CHAPTER 1

4 REASONS WHY WE NEED TO STUDY BUSINESS ETHICS (RATIONAL)

1. The Moral Consideration
 To have standards
 To know the right and wrong
2. The Religious Considerations
 The religious ones do not practice what religion teach (ex. Massage
 therapy ni sir na yung nagmassage sa kanya is muslim which is not allowed sa religion nil
ana makakita ng halos hubad na katawan ng lalaki)
 They sometimes put religion aside to earn money.
3. Professional Considerations
 Dealing w/ superiors properly
 Time is time. Deadline is deadline (ex. Kapag
 inutusan ka ng Chinese na gumawa ng ganitong work at need ipasa ng ganitong date
and time, tuwang tuwa sila kapag napasa mo on time or before the deadline, that’s
professionalism)
4. Profit Consideration
 honesty
 need maging tapat sa customers.

ETHICS PHILOSOPHERS:
1. Socrates
2. Aristotle
3. Epicurus
4. Plato

ARABIC TERMS
AKHLAQ— disposition; practice of virtue, morality, and proper manners.
ADAB— Islamic etiquette; refined, good moral, decency, humanness.
IHSAN— beautification, perfection and excellence.

PURPOSE OF ETHICS:
MAIN PURPOSE:
1. For people to be educated what is right and wrong
SPECIAL PURPOSE:
 1. The businessmen cannot employ double standard.
2. To show businessmen the common practices na mukhang tama pero mali naman pala
3. To serve as a standard or ideal upon business conduct may be based.

CHAPTER 2
Unethical Practices in Providing Service
Four Major Areas:
1. While providing service to customers
2. How members of a business organization fulfill their duties and responsibilities
3. How competitors treat each other
4. Providing a price fair to the manufacturer, seller, and buyers
MISREPRESENTATION TWO TYPES:
1. Intentional – Lying (deliberate and willful)
2. Unintentional - White Lie (not aware)

TYPES OF LYING
1. Through the use of an ambiguous term (sugar coating)
2. By making a statement from which a false inference may be drawn
3. Through action
4. Through suppression (Stopping) of correct information

CONSEQUENCES OF LYING
1. Distrust of a liar
2. Considering all persons as liars
3. Tends to lie again to cover up his original lie
4. Victims of the lie becomes bitter
5. People who lied were able to get away with it.

PRACTICES INVOLVING MISREPRESENTATION

DIRECT MISREPRESENTATION – actively misrepresenting something about the product or
service
1. Deceptive Packaging
 Adding new to the label of a product but reducing its content
  Using the same size packages containing varying product weights but different
measurements
 Misleading designations such as the number of servings (ex. Good for four person)
 The use of bigger size
 SA PACKAGING LANG MAY BINABAGO
2. Adulteration
 Adding something to increase its bulk or volume (ex. Mixing cow’s milk with
reconstitutes milk and sold as fresh milk)
 MISMONG PRODUCT YUNG BINABAGO
3. Misbranding or Mislabeling
 Making its container similar to well-known product for the purpose of deceiving the
customer (ex. 3 minutes lutuin ang noodles pero in real life is more than 3 minutes)
 KUNWARI GOOD QUALITY INGREDIENT ANG NAKALAGAY SA PACKAGE NILA BUT HINDI
NAMAN
4. Shortweighing
 Scale is tampered with, so the scale registers more than the actual weight (ex.
Paglalagay ng tsinelas sa ilalim ng timbangan)
 GINAGAMITAN NG TIMBANGAN
5. Shortmeasuring
 Measuring stick or standard is shorter than the real length or smaller in volume than the
standard (ex. Pagbili ng tela tapos ang gamit na panukat ay ang kamay ng isang babaeng
maikli ang lapad ng kamay).
 GINAGAMITAN NG RULER OR ANYTHING NA MAHABANG PANGSUKAT
6. Shortnumbering
 Seller gives the customer less than the number asked for or paid for. (ex. [1] cotton buds
na may 100 pieces pero kapag binilang ay 80 pieces lang. [2] “Yung tipong bumili ka ng ¼
na asukal tapos alam mong kulang dahil yung lalagyan mo alam mo na talagang pang ¼
yun”)
 KUNWARI YUNG MATCH BOX, NAKALAGAY IS 60 PCS BUT BINILANG MO AND KULANG
YUNG LAMAN
7. Shortchanging
 Seller gives the customer less than the change he should get (ex. Nagbayad sa jeep at
sinabing estudyante ng PUP pero hindi ka na sinuklian)
 EXAMPLE IS YUNG BUMILI KA SA TINDAHAN AT SINUKLI SAYO IS CANDY
8. False or Misleading Advertisement
 Greatly exaggerates the virtues of a product and tells only a half of a truth (ex. Sa
advertisement ng Burger King sa burger ay siksik, umaapaw ang mga toppings at halos
hindi na magkasya sa bunganga mo pero in reality, kabaligtaran nito)

