Course Code and Title: BACR3 Good Governance and Social Responsibility

Lesson Number: 12

Topic: Coping with Corruption through Work Ethics and Accountability in Public

Service

Professor: Soledad S. Escritor J.D.

This module is focused on the morals of doing business without ignoring the
legal perspective and taking into serious consideration situations within the legal and
ethical dimensions.

Learning Objectives:

At the end of the lesson, the student should be able to:

1. Recognize that good government and business people from rank-and-file to the
higher levels of governance must be aware of the necessity to inject values and
faith in the work place.
2. Assess the need for moral recovery in redefining the political culture of the
leaders and the public towards more responsive, professional and competent
public administration.
3. Promote zero tolerance for corruption through social values formation and active
participation and involvement of the public in the fight against corruption.

Pre-assessment: True or False: Read the sentence very well. On the blank before
the number, write True if the statement is correct, False if incorrect.

_________1. Corruption as a distortion to government efficiency and accountability

has been present since time immemorial.

_________2. It exists only in government bureaucracies.

_________3. Corruption is something society should tolerate.

_________4. Societies undergoing rapid change often appear susceptible to

corruption because people do not have stable moral guides for

behavior.

_________5. Conducting lifestyle checks on different government agencies’

employees diminish if not totally eradicate graft and corruption.

Lesson Presentation:

In the Philippines, corruption is understood as “the misuse of public power for

private profit.” In political democracy, our concern with corruption is with officials
performing their public tasks improperly in order to receive personal benefits. It is
illustrated when elected officials are seeking for people’s votes, when police are
overlooking crimes in return for a bribe, whenever a housing inspection is ignoring an
unsafe building in return for a favor and many more. But corruption exists not only in
government bureaucracies; they do dwell in the private sector as well. However, the
question of corruption is more public in scope, involving government officials and even
employees alike. As a distortion to government efficiency and accountability, corruption
has been present since time immemorial and it looks like there is not much, we can do
about it. Its effects are big and cause widespread economic neglect to those who are
supposed to receive public service. The goals of efficiency and accountability have
been sacrificed in favor of the politicians. It is not something society should tolerate.
Nevertheless, it exists everywhere, it is worse in some places than in others so there
are things we should do about it, after all, widespread corruption breeds political
instability. Corruption has direct economic costs. But more generally, the cost of
government services not properly provided and the inflated cost of government
programs due to corruption reduce both economic growth and the benefits we get from
government services. While many countries are clean, many countries are corrupt; the
question now is what can be done about corruption?

Ethics and Governance

The integration of moral values and ethical standards in public administration is one
effective strategy of responsive and good governance in the midst of dishonesty,
corruption, and mediocrity in the public service. Ethical values and traits would ensure
guidance among government employees only if these moral recovery principles are
enforceable in actions among all public officials and employees, and punitive in
character whenever violated, suppressed or restricted for personal advantage. Hence,
ethics and accountability are the foremost values in government discourses concerning
the administration of services in practically all democratic states today. Based on a UN
Report in 2000, “Promoting Ethics in the Public Service,” it was stated that:

Ethics is gaining prominence in the discourse about governance today. There is a

perception that standards in public life are in decline. This raises questions about the
costs of misconduct on the part of those who have been entrusted with guarding public
interests and resources. These costs are losses in trust and confidence in public
institutions and losses in precious resources which were meant to support the economic
and social development of nations and peoples. There is a move worldwide to restore a
measure of trust and integrity in public institutions and officials, to safeguard democracy
and promote better governance.

Building an Honest to Goodness Civil Service

Every public servant is expected to discharge his duties and functions with high
regard to the values of accountability, honesty, transparency and neutrality. The
selection of employees in the public bureaucracy is based primarily on merits and
fitness in order for him to faithfully perform the mandates of the office regardless of his
political affiliations or associations. This work value encourages good governance and
professionalism. In fact, the 1987 Philippine Constitution under Section 27 of Article 11
provides a leading declaration that the State shall maintain honesty and integrity in
public service and take positive and effective measures against graft and corruption.
However, in spite of all the efforts to keep the civil service efficient, competent,
accountable and professional, the civil service together with officers and employees
remain politically vulnerable to graft and corrupt practices. Many cases have been
documented, some of them are resolved, still many are pending waiting for the decision
of the Sandiganbayan. Many of them were also charged criminally and civilly in courts
of competent jurisdiction arising from petitions by aggrieved parties or citizens.

A Call for Work Ethic and Renewal

Work ethic refers to a set of values based on the moral virtues in public service like
honesty, accountability, and professionalism. The principle is values behind the work.
Ethical behavior for civil servants is enshrined in numerous laws and regulations in the
Philippines. The Philippine Constitution for one set, above all, the legal framework of
accountability of public officials under Article X1, which is primarily predicated on the
declaration that “public office is a public trust.” There is also the Code of Conduct and
Ethical Standards (RA 6713) in 1989 for all government officials and employees; the
Anti-Graft and Corrupt Practices Act of 1960 (RA 3019); the Administrative Code of
1987; Art.212 (Section on Bribery) of the Revised Penal Code; the Anti-Red Tape Act of
2007 (RA 9485) and even the Moral Recovery Program. There are also the three
constitutional Oversight Bodies: The Office of the Ombudsman, The Commission on
Audit, and the Civil service Commission. The Presidential Anti-Graft Commission
(PAGC) has been created to investigate allegations against presidential appointees,
and necessary cases have been filed before the courts. He establishment of the
Revenue Integrity Protection Service (RIPS) is responsible for investigating allegations
of corruption and conducting lifestyle checks on the Department of Finance (DOF) and
its agencies’ employees, same with the Bureau of Customs (BOC).Media reports and
coverage of anti-graft and corrupt proceedings in courts are publicized, but not all “big
fishes” are caught or convicted, many of them escaped conviction, while petty offenders
are commonly separated from office, if not jailed. The usual source of graft and corrupt
practices is government-funded infrastructure services.

A Case of Corruption: the People’s Perception

In 2004, the social Weather Station (SWS) released a survey as regards the
perception of the Filipinos on the main forms of corruption in the country. It revealed that
respondents, who themselves are Filipinos, perceived the following to be the main
forms of corruption:

1. General bribery or gift-giving;

2. Diversion of budget away from projects;
3. No transparency in public bidding;
4. Overpricing procurement;
5. Doing substandard projects;
6. Underreporting of tax collections;
7. Tax and tariff evasion
8. Pork barrel fund; and
9. Cronyism

According to a UN-DESA Report in 2004, the Office of the Ombudsman has

estimated that US$48B has been lost by the Philippine Government over the last
twenty (30) years on account of corruption. The Commission on Audit (COA) has
estimated that corruption costs the Philippines about Php2B which is US$44.5M each
year. It is estimated that some 20% of the annual budget is lost to corruption.
Furthermore, the Report identified the greatest number of corruption complaints
received by the Office of the Ombudsman in this order:

1. Department of Public Works and Highways (DPWH);

2. Department of Environment and Natural Resources (DENR);
3. Department of Education (DepED);
4. Burau of Customs (BOC) / Philippine Ports Authority (PPA);
5. National Irrigation Administration (NIA);
6. Bureau of Internal Revenue (BIR);
7. Department of Health (DOH);
8. Department of Interior and Local Government (DILG);
9. National Power Corporation (NAPOCOR);
10. Bureau of Immigration (BOI).

There are continuing concerns that anti-corruption measures might have proven
inadequate to ensure compliance with the Code of Conduct. More seriously,
commentators say that highly publicized cases of corruption involving well-connected
officials, including presidential appointees, have not been pursued, thereby weakening
the perception of the government’s commitment to fight corruption. In the meantime,
there is a public perception that the anti-graft bodies and the judiciary have been
ineffective against graft and corruption and worse, involved in it. In the SWS surve6y, it
also showed that only 0.5% out of every 100,000 civil servants get prosecuted for
corrupt acts in the Philippines. Three notable structural sources of corruption were
identified:

1) that candidates must finance their own electoral campaign, owing a debt of
gratitude to many sponsors who call in the favors when the candidates are
elected;
2) the incredibly poor compensation and reward system for civil servants;
3) the poor enforcement of anti-corruption laws in the Philippines that renders
corruption a low risk, high reward activity.

