Mestizo: Chapter 8 (The Rise of the Welfare State and the Recognition of Economic, Social and

Cultural Rights)
The Death of Laissez-Faire and the Rise of Bureaucratic States
The Philippines was still a colony of the US when the economic depression hit the country in the late 20s.
 “There was a miscalculation deeper than any failure, however gross, to appreciate the deficiencies of the
market mechanism”
o Political economists made the mistake of assuming that individuals could/would be reduced to the
class of a mere market commodity
o Laissez faire as the dominant theme of American economy failed
 Ideology: mechanism to transfer the political power of people to influential corporate and
industrial magnates
o Election of new President (Roosevelt) in 1932 heralded a paradigm shift in economic thought
 New Deal program; calculated to “save capitalism from itself”
 Created a no. of administrative agencies (“alphabet agencies”) tasked to solve specific
problems within their area of specialization
 These agencies practiced both rule-making and adjudicative functions (violation of
sep of powers!!)
 Administrative agencies have been created in Europe during the late 19th cent. and in the US in the early
years of the next cent.
o Created in response to popular outcry against slow pace of administration of justice
 Ex. As country began to peak as highly industrialized economy, its factories suffered from
weight of employee claims arising from injuries connected with employment of laborers
occurring in the workplace. Common law courts could not cope, so states created an
agency like the workmen’s compensation commission to process these money claims for
injuries from employment
o Regular courts had to contend with traditional doctrines on liability based on fault
 Principles of assumption of risk
 Contributory negligence
o Populist pressure forced legislature to strip courts of their jurisdiction over such claims and give
them to newly-created commissions.
o So, administrative agencies actively took over jurisdiction of narrow arrows of the law within their
specialized field.
o Other functions aside from adjudicating disputes
 Licensing, rule-making, investigating, prosecuting, and other related fxns
 Corollary power to grant provisional and final remedies (+ awarding of damages)
 Philippines followed the US as a colony
o Colonial authorities created agencies to carry out a policy of paternalism; progenitor of the welfare
state
 Carried out restrictions on personal liberties of Filipinos, regulation of trade and
commerce, hamletting of non-Christian tribes, and licensing of public utilities
 Emergence of administrative agencies perceived as part of history of struggle of political ideas
o Movement to take the law out of the influence of individualism was based also on economic and
political grounds, not just legal ones
o Conservative sectors of the US alarmed at expansion of discretionary power of administrative
agencies
 Enemies of New Deal regarded these as tools of socialism and denial of individual
freedom
 Hence, judicial review was superimposed on admin. agencies’ processes to check abuse
of discretion and excess of jurisdiction
Emergence of Administrative Due Process
 Imposition of judicial review over administrative agency proceedings led latter into collision course with
courts
 o Specialized orientation and summary procedures of administrative agencies vs. broad and
generalized approach of courts
o Clash revolved around concept of due process
 administrative proceedings: inquisitorial
 judiciary: adversarial
 Conservative lawyers in US became unduly concerned with administrative procedure
o Role of courts as guardians of substantive due process in economic affairs began to decline
o 1937, after “switch of time that saved nine” in trend of judicial decisions of US Supreme Court
(SC), conservative forces shifted crusade from substantive to procedural due process
 Movement spilled over into area of administrative law where procedural due process was
seen as a way of keeping governmental regulation w/in reasonable bounds and w/in the
limits of fair profits to private businesses
 Seeds of movement to restrict regulatory agencies planted by Justice Brewer of USSC
 He was one of the pillars of conservatism in US at the time
o Villain: ”administrative absolutism”
 American Bar Association spearheaded a campaign to surround the regulatory process
with procedures and rules to protect private parties from unfair and arbitrary action of the
independent commissions.
