The term phyletism from phili (Hellenic: φυλή): race or tribe was coined at the Holy and Great pan-Orthodox Synod that met in Constantinople in 1872. The meeting was prompted by the creation of a separate bishopric by the Bulgarian community of Constantinople for parishes only open to Bulgarians. It was the first time in Church history that a separate diocese was established based on ethnic identity rather than principles of Orthodoxy and territory. Phyletism, however, should not be confused with patriotism (which was known at that time as φιλοπατρία) as the latter simply means devotion and loyalty to one's nation and/or culture and is not at odds with Orthodoxy.
Here is the Synod’s official condemnation of ecclesiastical racism, or “ethno-phyletism”:
We renounce, censure and condemn phyletism, that is racial discrimination, ethnic feuds, hatreds and dissensions within the Church of Christ, as contrary to the teaching of the Gospel and the holy canons of our blessed fathers which “support the holy Church and the entire Christian world, embellish it and lead it to divine godliness.”
Konstantin Leontiev, a prominent writer on the subject, notes that both sides were equally responsible for the schism, but differentiates the two:
Both you [Greeks] and the Bulgarians can equally be accused of phyletism, that is, of introducing ethnic interests into Church questions, and in the use of religion as a political weapon; but the difference lies in the fact that Bulgarian phyletism is defensive, while yours is offensive. Their phyletism seeks only to mark out the boundaries of their tribe; yours seeks to cross the boundaries of Hellenism...