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CS4F

The 13th

International Convention of

the East Asian Economic Association

Grand Copthorne Waterfront Hotel, Singapore

October 19-20 2012

Convention Theme:

Opportunities and Challenges for Asian Economies in the New

Millennium

Prince Christian R. Cruz (University of the Philippines)


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When Does a Banana Republic Split?

Federalism and Province Creation in the Philippines

Prince Christian R. Cruz

University of the Philippines- School of Economics

[email protected]

ABSTRACT

Under what conditions will local elites agree to divide a province?

Using a simple model, the paper analyzes the incentives faced by

rulemakers that will lead to the creation of a new sub-national or local

government unit (LGU) such as a province or state. Factors such as

the amount of rent available, the probability and costs of winning

elections, and the lobbying costs are analyzed. The paper predicts that

local elites will likely agree to create a new province if the rents in the

divided province are substantial enough to cover the huge lobbying

costs, while considering the cost and probability of getting elected.
mailto:[email protected]:[email protected]:[email protected]


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The paper provides a framework for analyzing province creation in

the Philippines wherein the number of provinces steadily rose from 50

in 1945 to 73 in 1986 and 80 in 2011. There are also several proposals

to create more provinces. The study looks at federalism wherein the

creation of sub-national government units is endogenous within the

model. The framework can also be used to analyze the creation of

new LGUs in other Asian countries such as Indonesia and Vietnam.

Keywords: province creation, sub-national fragmentation, federalism,

rent-seeking

JEL Classification Codes: H77, D72, B52


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1. Introduction

A province is the highest sub-national or local government unit

(LGU) in the Philippines. It is headed by a governor, a vice-governor,

and a provincial board. It is divided into cities and municipalities and

into one or more legislative district, whereas each district elects one

representative to the lower house. The number of provinces steadily

rose from 35 in 1907 to 50 in 1945 and 73 in 1986. Since the passage

of the 1986 Constitution and 1991 Local Government Code

Republic Act (RA) 7160the total number of provinces has risen to

80 as of 2011. The creation of a new province requires a law passed

by Congress and approved by majority of voters in the affected areas

in a plebiscite.

In 1992, the sub-provinces of Biliran and Guimaras separated from

Leyte and Iloilo, respectively. The sub-provinces of Kalinga and

Apayao under the province of Kalinga-Apayao separated in 1995. The

newly created provinces are Saranggani in 1992, Compostela Valley

in 1998, Zamboanga Sibugay in 2001, and Dinagat Islands in 2007.1


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The creation of Dinagat Islands was nullified by the Supreme Court

(SC) in 2008 but was reinstated in 2011.

Two proposals for new provinces were rejected in a plebiscite: the

division of Isabela in 1995 and of Quezon in 2008. There were also

several other proposals filed in 2006 that failed to materialize: the

division of Cebu into four provinces, the creation of Bukidnon del Sur

(from Bukidnon), and the creation of Northwestern Samar (from

Samar). Bills to create Nueva Camarines (from Camarines Sur) and

Davao Occidental (from Davao del Sur) have passed the House of

Representatives, the lower house, in 2011 but are at the committee

level in the Senate, the upper house, as of September 2012.

Proposals to create a new province typically lead to fierce debates on

the costs and benefits of increasing the number of LGUs. While there

are several valid arguments in favor or against the creation of a new

province, one of the most dominant views is that the proposals are

meant to serve the personal interests of the proponents. It is alleged


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that elites create new provinces for personal or political reasons: to

allocate rent among them and to ensure their continued stay in power.

While it is inherently difficult to prove that rent-seeking and power-

preservation are the main reasons for creating a new province, an

approach taken by this paper is to seek under which conditions these

could happen. We construct a simple framework looking at the

factors that will lead to the creation of a new province if the main goal

of the local elite is to allocate provincial rent among themselves. The

interaction between the lobbying costs, the amount of rent available,

and the cost and probability of getting elected are analyzed in the

model by looking at the decision of the local elites in a province.

Province creation highlights the interaction among groups of local

elites, and the interaction between local and national elites. It shows

under what conditions, elites will allow change or reform to happen

given that change can only happen if the elite find it in their best

interest to allow them.