 Members directed attention of Congress, courts, and law schools to
o unusual growth of administrative discretion
o problems of subordinating it to judicial review
 supported by Judge Thomas Cooley; who railed against regulatory legislation by
independent commissions
o they violated
 law of supply and demand
 higher constitutional law upon w/c a republican gov’t was formed
o Cooley appointed as first chairman of Interstate Commerce Commission
 Established a pattern of operations similar to that of court of law
 Case-by-case consideration of all regulatory matters
 Under him, ICC regarded itself as a tribunal for adjudication of disputes bet. Private parties
and gov’t instead of aggressive promoter of public interest in railroad transpo
 In US SC itself, there was a shift in judicial thought to curtail the exercise of police power by means of
administrative regulation
o When Morgan cases cropped up during New Deal era, psych conditioning for administrative due
process had already been set
 raised issue of validity of proceedings before Dept. of Agriculture in establishing rates for
some Kansas city market agencies under Packers and Stockyards Act of 1921
 Gave SC opportunity to lecture the agency on essential elements of fair procedure
in administrative adjudication
 watershed in struggle to protect rights of private parties against arbitrary and unfair
procedures of gov’t agencies
 legal effects felt in PH immediately
 Pantranco v. PSC (1940)
o PH SC relied on first two Morgan cases; held that due process rights must
be respected even in administrative proceedings before the Public Service
Commission
o Justice Laurel: “…cardinal primary rights which must be respected even in
proceedings of this character”
 “right to a hearing…includes right of party interested or affected to
present own case and submit evidence…tribunal must consider
evidence presented… this principle emanates from the more
fundamental principle that the genius of constitutional government is
contrary to the vesting of unlimited power anywhere”
 Ang Tibay v. CIR
 o Court enumerated cardinal primary rights of parties before administrative
tribunals
 Right to a hearing
 Right to adduce evidence w/c tribunal must weigh and consider
 Right to a decision supported by substantial evidence
 Evidence must be presented at the hearing or contained in
the record and disclosed to parties
 Tribunal must act on own independent judgment; not simply
accept the views of a subordinate in arriving at a decision
 Decision must be rendered in a manner that parties can
know issues involved and reason for decision
 These rights would be applicable only to quasi-judicial tribunals exercising adjudicative
functions
 Even if SC enumerated them to be observed in “administrative proceedings”, from
context, it was clear that rights pertained only trial-type hearings before
administrative tribunals
 Analogy bet. Adjudicative proceedings before admin. tribunals and regular court
trials easy to apply = no difficulty in applying procedural due process requirements
in court trials to proceedings before admin. tribunals
 Path of administrative due process in regulatory proceedings more tortuous and deviating
than that in adjudicatory proceedings
 Courts, in judicial review, have acknowledged the basic differences bet. Judicial
proceedings and regulatory proceedings
o encountered difficulty trying to draw outlines of due process applied to
administrative regulatory proceedings
 Could be done by tracing evolution of judicial techniques in
approaching this problem
Redefining “Property” in the Welfare State
 US had become the bureaucratic state capped by administrative agencies after WWII and its emergence
as a superpower
o Agencies evolved into governmental behemoths guiding the economy
o Ideology of welfare state produced new concepts in law
 Idea of welfare itself gave rise to new social, economic, & cultural rights of the individual
o Developed countries realized that, with the hegemony of capitalism and industrialism, the source
of insecurity for individual shifted from political power to rising economic power of big financiers
and multinational companies
 Leaders realized that those who held reins of economic power = those who allocated
scarce resources of country
 Wielders of economic power began to challenge the holders of political power in an
industrialized society
 Insecurity seen as an economic phenomenon; only governmental action can be harnessed
to provide basic foundation of free society
 In importance, freedom from want = freedom from fear
 In a mass democracy, liberties listed in the traditional bill of rights become meaningless if basic needs of
individual (food, clothing, shelter) were left to mechanism of invisible hand of market
o In industrialized countries; personal liberty = negative duty of state to refrain from infringing on
political rights AND positive duty to combat hunger, provide water and meds, and redistribute
gains from wealth of nation
 Instead of constitution that limits powers of gov’t, why not have also a constitution that
requires gov’t to provide for welfare of citizens
o Idea of “social justice” took shape during New Deal era
 Roosevelt: “freedom from want and freedom of fear”
o “social justice” fully accepted as political statement by time of framing of 1935 PH Consti in midst
of unrest & dissatisfaction resulting from economic and social distress threatening all world gov’ts
  Countries that drafted their consti in 20th cent. adopted the principle
 Recognized cost of capitalism and consequences of industrialization in a mass
democracy
 Laid down policies to provide for economic well-being of citizens
 Trend of judicial thought in US began to realize need for new consti definition of “property” under the
welfare state
o Ex. “liberty” under same provision during Lochner Era
 More than freedom from physical restraint
o Doctrine came to PH through American-dominated SC
 Used Eurocentric concept of ‘civilized’; arrived at opposite conclusion (Rubi v. Provincial
Board of Mindoro !!)