Other causes of corruption in the Philippines are wide discretion of bureaucrats,

burdensome regulations and transaction system, weak control mechanisms, information
asymmetry between the rich and the poor, weak public vigilance, and elements of
Filipino political culture that translate into tolerance of corruption.

The Culture of Corruption

Corruption is also regarded as quasi-legal term meaning a “failure to carry out

proper or public responsibilities because of the pursuit of personal gain. The culture of
graft and corruption is an administrative issue since time, particularly in underdeveloped
societies, and the Philippines. Corruption and politics wreak havoc on any government
bureaucracy. The merit and fitness principle on recruitment in any civil service
bureaucracy is supposed to weed out the incompetent and the corrupt. However, in
most underdeveloped societies, the failure to institutionalize an honest-to-goodness
performance appraisal system made more the government and its officials corrupt A
performance appraisal system is an objective and fully operative mechanism by which
to gauge the work performance of people. The evaluation system will be the key to
making continued service in government dependent on how well one does his/her job.

Furthermore, studies of corruption in the Philippines point to these adversarial

effects which include, but not limited to:

1. Wastage of public resources as when infrastructure projects are poor; and

substandard and do not last their projected useful lifetime;
2. Low revenue collection, as when bribes are paid in lieu of taxes and charges in
revenue collecting agencies;
3. Other socially unfeasible behavior such as tax evasion and smuggling;
4. Cronyism, the highest form of corruption expressed in cartels and monopolies
that reduce competitiveness in industry;
 5. Increase in the cos of doing business in the country; and
6. Waste in the resources for development which postpones the poor Filipino
escape from poverty.

Generalization:

Public office is a public trust. Public officers and employee must at all times be
accountable to the people, serve them with utmost responsibility, integrity, loyalty, and
efficiency, act with patriotism and justice, and lead modest life. Public office is not a
property on which one can claim jurisdiction but it is a position of trust to render service
upon which one shall display integrity, efficiency and patriotism. To reiterate, then, a
public office has the following characteristics:

a) It is a public trust;
b) It is not a vested right;
c) I is not a property; and
d) It cannot be inherited.

A public office is the right, authority, and duty created and conferred by law, by
which, for a given period, either fixed by law or enduring at the pleasure of the creating
power, an individual is invested with some portions of the sovereign functions of the4
government, to be exercised by him for the benefit of the public. Thus, a public office, in
this respect, is exercised. He is ordinarily a servant who acts on the basis of order,
directives; and performs roles to which he is assigned. either by a public officer or an
employee. In this regard, an officer is regarded the head of a public office, one who has
the authority and command to exercise the powers and functions of the office he
represents. It involves the exercise of one’s discretion in the discharge of the functions
entrusted to him by the government and its people. Bu such discretion should be
aligned to the core values of the bureaucracy. On the other hand, an employee refers to
any person in the service of the government or its instrumentalities

Levels of Ethics

In public administration, there is a hierarchy of levels of ethics, each of which has

its own set of responsibilities. These are personal morality, professional ethics, ethics in
organization and social ethics. Personal morality is the basic sense of right and wrong.
This is a function of our post and is dependent on factors such as parental influences,
religious beliefs, cultural and social norms Second in the hierarchy is professional
ethics; public administrators increasingly recognize a set of professional norms and
rules that obligate them to act in a certain professional way. The third level of ethics is
ethics in an organization. Every organization has an environment or culture that
includes both formal and informal rules of ethical conduct. The fourth level of ethics is
social ethics. The requirements of social ethics oblige members of a given society to act
in ways that both protect individuals and further the progress of the group as a whole.

Activity/Evaluation:

1. Click on the phrase listed at www.oxymoronlist.com. Give five (5) examples of

words listed as oxymoron with its meaning.

2. Explain why business ethics is an oxymoron.

References: Principles and Practices of Public administration by Ricardo S. Lazo, First

Edition, Rex Book Store, Inc. Copyright 2011

Business Ethics and Corporate Social Responsibility Copyright 2007, Anvil

Publishing, Inc., and Jose Mario B. Maximiano,

Course Code and Title: BACR3 Good Governance and social Responsibility

Lesson Number 13

Topic: Business Ethics as Foundation of Corporate Social Responsibility

Professor: Soledad S. Escritor J.D.

This module emphasizes the fundamental principles and relationships of ethics

and business including a brief reflection on the morality of profit motive.

Learning Objectives:

At the end of the lesson, the student should be able to:

1. Integrate faith and work alongside with its implications at the personal and on the
corporate levels.
2. Categorize ethical management as the foundation of corporate social
responsibility.

Pre-Assessment: Formulate five (5) short questions on how you as a business

practitioner shall make business decisions in accordance with moral concepts and
judgments. Example: Is it true?

1.
2.
3.
4.
5.

Lesson Presentation:

What Business Ethics Is

In the traditional sense, people go into business to maximize profit (huge profit,
that is), while ethics deals with anything other than profit. Ethics, in the field of
Philosophy, is a specialized study of what is right or wrong. However, there is the
dilemma about doing the right thing.” It seems that the one who abides by moral
principles is usually poorer while the crook becomes richer. The dilemma arises
because ethical behavior is not always rewarded and unethical behavior is rarely
punished. Business ethics in our discussion is also known as ethical management.
Managers are caught in a balancing act between the ideal and the practical such as, the
need to produce a reasonable profit for the shareholders and at the same time to
maintain integrity by paying correct taxes to the government. With some exceptions, it
appears that those who choose to conduct business in an ethical manner will, in the
long run, perform better than those who do not.

Ethical Management in the Workplace

Ethical management is the foundation of corporate ethical issues arising from the
employer-employee relationship, such as the rights and obligations justly owed between
them. Preventing discrimination issues in the workplace include the practice of
affirmative action and fighting sexual harassment, child labor, and other discriminatory
practices on the bases of age, gender, religion, and physical attractiveness. In this area,
moral challenges affecting the privacy of the employer, the practice of whistle blowing,
and working conditions and occupational safety may take place --- and the moral leader
and practitioners should be in a position to face these challenges squarely.

A company cannot become a corporate citizen without being ethical. Business

ethics seeks to determine whether a particular behavior, decision, or action of an
individual or organization is morally right or wrong. It is subjective (or what the subject or
doer thinks is right or wrong.) Rather it is objective, and the basis is a universal standard
common to all. Business is related to corporate social responsibility, although the former
is primarily personal and CSR is mainly social.

The wisest thing to do is to practice business ethics first, and then practice CSR.
Business ethics knocks on one’s conscience before the individual makes a business
decision, while CSR nags the moral accountability of a group or individuals. Before CSR
is practiced correctly, it is assumed that practitioners are ethical. It means that the
business leader or entrepreneur and the other members of the organization are well-
founded in business ethics before doing corporate citizenship. We cannot practice CSR
without business ethics.

Business ethics can become a philosophy of management---if the practitioner

chooses to do so. Whereas ethics is principally personal, CSR is social and corporate.
In most cases, the ethical behavior of a corporation depends to a large extent on the
moral conviction of its CEO and managers---meaning to say that the company CSR in a
certain degree depends on the personal ethics of the CEO. Of course, it is necessary
that ethics also becomes a corporate affair and the conviction of the rank-and-file as
well. You practice ethics because it is your philosophy of management; you benchmark
CSR because it is the right thing to do.