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Using four cases of province creation (two successes and two

failures), the paper finds that the local elite is likely to agree to divide

a province if the lower provincial rent caused by the division can be

compensated by higher probability of winning and lower campaigning

costs. There are potentially huge returns for the proponents of the

division and this must be weighed against the lobbying cost. The huge

lobbying cost, however, may hinder some elites from proposing to

divide their province since its recovery is uncertain if the proposal

fails. Most of these costs are not quantifiable making the analysis

difficult even for the proponents. The uncertainty regarding the

outcomes of the proposals also makes it risky for the proponents.

There seems to be two emerging trends in terms of sub-national

fragmentation and consolidation. With an aging population and focus

on fiscal sustainability, local government consolidation is observed

more commonly in developed economies such as in the US, Japan,

and Europe. In several emerging economies, however, LGU

fragmentation is gaining ground especially with rapid population

growth and recent experience with democratization (Gomez-Reino


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and Martinez-Vazquez, 2012). Although there are several papers on

history of individual provinces, as far as we know, there is no

comprehensive study on province creation in the Philippines. The

paper is an attempt to fill the gap.

The next section reviews the literature. It is followed by a discussion

of arguments for and against a new province. The simple framework

is presented in section four followed by the discussion on how to

quantify the framework. The four case studies are presented in section

six. Section seven provides some general findings on lobbying costs

and the probability of winning. The last section concludes.

2. Federalism and province creation

The main arguments in support of and against the creation of LGUs

can be tied to the literature on federalism, decentralization and the re-

drawing of boundaries. The seminal paper on decentralization by

Tiebout (1956) explores how competition between LGUs can

approximate perfectly competitive markets and lead to an optimal

level of delivery of public goods. Oates (1972) forwards a theorem


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that formalizes the basic efficiency argument for the decentralized

provision of public goods. He also provides a solution for the trade-

offs between the costs and benefits of having smaller governments.

Alesina and Spolaore (2003) analyse the optimal size and number of

political unitsboth national and sub-nationalthat is Pareto optimal

under certain regimes. They find that democratization may lead to an

inefficiently high number of states, compared to a case of a central

planner or a benevolent dictator. Gomez-Reino and Martinez-

Vazquez (2012) find that the number of government tiers is mostly

related to size (population and land area) variables. Further,

preference for political accountability generally leads to smaller

jurisdictional size and greater number of government units.

As the number of provinces increases, there can be a better matching

between the heterogeneous needs of people and the services provided

by LGUs. With more LGUs, there is a tendency that each unit will be

smaller and more responsive. With smaller sizes and better matching

of services, there can be higher accountability, referred to as


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allocative efficiency. The increase in the number of LGUs, however,

may lead to higher administrative costs in terms of salary of

government officials and maintenance costs for the delivery of

services. Hence, having too many LGUs may lead to lower

production efficiency. The problem of the government is to find the

proper balance between these two concepts of efficiency: allocative

efficiency and production efficiency (Niazi et. al., 2010).

Creation of new provinces, however, may not be driven by the desire

for efficiency but by pure self-interest of the proponents. In the public

choice theory, pioneered by the likes of Buchanan and Tullock

(1962), politicians are deemed as rational economic agents

maximizing rent-seeking and their power and influence. Persson and

Tabellini (2000) show several models of politicians pursuing different

goals such as maximizing jointly their probability of winning re-

election i.e. staying in power and the amount of rents they keep for

themselves.


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Looking at provinces as institutions, we can look at province creation

as institutional change under the New Institutional Economics (NIE)

framework. Institutions are created to minimize uncertainty in the

society by establishing a stable but not necessarily efficient, structure

for human interaction (North, 1990). It is possible that uncertainty is

minimized only for those who created these institutions and are able

to maintain them even if these institutions lead to uncertainty for other

players in the society. From this perspective, institutional change

happens only if the local elite find it to their best interest to allow

change to happen (Acemoglu and Robinson, 2012).

Studies on the creation of political units focus mainly on

gerrymandering and redistricting (see for instance Friedman and

Holden, 2008). Less commonly observed and studied is the creation

of new LGUs such as provinces or states. Studies on the creation of

new LGUs were done on Indonesia (Fitrani et al., 2005; Kimura,

2010; Niazi et al., 2010) and Vietnam (Malesky, 2006), among others.

These studies also highlight different motives for the creation of new

sub-national government units.


