Social Responsibility with Business Ethics - Prelims Reviewer

Comprehensive flashcard deck covering statutory provisions, general principles of business ethics, ethical decision-making frameworks, corporate governance, fiduciary duties, and landmark Supreme Court jurisprudence based on the prelim reviewer.

Business Ethics

A specialized study of moral right and wrong that evaluates business institutions, organizations, and commercial behavior in market operations.

Systemic Level of Business Ethics

An operational level of ethics focusing on macroeconomic policy, Philippine tax structures, and national regulatory bodies like the Philippine Economic Zone Authority (PEZA), Department of Trade and Industry (DTI), and Securities and Exchange Commission (SEC).

Corporate Level of Business Ethics

An operational level of ethics focusing on internal company policies, workplace guidelines, and corporate culture.

Individual Level of Business Ethics

An operational level of ethics focusing on personal moral choices and ethical decisions made by individual managers or workers.

Law vs. Ethics Comparison Framework

A framework contrasting Law (the behavioral baseline of codified statutes enforced mandatorily by state authorities) with Ethics (the moral ceiling of societal values and conscience guided by voluntary adherence).

Utilitarianism

An ethical framework (consequentialism) that evaluates moral worth strictly by outcomes, holding that an action is right if it produces the greatest aggregate benefit for the greatest number of people.

Act Utilitarianism

A branch of utilitarianism that involves the direct evaluation of a specific, immediate action based on its net utility.

Rule Utilitarianism

A branch of utilitarianism that evaluates whether adhering to a general rule yields superior long-term systemic utility.

Deontological Ethics

An ethical framework asserting that morality is grounded in duty and universal moral principles regardless of consequences.

Formula of Universal Law

A formulation of Immanuel Kant's Categorical Imperative stating that one should act only according to maxims they would rationally desire to become universal laws for everyone.

Formula of Humanity

A formulation of Immanuel Kant's Categorical Imperative stating to never treat human beings merely as disposable tools for financial gain, but as ends in themselves.

Virtue Ethics

An ethical framework associated with Aristotle that focuses on developing moral character (such as honesty, fairness, courage, and prudence) rather than following mechanical rules.

Care Ethics

An ethical framework associated with Carol Gilligan that emphasizes contextual empathy, concrete human relationships, and protecting vulnerable stakeholders.

Tucker’s 5-Question Model

An ethical decision-making model that evaluates a decision based on five questions: Is it Profitable? Is it Legal? Is it Fair? Is it Right? Is it Sustainable / Environmentally Sound?

Rest’s 4-Component Model

An ethical decision-making model consisting of four sequential steps: Moral Sensitivity, Moral Judgment, Moral Motivation, and Moral Character.

Corporate Governance

The structural framework of rules, relationships, systems, and processes by which corporations are directed, controlled, and held accountable.

Duty of Obedience

A fiduciary duty under corporate law requiring officers and directors to execute functions strictly within authority limits granted by law, the Articles of Incorporation, and By-laws.

Duty of Care

A fiduciary duty requiring directors and officers to exercise the diligence, skill, and prudence that an ordinarily prudent person would exercise under similar circumstances.

Business Judgment Rule

A legal principle providing that courts will not interfere with honest corporate business decisions made in good faith and with reasonable care.

Duty of Loyalty

A fiduciary duty demanding undivided fidelity from corporate officers and directors, placing corporate welfare above private gain.

Corporate Opportunities Doctrine

A principle under Section 33 of RA 11232 stating that if a director or officer acquires a business opportunity in conflict with their duty, they cannot seize it for personal gain, and usurped profits must be refunded unless ratified by a 2/3 supermajority vote of stockholders.

Shareholder Primacy

A corporate theory holding that management's primary duty is maximizing profits and financial returns for stock owners.

Stakeholder Theory

A corporate theory holding that boards owe fiduciary duties to create balanced value across employees, consumers, suppliers, local communities, and the environment.

Comply or Explain Approach

A regulatory approach under SEC MC No. 19, s. 2016 requiring publicly listed corporations to comply with corporate governance guidelines or publish explanations for non-compliance in SEC filings.

Independent Director

A director required in corporations vested with public interest (at least 20% of board membership under RA 11232, Sec. 23) to protect minority shareholders and public interests.

Disclose-or-Abstain Rule

A principle under Section 27 of the Securities Regulation Code (RA 8799) requiring an insider in possession of material non-public information to either publicly disclose it before trading or abstain from trading company securities.

Globe Mackay Cable and Radio Corp. v. Court of Appeals

A Supreme Court case ruling that while employers have the legal right to dismiss or prosecute employees, exercising rights with malice, abuse, and harassment violates Article 19, Article 21, and Article 2176 of the Civil Code.

Velayo v. Shell Company of the Philippine Islands, Ltd.

A Supreme Court case establishing that executing a bad-faith scheme using insider knowledge to bypass a creditors' agreement and seize corporate assets violates Articles 19, 21, and 23 of the Civil Code.

GF Equity, Inc. v. Valenzona

A Supreme Court case holding that unilateral contract termination clauses violate the Principle of Mutuality of Contracts (Article 1308) and invoking them arbitrarily constitutes an abuse of rights under Article 19 in relation to Article 20.

Emeterio Cui v. Arellano University

A Supreme Court case holding that a contractual clause requiring a scholarship student to waive transfer rights unless scholarship funds are refunded is void for being contrary to public policy and morals under Article 1306.

University of the East v. Romeo A. Jader

A Supreme Court case ruling that educational institutions owe a standard of good faith under Article 19 to promptly inform students of academic status, making them liable for damages caused by gross delay in releasing grades.

Vicente Perez v. Eugenio Pomar

A Supreme Court case holding that under innominate contracts (facio ut des) and natural justice, accepting requested services creates an implied obligation to pay reasonable compensation to prevent unjust enrichment.

Total Office Products and Services (TOPROS), Inc. v. John Charles Chang, Jr., et al.

A Supreme Court case ruling that establishing competing enterprises and diverting client accounts breaches the Duty of Loyalty and Corporate Opportunities Doctrine (Sec. 33, RA 11232), holding usurped profits in constructive trust for the corporate treasury.

H. Steinberg v. V. Velasco, et al.

A Supreme Court case ruling that declaring dividends based on uncollectible debts while insolvent constitutes gross negligence under Section 30 of RA 11232, making directors personally liable to reimburse the treasury.

Antonio D. Carag v. National Labor Relations Commission, et al.

A Supreme Court case establishing that under the Doctrine of Separate Corporate Personality, directors are not personally liable for corporate obligations upon insolvency without clear proof of gross negligence, bad faith, or unlawful acts.

John Gokongwei, Jr. v. Securities and Exchange Commission, et al.

A Supreme Court case upholding by-law amendments that disqualify direct competitors from board seats to prevent inherent conflicts of interest and protect the Duty of Loyalty.

Prime White Cement Corp. v. Intermediate Appellate Court

A Supreme Court case holding that self-dealing contracts executed by directors that lock in unconscionable loss-making prices for personal profit violate fiduciary duties under Section 31 of the Revised Corporation Code and are unenforceable.

Securities and Exchange Commission v. Interport Resources Corp.

A Supreme Court case enforcing the Disclose-or-Abstain Rule (Sec. 27, SRC) against insiders who buy or sell securities while in possession of material non-public information.