It is advantageous if a company has a CSR department, which should not be

headed by a lawyer. It should not be headed by a lawyer because ethical management
is beyond legal and regulatory compliance. It requires the involvement of everyone and
it is primarily social. CSR includes code of conduct, corporate citizenship, employee
volunteerism, resource sharing and management, social investment and sustainable
development. CSR is interested in broadening participation in social development
efforts by getting more people to participate in poverty-alleviation programs and
community involvement. The more people are engaged in ethical management, the
better.

Ethical management is a tool towards corporate excellence. The goal of both

business ethics and CSR is the moral excellence of all players in the business. The goal
of business ethics is personal excellence and that of CSR is corporate excellence.
Excellence is an open-minded goal, which means a personal; and corporate decision to
enter the room for improvement and become better citizens of the world.

Both business ethics and CSR deal with human conduct, practices,
decisions, way of doing things, including both external and observable behaviors and
internal unobservable intentions, including universal moral values. It is undeniable that
there are things everyone values like honesty, providing assistance to a needy person,
patience, protecting the environment, business integrity, and keeping one’s word. On
the other hand, fooling a client, verbally abusing a worker, sexual harassment in the
workplace, and price fixing are morally wrong. There are values that are universally
valid, which means to say they are recognized by all and everywhere. In other words,
there is only one universal language for all business practitioners and professionals
everywhere-----the TRUE, the JUST, the FAIR, and the GOOD. Pope Paul V1 declared
that “Words will lack real weight unless they are accompanied for each individual by a
livelier awareness of personal responsibility and by effective action.”

We do not simply plan our corporate social involvement; we apply it to day-to-day

operations as part of our core business. We just don’t read ethics book. Since they do
not end in memorized codes and principles, business ethics and CSR are practical,
pragmatic, and alive. Morality should not only be lectured in classrooms. It should be an
operative experience that is founded on personal and corporate integrity. Universal
values and timeless truth are nothing without praxis, since fine words can never actually
substitute for a meaningful living. Corporate social responsibility is the result of a deep
conviction that there is something more superior to the truth, and that is social
involvement. A good theory without daily living is deceased, just as faith without deed is
dead (James 2: 17 & 26). For this reason, it is always harder and far more challenging
to live the truth and get involved than to memorize some business codes of conduct. .

Yes, business ethics is about firm conviction. Corporate involvement is not

about feelings, since ethical standards are not just emotional or sentimental issues.
Emotions are important and no one denies that. But we cannot rely on them too much
because they are changeable, fleeting, and almost always capricious. Similar to a
marshmallow, emotion is good and sweet but unreliable in tough decision-making.
refers to the myriads of the extraordinary and ordinary decisions and practices, which
men and women of good will make, and the lasting values for which they stand. The
total development of the human person embraces the physical and the spiritual,
material and immaterial, financial and moral. Progress must be for all residents of this
planet, for every member of humankind and for the whole human person, Economic
development itself is not an end. It is a means to an end, and the end is the total welfare
of man, that is, for the whole person.

Generalization:

At times, corporate social responsibility and ethical management coincide with the
law. Hence, the legal prohibitions against fraud, tax evasion, pollution, bribery to public
officials, child labor, sexual harassment, and job discrimination are also CSR concerns.
Those instances forbidden by law are also forbidden by certain codes of conduct.
Compliances with such laws is tantamount to compliance with corporate social
responsibility. But the observance of what is legal, is only the minimum requirement of
corporate social responsibility. It means that something more is required of business.
We learn from those sad experiences of humanity, such as the oil spill of Exxon Valdez
in Alaska, Marcopper disaster in Marinduque, Philippines, and the pesticide accident in
Bhopal, India, we cannot but convince ourselves that something more is expected of
business than obeying the law. While the minimum daily wage of P300 per day (Metro
Manila) for example, is mandated by law, the wage mandated by corporate social
responsibility is certainly higher than the minimum wage. What is ethical in
compensation is to provide a paycheck that can purportedly provide a decent style of
living for the worker and his dependents. It is called the family wage calculated with
justice and family values as determinants. .

Activity/Evaluation: Read the case very carefully. Analyze the issues involve and
answer intelligently.

Ethics vs. Profit

A large American company participates in a highly competitive industry. To

meet the competition and achieve profit goals, the company has chosen the
decentralized form of organization. Each manager of a decentralized center is
measured on the basis of profit contribution, market penetration, and return on
investment. Failure to meet the objectives established by corporate management for
these measures is not accepted and usually results in demotion or dismissal of a center
manager.

An anonymous survey of managers in the company revealed that they felt

pressured to compromise their personal ethical standards to achieve the corporate
objectives. For example, certain plan locations felt the pressure to reduce quality control
to a level that could not ensure that all unsafe products would be rejected. Also, sales
personnel were encouraged to use questionable sales tactics to obtain orders, including
offering gifts and other incentives to purchasing agents.

The chief executive officer (CEO) is disturbed by the survey findings. In his
opinion, the company cannot condone such behavior. He concludes that the company
should do something about this problem.

Questions:

1. What are the ethical problems mentioned in this particular case and what are the
probable causes of these problems?
2. Is it all right to do something illegal or unethical to maintain the company’s image
and profitability? Elaborate. S
3. If you are the CEO of the company, what would you do and why?

References: Business Ethics and Corporate Social Responsibility, Copyright 2007, Anvil

Publishing,Inc. and Jose Mario B. Maximiano

Business Ethics and Social Responsibility, 2 nd Edition, Copyright 2011 by

Rex Book Store, Inc. and Fr. Floriano C. Roa

Course Code and Title: BACR3 Good Governance and Social Responsibility

Lesson Number: 14

Topic: Moral Theories and Principles

Professor: Soledad S. Escritor J.D.

This module prepares future managers and aspiring business leaders for
dealing and resolving complex moral problems that affect commercial transactions and
fiduciary relationships of people in business organizations.

Learning Objectives:

At the end of the lesson, the student should be able to:

1. Understand the nature of business from the moral perspective

2. Rationalize the importance of ethics in business
3. Apply the dynamics of moral reasoning as a framework for making ethicasl
decisions in business

Pre-Assessment:

Sentence Completion: Fill the blank with the correct word/s to complete the meaning of
the sentence.

A. The right to 1) __________is so fundamental that even if there is a just cause for
2) ____________and after 3)__________________any legislative 4) _____may
rule against dismissal from work due to the fact that the right to work is a basic
5) ______________very much related to the right to life.

Words to choose from:

court work dismissal due process privilege

Lesson Presentation:

Business is as old as human civilization. It is an activity that is part and parcel of

human society. Society will not exist without business. Since business is an integral part
of society, its activities must be examined from the ethical perspective, in the same way
that society examines politics, economics, government, culture, and religion from the
moral point of view. The fundamental reason for examining the activities of business
from the moral perspective is for the promotion of the common good, protection of the
individual’s interests and the preservation of the human society in general. Without
ethics, business will be a chaotic human activity because there will be no common
understanding and agreement about what is right and wrong human conduct. Human
Dignity in the Priority of Labor over Capital

Man, the human person, is above other Ms (material resources, machine,

methods, management, money, etc.). The human labor is the real wealth creator. All
others are secondary to the dignity of the human labor. Every human being, more
specifically the breadwinner of the family, has the right to work and earn. But, by
exercising this fundamental right, it is only proper that individual workers are guaranteed
human treatment, just wage and good working conditions worthy of the human person.
When the company is socially responsible toward its employees, providing good
working conditions, and paying them above the minimum wage, it recognizes the
correct and complete concept of human labor, which is both philosophically reflected
and biblically revealed. This special concept human labor is better grasped when we try
to see more than what meets the eye and see the beauty hidden within the core of the
human soul.