INDIRECT MISREPRESENTATION – omitting adverse information about the pr

1. Caveat Emptor
 Let the buyer beware.
 Only markets the good side of the product (ex. T-shirt na binili ni sir na akala niya walang
defect pero pag-uwi niya nakita niya yung defect na tinahi lang konti)
2. Deliberately Withholding Information
 Selling but not telling the buyer all the significant information
 Giving vital information such as numbers, address, ingredients
3. Business Ignorance
 To know the nature of the product you are is selling.
 Unable to provide the customer the complete information he needs to make a fair
decision.
4. Overpersuasion
 Forcing customers to buy their product in a way of advertising
(ex. Nasa bus ka tapos tinanong ka ng isang lalaking mukhang kundoktor ng “ilan kayo?”
tapos nung sinabi mong “dalawa ho, nasa likod yung isa” bigla kang binigyan ng
dalawang juice na nakatusok na, wala kang nagawa kundi kunin ‘yon dahil pinipilit kang
bilhin dahil nga nakatusok na yung straw sa juice)

GIFT-GIVING
 Giving gifts to customers is a common practice in the business community.
 Giving gifts to your co-worker/superior in the intention to be promoted
REASONS FOR GIVING GIFTS
1. It is an effective way of establishing goodwill with a customer
2. It is used as a token of appreciation for business received from the customer
3. It is a good form of advertising
4. It is commonly practiced by competitors to compete effectively.
GIFT-GIVING: ETHICAL OR UNETHICAL?
 Gift-giving is depending to the intention of the giver.

FOUR FACTORS IN GIVING GIFTS

1. It’s value (ex. every valentine’s nagbibigay ka ng card sa bestfriend mo then one-time bigla
kang nagbigay ng singsing)
2. The time when it is given (ex. Kapag bigayan ng grades, tapos nagbigay ka ng suhol para
taasan yung grades mo)
3. The circumstances under which it is given
4. The personal relationship between giver and receiver

CHAPTER 3
PRACTICES OF CORPORATE MANAGEMENT
PRACTICES OF BOARD OF DIRECTORS
1. Plain Graft
 Voting themselves for the diems
 Sabotaging the company for the money
2. Disloyal Selling
 Involves conflict of interest
 EXAMPLE NITO IS YUNG PERSON MAY TWO BUSINESS AND MAY CUSTOMER NA
NAMAMAHALAN DUN SA ISANG COMPANY NA EMPLOYEE LANG SIYA AND SINABI
NIYANG DUN NA LANG MAG AVAIL SA ISANG BUSINESS NIYA WHICH IS SIYA YUNG
OWNER DISCRETELY
3. Insider Trading
 Occurs when a broker or another person with access to confidential information uses
that information to trade in stocks and securities.
 GINAGAMIT YUNG DISADVANTAGES IN ISANG COMPANY TO GAIN MONEY
4. Routing Purchases Through Director’s Pocket
 Creates a separate corporation where they are the controlling stockholders.
5. Negligence of Duty
  Common breach of trust (ex. Isang beses sa isang taon lang ang meeting pero hindi ka
pa pumunta)

