Business Ethics

Socially desirable and ethical practices that may not entail additional cost or money:
1. Serving an honest day’s work among the employees;
2. Volunteering in waste management promotion like recycling and preservation of the environment
3. Rejecting business products, television stations, and other media that promotes objectionable shows
4. Uprightness or truth in advertising
5. Production and delivery of organically-grown fruits and vegetables and other food products; and
6. Preparation of and obedience to the business code of ethics.

It is to be reminded that an enterprise also has its responsibility to its:

1. Investors and owners – for fair returns on their investments
2. Customers – for safe products
3. Suppliers – for fair deals
4. Employees – for decent wages

The Management Association of the Philippines (MAP)

- They have taken the lead in the practice and inculcation of business ethics through its member-companies.
- The regular sessions of the organization allow for evaluation of the individual practice of business ethics in member companies
against MAP standards.

Philippine Chamber of Food Manufacturers, Inc. (Food Chamber)

- Another important business ethics organization in the Philippines
- Selected Food Chamber committees indicate participation of the organization and its members in the task of responsible, self-
imposed moral guidelines, such as the following:
o Regulatory and Scientific Affairs
o Small and Medium Enterprise (SME) Group
o Legislative

A. Regulatory and Scientific Affairs

 These provide linkage with institutions and its attached agencies like Department of Health-Food and Drug
Administration (DOH-FDA), Food and Drug Administration-Noncommissioned Officer (FDA-NCO), Department of
Science and Technology (DOST), World Health Organization (WHO), Foreign Investments Act (FIA), and more
to be able to provide technical support and enable members and other stakeholders to improve product quality,
production capability, cos competitiveness, market share, environmental issues and more.

B. Small and Medium Enterprise Group

 Assisting members and stakeholders in market -matching activities

C. Legislative
 This is tasked to contribute in the formulation of resolutions, sustaining advocacies, and lobbying activities with
the government as contained in the legislative agenda, packaging, trade regulations and standards, critical to
attain sustained growth

Legal Responsibilities
All business enterprises need to comply with a country’s laws and regulations. Obedience to local, national, and relevant international
laws constitutes legal responsibilities. A selection of essential laws that explain legal responsibilities of Philippine enterprises include
the following:
1. Corporation Code (Batas Pambansa Bilang 68)
2. Consumer Act of the Philippine (RA 7894)
3. Minimum Wage Law
4. Migrant Workers and Overseas Filipinos Act of 1995 (RA 8042)
5. Environmental legislation, which includes the following:
a. Presidential Decree (PD) 1586 – established an environmental impact statement system.
b. RA 6969 – concerned with the Toxic Substances and Hazardous and Nuclear Waste Control Act of 1990.
c. RA 8749 – includes the Clean Air Act of 1999.
d. RA 9003 – is concerned with the Philippine Ecological Solid Waste Management Act of 2000.
e. RA 9275 – looks at the Clean Water Act of 2004
f. RA 9512 – gives permission for the Environmental Awareness and Education Act of 2008

Corporate Governance

Section 2.1
- Enumerates the stakeholders of an enterprise – investors, owners, customers, suppliers, employees, and the community it is
located in.
- This section details the legal responsibilities of organizations to these stakeholders.
Corporation Code (Batas Pambansa Bilang 68)
- Dictates the most important legal responsibilities toward investors and owners, as it guarantees that the enterprise is managed
in the interest of its stockholders.

Section 3.3
- Details essential provisions of BP Blg. 68.

Consumer Act of the Philippines (RA 7894)

- Details the legal responsibilities of enterprises toward their buyers, suppliers, tradesmen, and distributors.
- Mandates that the conduct of business and industry must implement measure for:
o Protection against hazards of health and safety;
o Protection against deceptive, unfair, and unconscionable sales acts and practices
o Provision of information and education to facilitate sound choice and the proper exercise of rights by the consumer;
o Involvement of customer representatives in the formulation of social and economic policies.