Respect for Fundamental Human Rights

The Universal Declaration of Human Rights adopted in 1948 by the General

Assembly of the United Nations, is the most important declaration recognized by all
member states. It includes all civil, political, economic, social and cultural rights. Civil
and political rights – sometimes referred to as “first generation rights” by human rights
specialists – include the rights to freedom of religion, freedom of association, freedom
from torture and slavery, and freedom from discrimination. Economic, cultural, and
social rights – “second generation rights”, include the right to education, the right to just
and favorable conditions of work, and the right to participate in cultural life. A right is a
personal entitlement to something. Your right is your privilege, a moral claim, a
prerogative and exclusive title to what is due to you. It also enables you to freely choose
whether to pursue certain activities and interests or not. Your right empowers you to act,
perform, and think in your own personal and distinct way. IF something is due to you,
then, you have a right to it. From birth, in fact, from womb to tomb, personal human right
is an essential part of one’s personality. Because they flow from human dignity, and
because human dignity is priceless, human rights are priceless and cannot be bought,
sold, transferred, or exchanged for another value. Our Philippine Constitution
pronounced this most significant statement, “We hold these truths to be self-evident:
that all men (and women) are created equal and endowed by their Creator with certain
inalienable rights.” Business can make or break society. Business enterprises have
ongoing operational tasks that encompass human rights dimensions such as:

*Employment: labor conditions, recruiting, and laying off employees

*Security: ensuring the security of their facilities and personnel
*Economic development: deciding in which countries they are going to invest and
operate, and the socioeconomic impact of those investments
 *Environment: identifying and managing environment risks
*Community / Social responsibilities: such as making a positive contribution to
the societies within which they operate across broad range of non-business
activities.

Respect for Basic Employee Rights

The right to work is part and parcel of the right to life and the duty to sustain it. It
is fundamental because it flows from nature, as it is inborn in every person. The human
person is created to work, to till the soil and raise cattle, to subdue the earth and its
natural resources. Social responsibility which is both corporate and governmental,.
means making an attempt, those unavoidable physical and biological necessities in life
to fill up his innate vacuum in the human person. The right to work is fundamental to all
for these reasons:

1.People work to survive – people work to satisfy some survival needs, those
unavoidable physical and biological necessities in life. There is no need to explain why
basic survival requirements necessarily include the compulsion to live with honor and
dignity. How can society expect someone to live with honor and dignity when someone
does not even have adequate work?

2.The natural obligation to support our dependents – With work,

entrepreneurship, or any means of livelihood, we provide shelter, education and daily
bread to our dependents. What happens now if the breadwinner is jobless?

3. Psychological – which means people work to gain and maintain self-respect. In

this sense, work becomes the highway to develop oneself. With self-development
comes our calling to cooperate in social progress, peace and order, and
betterment of society. Needless to say, joblessness means restlessness,
inasmuch as joblessness breeds all sorts of crime, looting, mob rule and social
disorder.

Just wage is not only something to get by but also the means to enjoy a
good quality of life. For the wage to be just, some allowances for contingencies
should be considered because common sense imposes, for instance, that wage
may increase accordingly when prices of commodities increase. The minimum
wage is set by the government to protect low-paid employees against all types of
exploitation by setting a floor in which their remuneration cannot further fall. A
just wage is a means to provide for the worker and his family a manner of living
in keeping with the dignity of the human person. Anything less is morally
unacceptable.
 Security of tenure is a basic right of both public and private employees. It
means that, in case of regular employment, the services of any one of the
workers cannot just be terminated except for just cause and after a due process.
The employee right to due process consist of an objective evaluation of his/her
case, a fair hearing and a chance to appeal, a process very fundamental in firing
and even in demoting. This right is both legal and moral. Corporate social
responsibility goes beyond what the law requires. The right to security of tenure
is essentially linked to other fundamental right (rights to work and life) so much
so, even if there is a just cause for dismissal, business may still rule against
dismissal from work because this right is essentially related to the right to life and
the natural duty to sustain it. Born like twin brothers, the right to work and the
right to life obviously take precedence over other considerations. In the
workplace, due process is the right of the worker to grievance, arbitration,
intervention or some other fair method to evaluate hiring, firing, promotion, or
demotion. Under this right, all rank-and-file workers of any organization are
considered autonomous persons and must be treated fairly and justly. Due
process does not ask others to do what they ought to do; it is but a plea for fair
treatment. The employee’s right to due process may also be considered a check
and balance on the employe3r’s oppressive doctrine of employment at will.

Social Justice

In social philosophy and legal understanding, justice means “the

disposition by which we render to each one what is due to her/him. Justice is a
complete disposition, a good habit, a virtue that urges the doer to give “what is
due to others.” Therefore, when something is due to me (objective right), then, I
have a right (subjective) to that something, which is due to me. The subjective
right is my moral power to have, to do, and to demand what is due to me. When
this something is given to me, it is justice. Definitely, justice is not just an isolated
virtue of the chosen few but a necessary commodity for every serious player in
the game of business, including internal and external customers, suppliers,
stockholders, investors and the bigger society. This may sound idealistic but
justice implies that everybody plays fair and square, practicing honesty and
fairness in dealing with others, that is, if everyone wants to keep the business
environment sound, orderly, and intact. Social justice from the Christian point of
view requires the private sector, all business institutions, NGOs, and the
government to acknowledge that the greatest benefits should go to the four Ls:
less fortunate, least advantaged, the last, and the lost. This condition is realized
in the fundamental principle applied to business, otherwise, known as the
preferential option for the poor. It is social justice that makes sure those who
have more in life can assist those who have less. One of the greatest injustices
 of the contemporary history is that the affluent, powerful, prosperous, and
moneyed are relatively few and those who are powerless because they possess
almost nothing are the majority. Injustice, as noted by John Paul 11, is the fruit of
the inequitable distribution of goods and services originally intended for all, a truly
regrettable situation where the lion’s share of the best lands, crops, properties,
and material resources are owned by the exclusive one percent of the powerful
minority.

Social Dimension of Private Property

Everyone’s moral right to property is a determined ownership, a free choice

to a possession and disposition of any property. With this moral right, no other person
except you, the rightful owner is entitled to own and use this property and to dispose
of it in whatever manner you deem serviceable. The right to private property is a
conditional right not absolute if it has become a necessity to the contemporary social
life. It is conditioned by two factors: 1) our personal needs and 2) the higher needs of
the community.

It looks scandalous that the salaries of the chief executive officer (a.k.a.
executive compensation) rise an average of more than 10 percent every year while
the rank-and-file employees subsist on minimum wage. An outsized executive
compensation violates anyone’s basic sense of fairness. It is bothering to know that
executives make so much money only because they have so much power. By virtue
of the principle of universal destiny of the earth’s goods, corporate citizenship
maintains that private property does not constitute for anyone an absolute and
unconditional right. Since private property has a social character with corresponding
social obligations, it goes without saying that we have conditional and limited right
over all possessions, stocks, and wares that we rightfully and legally own. To take
another’s property without his consent is stealing, and therefore morally prohibited.
But a person in extreme necessity has the right to procure for himself what he needs
out of the abundance of others. Whoever takes what is essential for himself is not
violating the right to private property, for those things taken are his by natur45al right
(Vatican Council 11, 1965). The goods of this world are originally meant for all. The
right to private property is valid and necessary, but it does not nullify the value of the
principle of ‘social mortgage”. By this principle, business is told to accept the reality
that the stock and wares of creation are destined for the entire human race.
Option for the Bottom of the Pyramid

Poverty is a human condition of having insufficient resources or income. In its

most extreme form. poverty is a lack of basic human needs, such as adequate and
nutritious food, clothing, housing, clean water, and health services. The world’s
poorest (many of whom live in developing regions) struggle daily for food, shelter,
and other necessities. They often suffer from severe malnutrition, epidemic disease
outbreaks, famine, and war. In wealthier countries, such as the United states,
Canada, Japan, and those in Western Europe- the effects of poverty may include
poor nutrition, mental illness, drug dependence, crime, and high rates of disease.
They are the countless homeless or squatters, street children and beggars, the
jobless, underemployed, the orphans and elderly who are alone and abandoned
whom the late US President Franklin Delano Roosevelt identified as “the forgotten
man at the bottom of the economic pyramid.”