o For “property” redefinition, PH SC led the way as early as 1953
 “the right of a person to his labor is deemed to be ‘property’ within the meaning of the
constitutional guarantees”
 Case: private employer filed w/ labor court petition to lay off 44 employees. Judge
conducted ocular inspection; interrogated 15 employees; then granted petition. SC
reversed it as employees weren’t given a chance to submit evidence; hence were
denied due process; “laborer cannot be deprived of his means of livelihood without
due process of law”
 Due process clause applied to private economic power; happened at time when orthodox
view was that this guarantee is a limitation only on governmental power
 US (1970s) high tribunal, in dealing w/ revocation or withdrawal of welfare benefits given by welfare state,
began to question of identification of sources to give substance to “property” protected by due process
clause
o Began to infuse new meaning to concept of property
 Looked at elements of welfarism
 Prompted by seminal article published by Yale prof who developed the thesis that property
under the constitution includes government largesse and welfare benefits doled out to
recipients, permits, concessions, grants, and licenses issued by the gov’t
 Thesis: any deprivation of gov’t largesse needs to be protected under due process
clause like that of traditional property rights
 Raised against background of criticism of decision-making procedures of
administrative agencies w/ respect to distribution and withdrawal of benefits to
welfare beneficiaries
o Critics of admin agencies: arbitrary exercise of executive power!!
o Consumer advocates: captives of same entities they were supposed to
regulate; neglected to protect interests of beneficiaries of welfare legislation
o Lawyers pushed for
 more formal decision-making procedures
 stricter judicial review of their actions (ex. Due process reqs),
 increased participation by public interest groups in making of
decisions
 transparency
 closer congressional scrutiny of their policies
 elimination of conflicts of interest
The Rise of Procedural Due Process in Administrative Law
US expanded scope of “procedural due process” under consti even as they adopted Reich’s redefinition of
“property protected by the due process clause
 First technique; “right-or-privilege” dichotomy
o w/n interest affective by administrative action was a right or a privilege
 from basic phraseology of due process clause (protects life, liberty, or property); thus
personal or property rights must have been affected
o used most frequently in immigration, business licensing, and gov’t largesse cases
 Shaughnessy v. US ex rel. Mezei (immigration exclusion case)
  “…respondent’s right to enter the US depends on the congressional will… courts
cannot substitute their judgment for legislative mandate”
 Reasoning: gov’t can withdraw the privilege from an individual w/o affording due
process protection
o If gov’t can withdraw, it may also impose any condition; power to
exclude/deny includes lesser power to impose a condition
 De Bisschop v. Galang (deportation case of PH SC)
 Denied petitioner’s plea for prohibition against Commissioner of Immigration
 Extension of stay of aliens is discretionary on part of immigration authorities;
summary hearings not a violation of due process clause
 Cited an earlier ruling; “due process of law not necessarily judicial…process by
means of w/c gov’t is carried on, and order of society maintained, is purely
executive or administrative, which is as much due process of law as judicial
process”
o “day in court = right in judicial proceedings; otherwise in administrative;
rests upon different principles”
o Criticized by jurists and textwriters
 Schwartz
 “privilege” concept developed at time when role of gov’t was relatively restrained
 In contemporary welfare state, this approach would have devastating
consequences
o “…Welfare State will be littered with dependents left outside pale of legal
protection”
 Right-privilege dichotomy doesn’t answer whether a particular license, contract, or
privilege should be taken away w/o notice or hearing
o US SC expressly rejected the right-privilege approach in Goldberg v. Kelly
 Case involved validity of regulations governing the termination of welfare benefits
 “…constitutional challenge cannot be answered by an argument that public assistance
benefits are a ‘privilege’ and not a ‘right’… they are more like a ‘property’ than a ‘gratuity’.