PRACTICES OF EXECUTIVE OFFICERS

1. Claiming a vacation trip to a business trip (ex. Nagsabi ka na 500 pesos ang pamasahe sa
grab na sasakyan mo pero ang sinakyan mo ay pedicab/tricycle lang)
2. Having employees do work unrelated to the business (inuutusan mo halos araw-araw ang
employee mo na ipagtimpla ka ng kape kahit hindi naman ‘yon ang trabaho niya)
3. Loose or ineffective control
 Managers do not provide adequate controls to remove temptation and to prevent or
discourage employess from engaging in unethical practices.
 KUNWARI EX OR FRIEND MO YUNG KATRABAHO MO KAYA HINDI MO MASUWAY OR
KINUKUNSINTI
4. Unfair labor practices

b. To require as a condition of
employment that a person or an
employee shall not join a labor
organization or shall
withdraw from one to Which he
belongs;
c. To contract out services
or functions being performed by
union members when such will
interfere with, restrain or
coerce employees in the exercise
of their rights to self-organization;
d. To initiate, dominate,
assist or otherwise in with the
formation or administration of any
labor organization, including
the giving of financial or other
support to it;
e. To discriminate with
regard to wages, hours of work,
and other terms or conditions of
employment in order to
encourage or discourage
membership in any labor
organization.
 f. To dismiss, discharge, or
otherwise prejudice or
discriminate, against an employee
for having given or being about
to give testimony under the Labor
Code.
g. To violate the duty to
bargain collectively a prescribed
by the Labor Code;
h. To pay negotiation or
attorney’s fees to the union or its
officers or agents as part of the
settlement of any issue in
collective bargaining or any other
dispute;
i. To violate or refuse
to comply with voluntary
arbitration awards or decisions
relating to the implementation or
interpretation of a collective bar
gaining agreement;
j. To violate a collective
bargaining agreement.
a. To interfere with, restrain or
coerce employees in the exercise
of their right to self-organization;
b. To require as a
condition of employment that a
person or an employee shall not
join a labor organization or shall
withdraw from one to Which he
belongs;
c. To contract out services
or functions being performed by
union members when such will
interfere with, restrain or
coerce employees in the exercise
of their rights to self-organization;
d. To initiate, dominate,
assist or otherwise in with the
formation or administration of any
labor organization, including
the giving of financial or other
support to it;
e. To discriminate with
regard to wages, hours of work,
and other terms or conditions of
employment in order to
encourage or discourage
membership in any labor
organization.
 f. To dismiss, discharge, or
otherwise prejudice or
discriminate, against an employee
for having given or being about
to give testimony under the Labor
Code.
g. To violate the duty to
bargain collectively a prescribed
by the Labor Code;
h. To pay negotiation or
attorney’s fees to the union or its
officers or agents as part of the
settlement of any issue in
collective bargaining or any other
dispute;
i. To violate or refuse
to comply with voluntary
arbitration awards or decisions
relating to the implementation or
interpretation of a collective bar
gaining agreement;
j. To violate a collective
bargaining agreement.
 To interfere with, restrain or coerce employees in the exercise of their right to self-
organization.
5. Making false claims about losses to free themselves from paying the compensation and
benefits provided by law (ex. Nagkukunwaring nalugi ang Negosyo pero ang totoo ay unit-
unting nagnanakaw)
6. Making employees sign documents showing that they are receiving fully what they are
entitled to under the law when in fact they are only receiving a fraction of what they are
supposed to get.

PRACTICES OF EMPLOYEES
1. CONFLICTS OF INTEREST
 An employee who is duty bound to protect and promote the interests of his
employer violates this obligation.
 TINATRAYDOR YUNG COMPANY FOR PERSONAL GAIN
2. DISHONESTY
Ex. Nakipagkutsaba ka sa katrabaho na bukas ay malelate ka sa trabaho kaya binigay mo yung
timecard mo para siya ang mag timecard para hindi ka maconsider as late)
3. SEXUAL HARASSMENT
 Harassment can include "sexual harassment" or unwelcome sexual advances, requests for
sexual favors, and other verbal or physical harassment of a sexual nature
 [REPUBLIC ACT NO. 7877]

 AN ACT DECLARING SEXUAL HARASSMENT UNLAWFUL IN THE EMPLOYMENT, EDUCATION

OR TRAINING ENVIRONMENT, AND FOR OTHER PURPOSE.