While teaching a man to fish is better than giving a man a fish, it is better still to
teach a whole village how to raise capital, mobilize resources or critical mass, or
some other key resource. Poor people do not need charity. What they need is access
and information about the tools of capitalism. Strategies aimed at the bottom of the
pyramid will, by necessity, create jobs and improve incomes among those people,
even reversing the widening gap. The preferential option for the poor, as a basic
business ethics principle, is first and foremost a resolve towards poverty alleviation. It
means private businesses, among others, have to conspire” in favor of grassroots
development” and help in the slow reconstruction of the poorest lives. Indigence is a
concern that needs to be addressed now and not after ten years’ time or later.

Generalization

Earth Responsibility and Sustainable Development

Many of those who really care about the future are pinning their hopes on
sustainable development, which urges us to take care of our present needs “without
compromising the future generation’s ability to meet their own needs. Erratic behavior
is manifested in climate change. By the consistent and ill-considered acts of
exploitation and lack of social responsibility in the use and abuse of nature, we have
destroyed a big chunk of our beautiful planet and in turn have become the victims of
his degradation. It is not just United Kingdom or Europe anymore. It is not just the
West or the East. It is now a global concern. Human survival is at risk.
 Activity/Evaluation: Read the case very well. Briefly but intelligently answer the two
questions given.

Expired Gravy

Mang Toot’s fast-food chain has been known in the business not just only for its
great tasting food and excellent service but also for its cleanly prepared dishes. One
day, Emong, a service crew of Mang Toot’s Makati branch, was preparing the gravy.
He was unaware that the starch he used was already expired. He only noticed it after
some time and the gravy had already been served to some customers. Knowing that
it may cause harm to the customers, he immediately told Bartolome, the branch
manager, about it. Bartolome told Emong not to tell anyone about it, besides, no one
is complaining.

Questions:

1. What is the moral issue in the case?

2. If you were Bartolome, what are you going to do?

References: Business Ethics and corporate Social Responsibility, Copyright 2007

Anvil Publishing, Inc. and Jose Mario B. Maximiano

Business Ethics and Social Responsibility, 2 nd Edition, Philippine Copyright

2011 by Rex Book Store Inc. and Fr. Floriano C. Roa

Course Code and Title: BACR3 Good Governance and Social Responsibility
Lesson Number: 15

Topic: Social Responsibility towards the Employees

Professor: Soledad S. Escritor J.D.

This module examines the broad array of ethical issues and problems that affect
the flow of business as a dynamic yet complex human activity.

Learning Objectives:

At the end of the lesson, the students should be able to:

1. Examine the different issues and problems in business and business enterprise
from the moral perspective.

2. Dispute the importance of corporate social responsibility and ethical

management within the workplace.

Pre-Assessment: Take a good look at some samples of contemporary TV and radio

commercials and print ads: Identify the products these words represent.

____________1. Just do it!

____________2. Iba ang may pinagsamahan!
____________3. Magpakatotoo ka!
____________4. Kanino ka bumabangon?
____________5. Every drop counts!
____________6. Gulat ka, ‘no?
____________7. Tibay araw araw!
____________8. Ito ang tama!
____________9. It’s finger lickin’ good!
____________10. Buhay na buhay ka!

Good Working Condition: Basic Employee Right

Corporate Social Responsibility is a policy, an attitude, and a management

philosophy in terms of how employees are treated, and this encompasses a multitude
of business practices, such as fair wages, non-discriminatory hiring or equal
employment opportunities, the avoidance of child labor, relations with the unions or
organized labor, the respect for worker’s rights. A firm cannot simply claim being a
good corporate citizen while at the same time failing in its utmost duty to provide good
 working conditions to its employees. It is unwise for companies to donate millions of
dollars for a cause, or put up a foundation for outreach programs, when in fact, its
workers are required long working hours and not even compensated the minimum
wage or are underemployed.
Using the stakeholder theory approach, it is more likely that a firm becomes a
corporate citizen when it provides good working conditions to internal stakeholders (its
employees) first before it practices social responsibility to its external stakeholders.
Given the normative aspect of this requirement, many are still asking what working
conditions could be considered well enough.
The term factory generally refers to a large establishment employing scores of
people involved in mass production of industrial or consumer goods. Sweatshop, on
the other hand, is usually a small manufacturing establishment, for instance, a garment
factory, where tired employees work long hours under substandard conditions for low
wages. In today’ globalizing world, working conditions are increasingly becoming an
issue in international relations and trade agreements.
The physical environment involves exposure to dangerous substances, heavy
loads, and corporal risks. The working time issues include weekly hours, commuting
time, shiftwork, and atypical work patterns. In the organizational environment, job
content refers to repetitive tasks, and pace of work, while the social environment refers
to psychosocial risks including harassment and discrimination in offices and factories.
Work-related outcomes are concerned with perceptions of health risk, work absences,
and job satisfaction. All of these are factors that directly or indirectly affect working
conditions. The insurance industry has regularly classified some jobs to be more risky
to health and safety than others. For instance, pilots, flight attendants, military
personnel, police officers, firemen, security guards, drivers, and seamen are doing jobs
that carry greater amount of corporal risks than other jobs, where such risk factor is
considered in the compensation package.
Besides the physical environment, there is harassment, a form of discrimination
that creates a poor social environment and work-related outcomes. It usually stems
from reasons such as professional jealousy or simply dominance over another that
purposely intimidates or threatens another party to achieve an ulterior motive. Explicitly
or implicitly, harassment affects personal work, unreasonably interferes with one’s work
performance, and creates a hostile and offensive work environment. Harassment is not
a minor irritation that has marginal or negligible consequences. Its effects to the victims
may include psycho-emotional stress, a degrading aftermath, self-doubt, health risk,
work absences, and job dissatisfaction ------ by far the last thing a company wants to
see happening.
To address this, experts recommend that human resources (HR) department
put up some programs to improve the psychosocial environment of the workplace, the
aim of which is to accomplish preferred employee behavior (fair, just, and acceptable)
and an excellent working relationship. They also recommend that employees
themselves be included in developing and operationalizing such programs. In all issues
that concern the working conditions, employee participation usually produces better
quality decisions through the inclusion of diverse interests and perspectives. Employee
participation also increases the credibility of the decision process and outcome by
reducing suspicion of unfair bias. It may be stressed therefore that creating good
working conditions by pushing for social responsibility awareness in the workplace,
among others, is a shared responsibility of both the employer and the employees.
Needless to say, much can be achieved when both labor and management are
mutually participating in the attainment of this corporate social responsibility or CSR
practice in the workplace.
Employees are the internal customers, human resources, and intellectual capital
of business. Corporate social responsibility is grounded on the basic principles of the
priority of labor over capital, respect for human dignity and human rights, and social
justice (to give what is due).
Equal job opportunity is a labor policy that prohibits business from discriminating
against otherwise-qualified people with disabilities. Employers must not discriminate in
job application procedures: the hiring, advancement, or discharge of employees;
employee compensation; job training; and any other terms, conditions, and privileges
of employment. Job discrimination refers to the unjust act of differentiating one group of
people not on the basis of personal merit but on the basis of partiality or bias. In the
workplace, when you distinguish between two people on the basis of non-job criteria,
then, that act may constitute a pattern of job discrimination.
It is unethical and socially irresponsible for any employer to dismiss or discharge
an employee merely on account of his/her marital status. Hiring, firing, promotion or
demotion must be subjected to an objective, unbiased, and fair criteria. Workers ought
to be treated equally on the basis of individual merit and not on the ground of sexual
orientation or marital status. Everyone’s basic right to work should be upheld since this
is essentially related to the right to life and the support of his/her dependents.

