After the Central Bank failed to persuade the President to amend the banking laws by presidential decree, the World Bank mission was invited in 1988 to evaluate the financial system of the Philippines. The mission endorsed the overall direction of the Central Bank's initiatives for structural reforms (see World Bank,1988). They agreed with most of the CB-initiated proposed amendments to the Central Bank Act and General Banking Act. The World Bank incorporated them into the set of conditions attached to the Financial Sector Adjustment Loan.
The recommendation by the World Bank mission covered a broad range of issues including (a) banking operations and financial conditions; (b) supervision and regulation of commercial banks; (c) supervision and regulation of securities market institutions; (d) legal issues affecting the Central Bank; (e) an enlarged role for the Philippine Deposit Insurance Corporation; (f) legal issues involved in debt recovery and insolvencies; (g) a proposal to set up special courts for banking and insolvency cases; (h) a government / Central Bank-directed credit programme; and (i) gaps in financing selected real sectors (export finance, provision of long term credits and foreign exchange resources).19 With respect to the enhancement of the regulatory power of the Central Bank, the key recommendations included the following issues: rules on emergency advances to banks; criteria for bank insolvency; regulatory instruments, detecting and countering insider abuses; and protection of Central Bank officials from law suits.
However, the World Bank's support for structural reform in the banking sector was not sufficient to push structural reforms through the legislative process. Under the Aquino administration, the fate of structural reform was left largely in the hands of the Legislature, since President Aquino was not keen to implement structural reform by Presidential decree before the Legislature was restored in 1987. The legislative process required to pass laws is "usually a long and tedious process, made more so, by the present bicameral structure" of Legislature (de Leon, in Velasco,1989:96). Particularly under the Aquino government, the legislative process was constrained by the institutional inefficiency of the Legislature, newly-restored after more than fifteen year's 19 For details, see World Bank (document) (1988:155-164).
closure, and the fierce conflicts between the Executive and the Legislature, particularly the Senate, over key legislation including foreign debt issues, land reforms, annual budgets and the U.S. bases issue.
These fierce conflicts can be understood in the context of the unique features of the Aquino government during the transitional period: the suspension of legislative elections between 1987 and 1992, and the continuing tradition of Philippine parliamentary politics, namely the lack of a strong political party which shared the legislative agenda and disciplined the voting decision of member legislators. The 1987 elections demonstrated the popularity of President Aquino, who deposed Marcos. The elections resulted in a landslide victory for Lakas ng Bayan (LABAN), the pro-Aquino coalition party, which captured 150 of the 200 contested seats in the House and 22 of the 24 seats in the Senate. Aquino's popularity and widespread anti-Marcos sentiment were the main factors contributing to this landslide victory (see Velasco,1989:68). However, this victory in itself did not secure the successful promotion of the Executive's legislative agenda. LABAN itself was a broad coalition party with no common legislative agenda. Once elected, legislators did not need to cooperate with the President in order to ask for her support for immediate electoral purposes since there was no legislative election between 1987 and 1992. In addition, although the LABAN party's candidates were endorsed by the President in the elections, President Aquino did not belong to the party. President Aquino did not lead any political party which she could use to bridge the gap between the executive and legislative branches for her legislative agenda.
To understand the difficulty of implementing structural reform under the newly- restored democracy, it is worth briefly examining the legislative process involved in policy-making. Under the 1987 Constitution (Section 1, Article VI), the Congress is composed of two houses: the Senate and the House of Representatives. The Senate is a nationally-elected body with 24 seats. The House of Representatives is composed of not more than 250 members, to be apportioned on the basis of area and population. In
the 1987 elections, 200 legislators were elected.20
Members of the Senate and the House can file bills for legislation on almost any subject. The Senate is generally expected to concentrate on legislation which is of national concern; the House of Representatives, in addition to national concern, tends to spend more time on bills of limited concern. These expectations reflect the responsibilities of each House, as stated in the Constitution. Under the 1987 Constitution, all treaties or international agreements are ratified by the Senate (Section 3, Article XVIII) while all appropriation, revenue or tariff bills, bills authorising an increase in public debt, bills of local application and private bills are initiated by the House of Representatives (Section 24, Article VI). In the bicameral structure of the Congress, a bill has to be discussed and passed in both the House and Senate. Thus, two bills on the same issue, a House bill and a Senate Bill, are filed and discussed in each committee and on the floor of the House and the Senate.
Apart from making laws, the Legislature expresses its concern and declares its intention to act upon important issues facing the country by passing resolutions. A resolution is filed and is discussed in the Legislature, but a resolution, except for joint resolutions, does not constitute legislation and need not be presented to the President for approval. The 1987 Constitution also confers on the Senate and the House or any of their committees the power "to conduct inquiries in aid of legislations in accordance with its duly published rules of procedure" (Section 21 of Article VI). The so-called Blue Ribbon Committee of the Senate, otherwise known as the Committee on Accountability of Public Officers and Investigations, is responsible for the investigations into the conduct of public officers.21
A large amount of legislative work normally rests with the Committees. Every bill filed by a member of either the Senate or the House is referred to one or more committees. A Committee is seen as a sub-division of Congress which prepares a piece of legislation 20 In addition to 200 seats, from the 1998 election, 50 representatives were elected through the party list system, which essentially aimed to choose representatives from minority political organisations. Large parties were excluded from the party list system.
21 For an overview o f the investigative function of the Senate and the Committee's activities during