 Court shifted inquiry to severity of injury to the interest of the individuals affected
 Element of emergency tilted balance in favor of the individual recipient
o termination of welfare benefits might deprive the individual of the means of
living
 w/n individual was “condemned to suffer grievous loss”
 thus, where injury affected to individual is quite serious, procedural safeguards would have
to be observed before deprivatory action by the gov’t could be validated
o Shifted its methodology with Board of Regents v. Roth
 Case: action by asst. professor hired for one year
 Wasn’t renewed after a year; demanded a hearing
 SC struck down his argument
 Due process requirements only cover range of interests included in 14th
Amendment of Federal Consti (i.e. liberty or property)
 He had no ‘property’ interests at stake
 Test of application of due process requirements is not the weight but the nature of
the interests involved
 Property interest = more than an abstract need/desire; must have a legitimate
claim of entitlement to it; dimensions are defined by existing rules or
understandings that stem from an independent source such as state law-rules that
secure certain benefits + support claims of entitlement to benefits
o Reiterated in Arnett v. Kennedy
 “…when property interests are created by positive law, they are also
defined and limited by the law which creates them, not the consti”
o Goss v. Lopez
 Public school students in Ohio cannot be suspended without observing due process
guarantees of notice and hearing
  “as long as a property deprivation is not de minimis, its gravity is irrelevant to the question
whether account must be taken of the due process clause”
 property & liberty interests in education
o Cornejo v. Gabriel and Provincial Board of Rizal
 PH case that used reasoning in previous case but reached a contrary conclusion
 SC upheld preventive suspension of a municipal president under the Administrative Code
without hearing
 Public office not considered property; it is a public trust or agency
o Recent PH case follows reasoning in Goss v. Lopez. (Guzman v. National University)
 Action involving college students from a private university allegedly because of their
boycott activities as a result of which they suffered poor academic standing
 Procedural due process standards
 1) informed in writing of the nature and cause of any accusation
 2) right to answer charges against them w/ assistance of counsel if desired
 3) be informed of evidence against them
 4) shall have right to adduce evidence on their behalf
 5) evidence must be duly considered by investigating committee or official
designated by school authorities to hear and decide the case
 University did not conduct such proceedings
 Jardeleza v. Sereno; even applicant for the position of SC Justice is entitled to a hearing
before the JBC
o Balancing approach came back in Mathews v. Eldrige
 Now a Three-pronged act (*)
 Private interest affected
 Risk of erroneous deprivation of interest if due process isn’t observed
 Government’s interest
 Case: Recipient of disability benefits brought suit against Sec. of Health, Education, and
Welfare, seeking reinstatement of the payments
 During its program of continually monitoring the medical conditions of aid recipients, state
agency determined that the petitioner’s disability had ended; hence no more benefit
 Informed petitioner by letter (indicated reason + advise)
 Social Security Administration notified petitioner that he would not be receiving any more
payments; advised of right to have agency reconsider its initial determination
 Petitioner filed petition instead
 Court indicated the factors it considered essential in the balancing process
 Mentioned three-pronged approach (*) (private interest, etc)
o Re first interest: the potential deprivation was less than that of a welfare
patient in Goldberg v. Kelly
 Here, eligibility was based on inability to engage in substantial
gainful activity
o Re Second interest: decision whether to discontinue disability benefits
would turn standard and unbiased medical reports by physician specialists,
plus a further safeguard against mistake in the policy of allowing the
disability recipient full access to all info relied upon the state agency
o Re third interest: incremental cost resulting from increased no. of hearings
and expenses of providing benefits to ineligible recipients
 Thus, due process reqs do not warrant trial-tyoe hearing before termination of
disability benefits
Economic, Social, and Cultural Rights in a Third-World Setting
 These rights are unlike civil and political rights
o Latter require only restraint on the part of the state
o Former can be enforced only through immediate state action or only after economic and social
programs had been carried out by governmental bodies or agencies
  “programmatic” in character; to be enforceable, they require expenditure of state
resources + positive programs to be pursued by administrative agencies
 Administrative law: institutionalization of economic, social, and cultural rights by
 Legislation
 establishment of administrative agencies
 expenditure of state resources
 regulation of private economic power and adjudication of demandable rights and
obligations
 rights that do not necessarily require state action or creation of admin agencies are
exceptions rather than the rule
 Enforcement of economic, social, and cultural rights in a developing country like the PH is a problem
o Most rights require a particular state of economic and social development
 Ex. Right to
 Take part in cultural life or community
 Decent living wage
 Partake in benefits of scientific/technological advancement
 Partake in benefits of literary or artistic production
o In the PH these rights are much more legal fiction
 State resources here are limited
 Tiny oligarchy over mass of poverty-stricken and teeming humanity
 Recognition came in trickles even after 1935 constitutional evolution
o 1936: laborer died (drowned in a rampaging river) from trying to recover a log