Labor Contractualization

The new millennium, tagged as the “century of knowledge society,” is witnessing

the sudden increase of part-time jobs even among professionals. This is happening in
spite of the fact that the Filipino labor force in general is globally recognized as the
technically proficient, highly educated, almost always overkilled, and have the
competitive advantage in the English language. Filipino workers are prioritized among
Asians by many international companies.
At any fast-food chain and your kids happen to drop by and eat, it is very
probable that only a few of the uniformed crew (18-24 years old) who are on duty will
become regular employees. One thing is sure for those crew members, the rest of
them are out of work before the sixth-month deadline imposed by the Labor Code.
From there, some have to renew their contracts while others have to look for another
job, usually in another fast-food chain, and the vicious cycle of contractualization, in the
fast food industry continues. The contractualization of labor is a business strategy
validated to be cost effective. The name of the game is cheap labor. In order to attract
foreign investors -----aspiring to be competitive as they say with our Asian neighbors --
we have to provide the cheapest labor possible. And this cheap labor comes through
contractualization of jobs and services. It appears that contractualization is a scheme
that allows capitalists to replace their workforce with ease according to market
demands. This translates to maximization of profits for the company, but for the
laborers, his system denies them the security and benefits of a regular job while being
paid very low wages. Contractualization has become the main form of labor in many
Philippine businesses, a good reason why there are hardly any labor unions in the
country or why most workers are not organized in the new millennium. Contract
workers cannot afford to join unions because they are at the mercy of their employers.
Many labor laws protect only regular employment. Contractualization, as a form of
underemployment, is socially irresponsible.

Anti-Sexual Harassment
Sexual harassment is a form of unlawful sex discrimination, which includes
unwanted verbal or physical behavior of a sexual nature that occurs in the workplace ot
in an educational setting under certain conditions. It is always an unsolicited and
unreciprocated behavior, an unwanted and imposed sexual attention which may be the
special reduced into two types: sexual coercion and sexual annoyance. Sexual
coercion is that which is explicitly or implicitly made as a condition for favorable
decisions affecting one’s employment, gain, or loss of tangible benefits. Sexual
annoyance, although not directly related to anyone’s employment still creates an
intimidating, hostile, or offensive environment in the workplace. Such behavior is illegal
if it creates an environment that is hostile or intimidating, if it interferes with a person’s
work or school performance or if acceptance of the harasser’s behavior is made a
condition of employment or academic achievement. The Anti-Sexual Harassment Ac in
the Philippines is RA 7877, Section 3. Its vicious consequences for the victims may
include psycho-emotional stress, a de-grading aftermath, self-doubt, economic loss,
and a possible breakdown of a relationship. When ignored, it can exact a high cost to
the company in terms of loss of productivity, high absenteeism among affected
employees, disruptions of work from long-term sick leaves, re-training of new
personnel because of frequent workforce turnover, and low morale among female
employees. Add to this is a tarnished public image setback on corporate finance
because of possible litigation costs.

Challenging Child Labor

 Child labor, the employment of children below 15 years old, is both illegal and
unethical. On June 17, 1992, RA 7610, also known as Special Protection of Children
Against Child Abuse, Exploitation and Discrimination Act was approved by the
President of the Philippines. On May 12, 1994, RA 7658 was issued by the Department
of Labor and Employment which provides that, among others, it is illegal to employ
children under 15 years of age. Poverty is sure to blame. .Most children are forced to
work in order to supplement the family’s meager income. Traditional distorted belief
asserts that children must help to pay debts and support the family. Children are
sacrificed at a tender age; they are ordered to send siblings to school while they
ironically stay out of school. It is very convenient for most heartless employers to hire
them because children do not or cannot complain much. Child labor also costs less
because the young workers are not usually given the required minimum wage and
benefits. They think that ignorant children do not require social security, health
insurance, and other benefits from their employers.

Generalization

It is good news that companies are employing more than few approaches to
avoid the sullying stigma of child labor. One effective approach is the use of labels,
which seeks to ensure that a single product or product type is free from child labor.
Another is by codes of conduct and supplier guidelines, usually tailored to the specific
issues faced by a particular company. By these tactics, business sends two clear
signals: first, to all partners that is hardnosed, resolute, and uncompromising with the
issue of child labor; and second, to customers to inform that products/ services are
100-percent child labor free.

Activity/ Evaluation: Case for Analysis. Read and understand the story very well. Give
short and direct answer to the three (3) questions asked.

Golden Taurus Garment Company

Golden Taurus is a garment company managed by a Taiwanese national. The

company is experiencing near bankruptcy because of the current strikes of its
employees’ union. The management attributes the current difficulty in the company’s
financial condition to labor unrest. Eva Wu, the owner, has experienced being bullied
and received several death threats.

Some of the issues raised by the employees against the management are the
below minimum wage salaries, series of unpaid SSS premiums, and delayed payment
of salaries. Also, employees do not get their 13th month pay even if the law entitles every
employee regardless of employment status. Also, employees are asked to sign a five-
month contract, which excludes them from getting the year-end bonus. Per company
policy, only those employed with six-month employment contract can get the year-end
bonus.

Long working hours and less break time add to the complaints of the employees.
Working hours start a seven in the morning and end at six in the evening. Break time in
the morning is from 10:00 to10:15 and none in the afternoon. Employees can eat their
lunch between 12:45 and 1:00 which gives them only a fifteen-minute lunch break.

Employees are also concerned with violation of contract. Sewers are given
quota which is against the agreed per piece basis. They are also troubled with the poor
working conditions and the inadequate supply of water for their personal hygiene in the
restroom.

Without the knowledge of employees, Golden Taurus filed a bankruptcy

status, and later operated under a new company name.

Questions:

1. Does the company’s current financial condition justify the compensation given to
the employees? Explain.
2. Is it ethical to deny the employees the information about the company’s financial
conditions and decisions?
3. Is it moral to let the employees sign a five-month contract instead of a six-month
contract?

References: Business Ethics and Corporate Social Responsibility, Copyright 2007, Anvil
Publishing, Inc. and Jose Mario B. Maximiano

Business Ethics and Social Responsibility, 2 nd Edition, Philippine

Copyright, 2011 by Rex Book Store, Inc. and Fr. Floriano C. Roa

Course Code and Title: BACR3 Good Governance and Social Responsibility

Lesson Number: 16

Topic: Social Responsibility Towards Consumer, End Users, and General

 Public

Professor: Soledad S. Escritor J.D.

This module explains the basic concepts and the importance of corporate
social responsibility of business organizations to their stakeholders.

Learning Objectives:

At the end of the lesson, the student should be able to:

1. Determine the principal purpose of TV commercials, print and broadcast media.

2. Look into the economic relationship and trade-off between profit maximization on
one hand and the practice of social responsibility on the other hand.

Pre-Assessment: Read and understand carefully the concepts shown in the anecdote

and answer intelligently the three given questions.

Where Is After-Sales Service?