Implementing Agencies tasked to Ensure Product Safety (RA 7849)

1. DOH – for food, drugs, cosmetics, devices and substances
2. Department of Agriculture (DA) for agricultural products
3. Department of Trade and Industry (DTI) for consumer products not administered by the DOH and DA
4. Bureau of Product Standards (BPS) – guides the trade transactions for consumer products under DTI.
5. Bureau of Food and Drugs (BFAD) – oversees the labeling requirements and price rates for food, drugs, cosmetics, devices
and substances.
6. Bureau of Agriculture and Fisheries Standards (BAFS), the Bureau of Animal Industry (BAI), and the Bureau of Plant Industry
(BPI) – administer the export and import standards of the Philippine agricultural products.

Food and Drug Registration Requirements

- The issuance of a License to Operate (LTO) and Certificate of Product Registration (CPR) requires the submission of the
following requirements stated in the checklist for the applications in hard copy and DVD-R format, using LTO data folder with
color-coded CPR folders.
o Dark blue for food
o Green for drugs
o Orange for cosmetics
o White for medical devices
o Red for household, urban, or hazardous substances or products, including pest control providers.

Food Establishment Licensing Requirements

- The issuance of a License to Operate (LTO), whether for initial, amended or renewal purposes, requires the submission of the
following:
o Requirements stated in the checklist for the applications
o Petition forms for food manufacturer, re-packer, bottled water manufacturer, food distributor (importer, exporter,
wholesaler)
o Application forms for Sangkap Pinoy, Seal or Diamond Sangkap Pinoy Seal.

Minimum Wage Law

- Entails the compliance of organizations with the minimum wages that their employees are entitled to. The law is administered
by Department of Labor and Employment (DOLE)
- As of May 2016, the highest nominal wage rate for Philippine industry sectors was found to be in the National Capital Region.
o Php454 Agriculture
o Php454 Service or Retail (fifteen or less workers)
o Php454 Manufacturing (employing less than 10 regular workeers)
o Php491 Non-agriculture (including private hospitals with one hundred or less bed capacity)
- Minimum wage rate for the agricultural sector (plantation and nonplantation) in the Autonomous Region in Muslim Mindanao
was at Php255 per day.
- The minimum wage rate for the non-agricultural sector (academe, manufacturing, and commercials) is at Php 265 per day.
Both wage rates were made effective on March 1, 2016

CORPORATE GOVERNANCE
- The term corporate governance has become an embodiment of ethics in the business environment
- It refers to the set of procedures designed to ensure that the company is managed in the interests of the shareholders
o Shareholders – owners of a corporation, as distinguished from the partners in a partnership and the proprietor in a
sole proprietorship.

Why the special attention to shareholders?

- Public ownership of corporation is a prime generator of capital that builds and sustains large corporations.
 - Shareholders or investors are suppliers of capital. They should be convinced of the integrity of the communication process
with the investee corporations.

Transparency, Accountability, and Fairness

- Essential principles in the organizing function of managers.
- Under the corporate governance concept, the terms are repeated as compliance standards.

Transparency

Accountability
- Employees will perform a job, take corrective action when necessary, and report upward on the status and quality of their
performance

Fairness
- May be measured by the equity theory.
- The equity theory states that people assess how fairly they have been treated according to two key factors – outcomes and
inputs (i.e. their own outcomes or inputs versus other outcomes or inputs)

Role of Business in Economic Development

- The primary role of business in economic development is the creation of jobs.
- Employment advances economic development and boosts social indicators to satisfactory levels.
- The observance of business ethics, where business and industry look out for their stakeholders, assures this advancement.
- Safe and affordable products and services for customers, honest wages for employees, reasonable returns for investors and
owners, and decent transactions with suppliers certify income allocation.
- Adherence to corporate governance practically guarantees this progress, as the integrity of business transactions allows for
dedicated investment and offers a vibrant securities market.

The Virtuous Business

- The practice of business ethics, legal responsibilities, corporate governance, and the participation in a country’s economic
development has allowed several enterprises to evolve into ‘virtuous businesses’
- Yale researcher Theodore Roosevelt Malloch encourages people to take a hard look at the reinforcement and renewal of the
foundations of the virtuous business in his book Spirtitual Enterprise.
- In the Philippines, the media reach and influence of the television network and its celebrities shed needed light on the social
needs of Philippine communities.
o Celebrities involvement in these projects draws the participation of fans, a veritable snowball effect for volunteerism.
o Individual participation by volunteers from various sectors – the youth and medical profession, and the partnership
with domestic and international groups and countries has multiplied spiritual capital.