 TC and CA denied heirs’ claim for compensation; cited assumption of risk and contributory
negligence
 When the case went public, the PH President assailed the judges’ decisions (favored the
wealthy); blamed lawyers (trampled on human rights in defending property interests)
 Although met with countercriticism from a one part, another part of the legal
profession called for judicial statesmanship + new look at techniques of judicial
reasoning
 UP Pres Bocobo: “socialization of the law”; urged courts to respond to throb of
present-day society
 Constiutional convention Pres. Recto: property rights made subordinate to
supreme interests and well-being of nation; urged implementation of this principle
 Pres. Quezon pointed the way for judicial statesmanship
o “…radically revise our concept of private property by emphasizing social
responsibilities of wealth… indoctrinate every citizen with ethical principle
that he is his brother’s keeper”
o However, judiciary persisted in old habit, gripped by stare decisis
 Despite radical provisions of 1935 Consti on social justice and protection of labor, courts
did not follow, defeating spirit of social justice provisions of the consti 
The New Property and Agrarian Reform
 Ideology of the welfare state resounded more urgently in PH in 1930s w/ Central Luzon’s agrarian unrest
o 1936: Court of Industrial Relations (CIR) established
 Charged with adjudicating disputes bet. Landlords and tenants in agriculture
 A novelty; SC didn’t know how to characterize it
 “court of justice” – power to settle conflicts
 Arbitral board – power of compulsory arbitration
 “court of equity”
 Characterization of CIR proceedings was just as confused
 Judicial, legislative, administrative, quasi-judicial
o CIR was an administrative agency; multifarious proceedings could be legislative, judicial, and
quasi-judicial
 Set up to equalize serious imbalance of economic power between labor and capital; tenant
and landowner
 After end of WWII, agrarian unrest rose to new proportions
o Tenants who fought as guerilla armies during war and did not surrender arms refused to be
relegated to serfdom
o Predominance of political power in country continued to reside in economically privileged
 Thwarted numerical superiority of peasants
 Dictated political alternatives to country
 So, tenancy laws reflected interests of landowning class
 Japanese observer: “outwardly conforming to democratic gov’t… PH society still in the
main ruled by an oligarchy”
 Against this backdrop, CIR was given almost absolute power to decide on all matters affecting labor and
agrarian disputes
o Compulsory arbitration
o Empowered to take cognizance of “agricultural or industrial disputes…”
o Thus, in arbitration, CIR
 fixed minimum wages for laborers and maximum rentals for tenants
 ordered wage reductions
 converted payment of salaries from monthly to daily basis
 ordered overtime payment, backwages, vacation, sick leaves
 determined “fair & just wage”, “just or unjust dismissal”, “national interest cases”
 defined “social justice” under consti
 When CIR decisions were questioned, SC upheld them, abiding by social justice provisions of consti
o Federation of landowners challenged authority of CIR to annul rice tenancy contracts alleged to
have been induced by fraud or deceit
 SC: fact that nullity of contracts raised doesn’t mean that CIR doesn’t have jurisdiction
o Landlords questioned capacity of labor union to sue on behalf of tenants
 SC: labor and tenants’ unions were recognized as one effective means by which laborers
and tenants may obtain protection of their rights
o Affirmed power of CIR to nullify contracts between landlords and tenants executed through fraud
and deceit (even if not under direct prohibition of civil law)
o Upheld CIR ruling that the refusal of a tenant to sign a tenancy contract containing stipulations
prohibited by law is not a cause for dismissal
 CIR found: potent weapon of landlords v tenants = threat of ejectment or dismissal
 Legislative committee study found that tenants had been indiscriminately dismissed
o In spite of legal provisions insuring security of tenure for tenants
o While law provided that tenants be dismissed only for cause
→ phrase was defined by courts under common law concepts
 1955: Congress finally decided to solve the tenants’ problem of tenure
o How? It passed a law which provided:
 (1) sale or alienation of the land does not itself extinguish the tenancy relationship
 (2) purchaser or transferee shall assume the rights and obligations of the ofrmer
landholder in relation to the tenant
 When landowner challenged constitutionality of this provision
→ SC dismissed the petition
→ held that it was valid in light of the consti. Prov. on social justice + power of state to regulate
contracts
 Prov of RA 1199 assailed did not prohibit the landowner from disposing his property
→ only provided that: in such eventuality, tenancy relation should be preserved
 Re: reasonableness of the law, high tribunal said: designed to protect the tenant from being unjustly
dispossessed by the purchaser of the land
o Rule: reiterated the ff. Year
→ this time, it was found that it was the lessee who hired the tenant and upon expiration of the lease,
lessor refused to employ the lessee’s tenant, invoking liberty of contract
 Re: CAR decision
o SC delved into the history of the law and found suff. Justification for ruling in favor of its
constitutionality
 1972: Martial law (ML) declared
→ rationalized as means to reform the old oligarchic social order + create new society
→ first acts: issue an emancipation declaration for tenant farmers
o PD 27: put all tenanted private agricultural lands devoted to rice and corn under land reform
o Even ML could not achieve limited land reform, much less social reform
 When Marcos was deposed → ML dismantled → new constitution decreed
→ agrarian reform and redistribution of agricultural lands
→ conditioned on just compensation + passage of an implementing law by Congress
→ it failed to achieve the Constitution’s objective of giving land to all landless farmers via
an agrarian reform program