Spidermart is a shop in Celia’s neighborhood. It is well known for being very

spacious, well supplied and for its enticing advertisements. Celia bought a shower
nozzle at the store and was assured by the salesman that despite the product’s being
quite expensive, Celia got more value for her money because the product is guaranteed
to last a lifetime and was imported from one of the largest sanitary manufacturers in the
world. However, when Celia’s plumber was installing the nozzles, he discovered that the
nozzles were defective. The plumber showed her the newly installed nozzles and she
saw how the water kept gushing out from the wrong places even if they were properly
installed. She was convinced that it is a factory defect, so, she went back to Spidermart
and told the salesman about it. The salesman would not believe her story but Celia
insisted until the store manager was summoned. The manager sided with the salesman
right away and kept convincing Celia that it must be because of wrong installation. The
commotion then resulted to Celia claiming the shop was only violating its catchphrase
and that she had been deceived. The manager still maintained not to replace the
defective nozzles. Celia told her friends about it and one of them suggested that she
raise this issue to the Consumers’ Union. The Consumers’ Union met with the director
of Spidermart and warned that they will publicize the issue if the shop will not do
anything about the matter. The shop director, out of fear of having the issue blown out
of proportion by the Consumers’ Union, agreed to have the nozzles replaced. Only then
was the issue solved.
Questions:

1. In what instances in the case were violations of corporate social responsibility

evident?
2. Was it right for the store manager to immediately side with the salesman? Why or
why not? Justify your answer.
3. Celia’s case may only be one of the many unpleasant episodes that happened
and remained uninvestigated at Spidermart. Replacing the defective nozzles
does not totally resolve the core of the matter as the Consumers’ Union has
given Spidermart a warning and many customers may suddenly come out in the
open upon hearing the news about the case of Celia. As a shop director, what
are the next steps that you must do?

Lesson Presentation:

Consumers are considered to be the most important stakeholders of the

business besides its own employees. Companies are duty-bound to fulfill and be
conscientious of their social responsibility towards the customers of their business. Not
only workers experience abuses and exploitation, cheating and abuse. These also
happened to customers in as early as the beginnings of the history of social
responsibility when workers were forced to work longer hours and treated as slaves.
Although aware of the poor quality of their products, avaricious businessmen during he
early periods cheated their customers by selling the same poor quality products with
very expensive prices. Even at present, there is still a great number of cheating
businessmen who swindle, deceive, and take advantage of their trusting customers.
Consumer rights which are, the right to safety, the right to be informed, the right to
choose and the right to be heard were introduced by the famous former U.S. President
John F. Kennedy. These rights became contributory to the now more intelligent and
smarter consumers of our generation. As mor and more customers become aware of
their rights, businessmen in turn have to take care not to violate these rights.

Social Responsibility Towards the Community and the Environment

All living things are dependent on the earth’s natural resources. Therefore, man
has the moral obligation to preserve the environment and respect the natural order of
things. Of all the living things created by God, man is the only living thing given the
responsibility of taking care of all the rest of the creatures on earth. It is a clear order
from God as written in the Bible. Only man is given authority over all the other creatures
in the same way that he is the only one given the ability to protect the environment, not
to intervene with the forces of nature. Genesis 1:26-30

The business industry is no doubt the primary user of the earth’s natural
resources. In the everyday course of a business, an enormous quantity of energy and
raw materials are being used in the manufacturing of products and services. Energy is
both employed and discharged into the environment. When resources and energy is
used, the earth’s natural resources are depleted. Businesses benefit so much from the
environment in order to produce the products, goods and services they need for their
businesses to prosper. They primarily rely on the benefits provided by the environment.
In turn, businesses have the corporate social responsibility of preserving and
maintaining the balance of nature because once natural resources are depleted, these
can never be replaced no matter how magnificent the power of man’s brain is.

Several of these commitments and activities fulfill the firm’s moral obligation
to societal, economic and environmental concerns. In general, they act in response to
these key elements and issues:

1. Stakeholder rights;
2. Supplier relations;
3. Human rights;
4. Human resource management practices;
5. Consumer rights and protection;
6. Labor protection and security;
7. Environmental protection;
8. Corporate governance;
9. Community development;
10. Health and safety.

Generalization:

The way businesses engage employees, shareholders, consumers,

suppliers, the government and its agencies, non-governmental organizations,
international organizations and other stakeholders form a progressive prospective of
corporate social responsibility of businesses at the present time. Many of these firms
believe that it stimulates corporate innovation and provides them a clear competitive
advantage. Companies worldwide have been motivated to respond favorably because
many of them have proven that responding to the call of being responsible businesses
has given them better financial performance and profitability, improved accountability to
and assessments from the investment community, enhanced employee commitment ,
decreased vulnerability through stronger relationships with communities and improved
reputation and corporate image building.

Activity/Evaluation: Analyze the case and answer the two questions given at the end of
the story.

FAIR WAGE?

CHEHOMA Corporation has been operating for almost ten years now. After five
years of operation, it started borrowing money from the bank yearly to keep its business
going. Due to the global crisis and the weakening of the Philippine economy, the
company failed to pay its debts to the bank. Because of this situation, the bank issued
the company a letter of notice telling the company that if it fails to pay its debts, or at
least the interest, within a year, the bank will have no choice but to take over the
company. Consequently, the company was forced to act on it. It decided to cut down its
expenses by having a mass lay-off of its employees in order to cope with the demands
of the bank. But certain groups of employees opposed the idea so they initiated a
dialogue with the management. They said that they prefer a salary below the minimum
wage rather than to lose their jobs especially in those times. However, the management
told them that this is against the law and that the company might face a criminal
offense. Still the employees continued to plead until the company gave in. As a
consequence, they told the employees that they would have to sign a document stating
that they actually received the right wage. It is to appear that the company is paying the
right amount of wage to the employee.

Questions:

1. Clearly the company will violate the law if it allowed its employees to receive the
wage below the minimum than the law requires. Is this decision morally correct?
Why or why not?
2. The employees insisted on what was legally wrong. Is this action morally
justified?

References: Business Ethics and Corporate Social Responsibility, Copyright 2007 by

ANVIL Publishing, Inc. and Jose Mario B. Maximiano

Business Ethics and Social Responsibility, 2 nd Edition, Philippine

Copyright 2011, Rex Book Store, Inc. and Fr. Floriano C. Roa

Course Code and Title: BACR3 Good Governance and Social Responsibility

Lesson Number: 17
Topic: Social Responsibility Towards the Competitors

Professor: Soledad S. Escritor J.D.

This module makes critical survey of ethical issues in business that the
contemporary manager and business leader might encounter and discusses the
dynamics of business activities, vis-à-vis, with its competitors.

Learning Objectives:

At the end of the course, the student should be able to:

1. Develop a framework for analysis and resolution of ethical dilemmas and

problems affecting business.
2. Acquire basic information about questionable business practices and their impact
to its competitors

Pre-Assessment: Give a short and direct meaning of the following business terms
and an example for each item.

1. Multilevel Marketing (MLM)

2. Pyramiding
3. Whistleblowing
4. Money Laundering
5. Bribery

Lesson Presentation:

Is competition good or bad? Competition is healthy and can be a motivation

for firms to produce better products or offer better services. Without competition,
firms can just relax and quality will suffer. Thus, competition becomes bad only .
when it eliminates a competitor like in a cutthroat competition. Some practices
include under cost selling or selling their products below cost just to get rid of their
competitors. There are different kinds of competition to wit:

1. A monopoly is a market situation where there is only one provider of a kind of

product or service. It is an extreme type of imperfect competition and a lack of
viable substitute goods.
2. An oligopoly denotes a situation where there are few sellers for a product or
service. It is a type of imperfect competition where they cannot dictate price like a
monopoly can, but the members of an oligopoly often turn into friendly
competitors, since it is all in the members’ interest to maintain a stable and
profitable price.
 3. Perfect competition is a situation in which no firm or consumer is large enough to
dictate prices. The prices are dictated by the law of supply and demand which
states that when the supply is scarce, the prices go up and when the demand
goes down, the prices will go the same way.

