De Lima's demotion signals the government's limited tolerance for dissent, a worrisome sign for one of Asia's oldest democracies and one with heavy implications for politics and the economy.
"The more the president goes after his critics, the more political polarization it will generate," said Herrera-Lim.
Duterte had a 91 percent approval rating, according to a July 20 poll, but certain segments of the population, such as the middle and upper income classes, as well as non-government institutions including the church, have voiced their unease with his policies.
"If he becomes more aggressive in attempting to remove any criticism of his administration, then they may start to find ways to organize to resist him, which could then push him into becoming less tolerant and then you get a spiral towards polarization," explained Herrera-Lim.
For now though, it may still be too early to call the Philippines undemocratic.
"Congressional majorities are used in many countries to limit the impact of opposition voices in the legislature.... It is dirty politics but not necessarily undemocratic. The press also remains free," noted Thompson.
Jean Franco, assistant professor at the University of the Philippines, shared that view.
It's not unusual for leaders to involve themselves in intra-Senate affairs so Monday's action does not make the Philippines undemocratic, she explained. If opposition continues to dwindle in Congress, that will add pressure on institutions outside the political realm, such as civil society and the media, to ensure accountability, she continued.
Still, experts agree the government's stance is likely to weigh on the long-term perceptions of foreign investors.
On Wednesday, S&P Global Ratings maintained its stable outlook on the country's sovereign credit ratings but warned extrajudicial killings could undermine respect for the rule of law through the challenges presented to the legitimacy of the judiciary, media, and other democratic institutions.
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