Yes it is illegal but it happens in front of huge crowds. Be warned it IS graphic and heartbreaking.
You want to do anything??? Write to the Philippine Embassy where ever you are and tell them they'll never have your tourist dollar as long as it continues.
Embassy of the Philippines in Wellington, New Zealand
50 Hobson Street,
P.O. Box 12-042
WellingtonPhone: (644) 4729-848 & 472 9921
Visit http://www.networkforanimals.org/Site/level2.php?id=88&article=157 follow THEIR link to the mayor of the city and sign up for their email newsletter and offer your support.
Brian May (from Queen) www.brianmay.com/brian/letters/letters.html is a huge animals rights fan and some horse people reckon he'll get on board so email him too... firstname.lastname@example.org