Difference between Fair and Unfair Competition

Fair competition is doing business under ethical rules of conduct, behavior

and judgment. It is attaining success in business through the merits of its products or
services while unfair competition is unethical business practice. It is doing business with
the goal of profit without regard to others. It varies form misleading advertisements to
copying of another’s trademarks and products, from destroying the reputation of
competitors by making false statements about their products to plain and simple fraud,
from technology piracy to personnel piracy. In general, unfair competition consists of:
 Deceptive trade practices such as misrepresentation and false advertising;
 Anti-competitive market practices such as under cost selling to kill the competitor;
 Defamation of a competitor or bad mouthing a competitor to a customer;
 Caveat emptor or indirect misrepresentation by withholding information from the
buyer; and
 Violation of intellectual property right such as copyrights, patents, trademarks
and service marks.
Difference between War and Competition
In a war, two contenders fighting hurl directly at each other, whereas in a
business competition, two or more parties are vying for the opportunity to provide
the customer’s needs whether it’s a product or service. In short, competition is a
rivalry to serve the customer.
Profit maximization drives business into motion and making a lot of
money, therefore, optimizing shareholder value and changing the rules of the
competition. Unhappily, when this economic factor becomes the absolute rule of
the game, business becomes obsessed with return of investment (ROI), return of
assets (ROA), and more revenues ---by any means and at any price, By any
means and at any price may include fraud, violation of human dignity in the
workplace, and unfair competition through patent and trademark infringement,
illegal copying or imitations, and other socially irresponsible gimmicks and
tactics.
Unfortunately, the manufacturing and selling of fake signature products
such as Giordano t-shirts, Amani sweaters, La Coste jackets, Nike and Reebok
shoes and socks are notorious examples of unfair competition widespread in the
Philippines, Hongkong, and Taiwan. So, is the counterfeiting of CDs and DVDs.
Certain manufacturers preferred to be great imitators than original creators.
Whistleblowing:
 It is the disclosure by an employee of confidential information which
relates to some danger, fraud, or other illegal or unethical conduct connected with the
workplace, be it of the employer or of his fellow employees. Four elements that
encompass whistleblowing:

1. He disclosure of information, be it internal or external, must be made in good

faith;
2. The disclosure must be made by a current, former or prospective employee;
3. The information must be linked with misconduct on the part of the employer; and
4. Evidence of the misconduct should exist as well as information regarding the
identity of the wrongdoer.

Multilevel Marketing and Pyramiding:

Multilevel marketing is a system of selling in which one signs up other people

to assist him, and they, in turn, recruit others to help them. It is a system of selling
through many levels of distributors, thus the word “multilevel marketing.” Each gets a
percentage on the price of the product being sold. This is also known as direct selling
companies. Common companies of this type are Avon Cosmetics, Triumph
International, Sara Lee Direct Selling and Tupperware Philippines. Most of these
business ventures became successful because he main focus of their activities is the
product sales. However, there are much multilevel distributorship that often call
themselves a ‘network’ but are nothing more than sophisticated chain letters. They are
thinly disguised pyramids which operate like a real “pyramid” claiming participants can
earn a lot of money by concentrating their efforts on recruiting distributors rather than on
selling a product. They promise to pay commissions up to two or more levels of down
lines. The companies of these types require people to pay a joining fee or they simply
call it an “investment” which amounts usually to several thousand pesos. But,
oftentimes, the joining fee is quite a big amount for the startup kit.

Pyramiding:

In the classic “pyramid” scheme, participants attempt to make money solely

by recruiting new participants into the program. The hallmark of these schemes is the
promise of sky-high returns in a short period of time for doing nothing other than
handling over your money and getting others to do the same.

Pyramid schemes focus on the exchange of money and recruitment. At the

heart of each pyramid is typically a representation that new participants can recoup their
original investments by inducing others to make the same investments. Each person
you bring to your pyramid is promised future monetary rewards or bonuses based on
your advancement up the structure. The fraudsters behind a pyramid scheme may go to
great lengths to make the program look like a legitimate multilevel marketing program.
But despite their claims to have legitimate products or services to sell, these fraudsters
simply use money coming in from new recruits to pay off early stage investors. But,
eventually the pyramid will collapse. At some point, he schemes get too big, the
promoter cannot raise enough money from new investors to pay earlier investors, and
many people except those at the very top of the pyramid, lose their money. Many losers
pay for a few winners.

Market Saturation: An Inherent Problem in Pyramiding:

Pyramid’s design can saturate the market with no one noticing. It is designed to
recruit so many salespeople, who in turn will attempt to recruit more salespeople, and
so on, until the market is saturated. It is unstoppable, a human “churning” machine with
no “off button.” Out of control by design, its gears will grind up the money, time and
entrepreneurial energy of the well-meaning who joined to supplement their income.
When the inevitable destiny occurs, the only money that may be made is not from the
product or service but from the losses of people down the organization.

Money Laundering:

Money laundering is the process of disguising illegally obtained money so that

the funds appear to come from legitimate sources or activities. Money laundering occurs
in connection with a wide variety of crimes, including illegal arms sales, drug trafficking,
robbery, fraud, racketeering and terrorism. Money laundering is the crime of the ‘90s.

Bribery:

Bribery is a practice of giving remuneration for performance of an act that is

inconsistent with the work contract or the nature of the work has been hired to perform.
It is intended to induce people inside the business or other organization to make
decisions that would not be justifiable according to normal business or other criteria. It
was then identified to be a form of corruption and is generally immoral and for most is
illegal. Remunerations, termed as bribes, can be in the form of money, gifts,
entertainment, or preferential treatment. Examples of bribery are:

 A motorist offers a certain amount of money to a police officer in order not to be

issued a ticket for over speeding;
 A citizen seeking paperwork or utility connections gives an expensive gift to
functionary in exchange for a faster service;
 A construction company sharing percentage of its income to a civil servant in
order to win a contract; and
 A narcotics smuggler bribes a judge to lessen criminal penalties.
 In some cases, the briber holds a powerful role and controls the
transaction; in other cases, a bribe may be effectively extracted from the person
paying it. Bribery is obviously unethical because of the following reasons:
 It is generally used as an instrument to gain personal or corporate advantage;
 It corrupts the concept of justice and equality;
 Bribery produces cynicism and a general distrust of institutions;
 It destroys people’s trust people’s trust in the integrity of professional services, of
government and the courts, of law enforcement, religion, and anything it touches;
and
 It treats people as commodities whose honor can be bought and sold. It thus
tends to degrade the respect we owe to other human beings.

Generalization:

Many unseen and unforeseen factors are driving today’s wheel of fortune and
the game of hyper competition. Enterprises are now faced with new competitiveness
requirements brought about by the following factors.

 Globalization of competition;
 Better informed and more discerning customers; and
 Increasing number of competitors.

It is always good if competition explodes into a price war ----the only war
favorable to consumers. In this war, prices go down. Competition at times csan
become dangerously untamed, reckless, and unscrupulous; and the public
interest and the common good are most of the time dodged and forgotten.

Activity/Evaluation: Read and understand the following story; answer the three
questions given.

Shared IT Secrets

When employee Eric Pantaleon quit his job in 2005, IT Systems, his company,
paid little attention. Pantaleon was one of the several customer-service representatives
of the Laguna, Philippine- based Computer Company, and the turnover of
responsibilities in the department wasn’t smooth. Following an uneventful exit interview
with human resources officials, Pantaleon left the company to start a job with IT rival,
Sampo Computer, also based in Laguna.

It might have ended there. But when Pantaleon’s new employer began taking
away IT’s market share, its top management started to be alarmed. After some
checking, IT learned that Pantaleon was using inside knowledge of IT’s customer lists to
make sales. Company officials also suspected he might be relying on IT’s customer
specifications and repair manuals.

Questions:

1. Is keeping “trade secrets” still an ethical issue in the age of globalization and
advanced technology?
2. Is Pantaleon’s action unethical, e.g. using the customer list of his previous
company for his new company? Why or why not. Discuss your answer.
3. If you were Pantaleon, would you also do the same thing as he did? Why or why
not? Justify your answer.

References: Business Ethics and Corporate Social Responsibility, Copyright 2007, by

ANVIL Publishing, Inc. and Jose Mario B. Maximiano

Business Ethics and Social Responsibility, 2nd Edition, Phil Copyright 2011,

Rex Book Store, Inc. and Fr. Floriano C. Roa