CHAPTER 4

BUSINESS PRACTICES IN TREATING COMPETITORS

1.Truthful Disparagement
- Letting the customer know about the truth of the products of the competitor ng for better
decision of the customer

2.False Disparagement --
-- sinisiraan yung competitor
– telling false adverse information abt the competitor

PREDATORY BUSINESS PRACTICES

- To cripple or destroy his competitor’s business

A. Inducing Breach of Contract

– to interfere with competitor’s production or distribution process

B. Undercost Selling

 Legitimate under cost Selling – Example is yung mga overruns

 Predatory Undercost Selling – ito yung patuloy mong binababaan yung price ng product
mo to force na bumaba rin yung sa competitor hanggang malugi sila
 Local Price Cutting – May lugar kung saan mataas ang benta ng isang product and may
lugar kung saan din mababa ang bentahan

PREDATORY UNDERCOST SELLING

- To ruin the competitor and force him out of business

LOCAL PRICE CUTTING

 - Selling below cost of production in the locality

CHAPTER 5
(ETHICAL PROBLEMS IN PRICE AND WAGE DETERMINATION)
WAGE: the amount of money he received for doing his job.
PRICE: the compensation for material goods and wage as compensation for service rendered
(Price and wage are both compensation)

ETHICAL CONSIDERATIONS IN PRICING

1. Price Theories
- Price depends on the law of supply and demand. The more supply, the less is the price: the
less the supplies the higher the price.

2. Methods of Determining Price

- Fair return (Profit)
- The larger profit a businessman wants, the higher will be the price of his products.
A.) Fair Price related to Fair Return
- the return established as fair for one industry should be fair for all members of that industry.
- The pricing structure of a company is fair when its profit is equal to the average profit in the
same industry for the same amount of capital and total resources used.
In determining fair return, Two commonly used bases are:
1.1. Equity or Capital
- preferred basis, comparable with amounts that may be invested in alternative
investments schemes
1.2 Total Value of assets used.

B.) Price in Fixed Price System is Fair Price

-the seller is expected to establish the lowest prices for his goods, and the customer is in turn
expected to take it or leave them at the price quoted.
- equality of all buyers, minimum and honesty for seller and buyer.

C.) Bargaining or Movable Price System

- If a businessman is the buyer, he attempts to persuade a seller to exchange his goods or
services for the lowest price and consequently for the smallest return.

D.) Bidding
- Businessmen makes his final price which is the minimum they are willing to accept
- May bidding

3. Pricing Practices
- Businessmen use a variety of pricing practices, which may be copied from others
A.) Varying Price Policy
- nagdedepend sa customer yung presyo, kung favourite ba siya ng seller or no
B.) follow the leader Pricing
- gingaya yung pricing nung mas kilalang company
C.) Odd Price Policy
- odd numbers yung pricing para paniwalaan na mas cheaper yung binibili
D.) Loss Leader Pricing
- Pinaniniwala yung mga customers na yung mga goods sa store is at sale

FACTORS TO CONSIDER IN ESTABLISHING FAIR WAGES

1. Duties and Responsibilities and the requirements of the job
2. Laws and Regulations
3. Cost of living
4. Going rate or Community Rate
5. Financial Condition of the Company

CHAPTER 6
(SURVEY OF LAWS ON BUSINESS ETHICS)

Republic act no. 7394 “The consumer act of the Philippines“

 - To protect the consumers from the actuations of some unscrupulous businessmen

CONSUMER PRODUCT QUALITY AND SAFETY

- Injurious, Dangerous and Unsafe Products
- Imported Products
- Prohibited Acts and Penalties

