inventor is contrary to moral
principles.
 3. No, it is contrary to moral principles and thus the law provides
that no one shall be unjustly enriched at the expense of another.

Jack and Poy

I. Problem: Whether or not Poy is guilty of stealing

II. Facts: Poy keeps the equipment of the hotel as souvenir despite the
policy of the said hotel prohibiting the taking of such equipment.

III. Course of Action: Poy shall be sued or the hotel may ask for
settlement.

Poy may be held liable under Article 308 of the Revised Penal Code
on theft.

IV. Recommendation: a settlement may be done to solve the issue.

However, Poy may be held liable for theft.

V. Answers to the question:

1. Yes, Poy is guilty of stealing or theft. Pursuant to Article 308 of

the Revised Penal Code, Theft is committed by any person who,
with intent to gain but without violence against, or intimidation
of persons nor force upon things, shall take personal property of
another without the latter's consent.
In the case at bar, the act of Poy by keeping the property of
the other constitutes theft which is punishable by law.

2. No, coercion is not sufficient reason to excuse a person form

moral liability unless such damages from such coercion must
be greater than that can be sustained from which moral liability
arises.
 Golden Taurus Garment Company

I. Problem: Whether or not the company violates the right of its workers

II. Facts: the Company refuses to give certain benefits and changes the
management of the company without informing the employees.

III. Course of action: the employees may bargain with the company on
their concerns or they may resort to a concerted action to obtain what
is right for them.

The employer may be held liable for damages since although the
employer has the power of control against the employees, the latter
has bargaining rights as provided by the Labor Code

IV. Recommendation:
Employees shall organize a concerted action.

V. Answer to question:

1. The acts of the company constitute violation of the contract.

Once an employee sign a contract, the compensation included in the
statement should be given. Whether the company is experiencing a
bankruptcy or not, it has the liability to give its employees an appropriate
compensation. More so as jurisprudence provides, once a company has
given a bonus or benefit in such a way that it is on customary basis, the
same shall be demandable unless the company decides to declare
bankruptcy.