DECEPTIVE AND UNFAIR AND UNCONSCIONABLE SALES ACTS OR PRACTICES

- Chain Distribution Plan or Pyramid Sales Schemes
- Home solicitation Sales
- Referral Sales

WEIGHTS AND MEASURES

- Metric System

CONSUMER PRODUCT AND SERVICE WARRANTIES

- Liability of a Retailer
- Enforcement of Warranty or Guarantee
- Guaranty or Service Firms
- Professional Services

LABELING AND FAIR PACKAGING

- Minimum Labeling Requirements
- Special Packaging of Consumer Products for the Protection of Children

PRICE TAG REQUIREMENT

- Kailangan may accurate price tag or label or markings

LIABILITY FOR PRODUCTS AND SERVICES

- Any filipino or foreign manufacturer should be liable for redress, independently of
fault for damages caused.

REGULATION OF REPAIR AND SERVICE FIRMS

- The Departmen of Trade and industry is responsible

CONSUMER CREDIT TRANSACTION

- Required Disclosures in Credit Sales
- Sales of Consumer Products on Installment Payment
NATIONAL CONSUMER AFFAIRS COUNCIL
- Composition
- Powers and Functions
- Consumers Education in Schools

CONSUMER COMPLAINTS
- Concerned department may commence an investigation

CHAPTER 7
(UNETHICAL PRACTICES RELATING TO FOOD, DRUGS, COSMETICS, AND DEVICES)

The Food, Drug and Cosmetics Act (Republic Act No. 3720)
 - To protect the health of the consumer by ensuring a safe and good quality of food,
drugs, cosmetics, and devices and to regulate their manufacture, sale and
advertisement.

COMMON VIOLATIONS IN FOODS MANUFACTURE AND SALE

VIOLATIONS IN DRUGS AND COSMETICS

CHAPTER 8
(THE COPYRIGHT LAW)
COPYRIGHT
- intellectual property that protects original works of authorship as soon as an author
fixes the work in a tangible form of expression.

Decree on the Protection of Intellectual Property Act No. 3134

- Mental creations belong to their creator, heirs, and assignees.

DURATION OF COPYRIGHT
- Last during the creator’s lifetime and 50 years after his death

HOW TO SECURE COPYRIGHT

- Copyright owner must, within 3 weeks after the 1st public dissemination of his work,
register and deposit with the national library

INFRINGEMENT
- Copying the part of the copyrighted work ng walang owners’ authority
 CHAPTER 9
(TRADEMARKS, TRADE NAMES, AND SERVICE MARKS)

R.A. NO. 166 Trademark Registration

TRADEMARK
- Distinctive, mark, name, symbol, or sign used by a manufacturer on his goods to
identify and distinguished them from others
- Ex. Sony
TRADENAME
- Individual names and surnames, firm names, devices or words used by
manufacturer, industrialists
- Ex. San mig Corp, Electric Co.
SERVICE MARK
- A mark used in the sale or advertising of service to identify the services of one
person and to distinguished them from others
- Ex. Insular Life Assurance Company,
COLLECTIVE TRADEMARKS
- Used by the members of a cooperative, or association, or org.
- Ex. YMCA, YWCA, Rotary International
DURATION OF TRADEMARK
- Lasts for 20 years from the date of issuance

ADVANTAGES OF TRADEMARKS
1. To the manufacturer or businessman
2. To the retailer or distributor
3. To the buying Public

CHAPTER 10
(THE PATENT LAW)
Republic Act No. 165 Philippine Patent Office (PPO)

PATENT
- Granted or giving an inventor the right to exclude others from making, using, or
selling his invention within the Philippines.
- Serves to stimulate inventions since the inventors are rewarded by a patent
DURATION OF A PATENT
- 17 years without extension, after this, the invention becomes available to the public
and anybody may produced it without authority

WHAT MAY BE PATENTED

1. Inventions
- Manufactured Product
- Substance
- Process
- Improvement
2. Design
3. Utility Model