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Unlike in the Philippines where province creation was done almost

continuously, creation of LGUs in Indonesia accelerated after the

downfall of authoritarian regime of Soeharto in 1998 and the Big

Bang decentralization in 2001. Termed aspemekaran or blossoming,

the number of provinces in Indonesia increased from 26 in 1998 to 33

in 2008, while the number ofkabupatens (districts or regencies) and

kota (cities and municipalities) rose from 319 to 510 (Niazi et. al.,

2010).

Malesky (2009) examines how the local elites reformist strategy led

to an increase in the number of provinces in Vietnam.

Gerrymandering was done to escape a Partial Reform Equilibrium

(PRE) and to promote liberalization. Unlike in Vietnam, however, the

province creation in the Philippines does not seem to be based on a

concerted effort by a group of national elite to push a specific cause.

While there are several books and articles on the history of individual

provinces in the Philippines, there are very few materials on the


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subject of province creation itself. The closest is Fragmentation vs.

Consolidation: The Case of Philippine Local Governments by

LOGODEF (2005). The study, however, focuses mainly on the cost of

putting up new provinces, municipalities, and cities. Anchored mainly

on the public choice and NIE frameworks, the paper tries to fill in this

huge gap by providing a framework to analyze the incentives faced by

proponents and opponents of new provinces.

3. Benefits and costs of province creation

The process of creation of a new province starts with a bill filed in the

House of Representatives. After passing the required votes in the

lower house, it is elevated to the Senate, the upper house. If there are

differences between the House and Senate versions, it must be

consolidated in a Bicameral Conference Committee. After getting

through Congress, the bill goes to the President for signing into law.

The president can also veto it or allow it to lapse into law. If vetoed,

the bill returns to Congress where it will need two-thirds vote in each

chamber to pass. The law must then be approved in a plebiscite

conducted by the Commission on Elections (Comelec).


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Section 461of the 1991 Local Government Code (LGC) provides the

requisites for a new province:

(a) A province may be created if it has an average annual income, as

certified by the Department of Finance, of not less than twenty

million pesos (P 20,000,000.00) based on 1991 constant prices and

either of the following requisites:

(i) a contiguous territory of at least two thousand (2,000) square

kilometres (sq. km.), as certified by the Lands Management

Bureau; or,

(ii) a population of not less than two hundred fifty thousand

(250,000) inhabitants as certified by the National Statistics Office:

Provided, That, the creation thereof shall not reduce the land area,

population, and income of the original unit or units at the time of

said creation to less than the minimum requirements prescribed

herein.

(b) The territory need not be contiguous if it comprises two (2) or

more islands or is separated by a chartered city or cities which do

not contribute to the income of the province.

(c) The average annual income shall include the income accruing to

the general fund, exclusive of special funds, trust funds, transfers,

and non-recurring income.


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Aside from the phasing out of sub-provinces, the passage of the 1987

Constitution and the 1991 LGC led to three important changes to the

way LGUs are created and administered:

1.Mandatory plebiscite for the creation of new LGUs such as

provinces. In the past, it depended upon the law that created the

province if there would be a plebiscite for the creation to be

approved.2 The guarantee of a plebiscite gives the peopleand

not the elitethe final say in the creation of new provinces.

2.Higher budget allocation for provinces and local government

units. The 1991 LGC allots 40% of national taxes collected

three years prior the current fiscal year as Internal Revenue

Allotment (IRA), the main source of funding of most LGUs.

This was significantly higher than the previous level of 20% as

national government fiscal transfer (Diokno, 2003).

3.Greater autonomy and responsibilities for LGUs. The higher

budget was necessary for the increased responsibilities of LGUs

due to the devolution of several services. LGUs were also

granted greater autonomy. The IRA was automatically released

to the LGUs, a significant shift from the previous policies


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wherein approval from the national government was needed for

most actions and procurement (Diokno, 2003).

There are two possible opposing effects of the 1991 LGC on province

creation. On one hand, the automatic release of bigger amounts to

provinces may encourage the creation of more units since there is

enough money to be distributed among otherwise competing elites.

On the other hand, the bigger amount can make established elites in

each province to be more protective of their share preventing the

division of existing provinces.

Harking on the allocative efficiency argument, proponents of new

provinces focus on difference between the needs in the mother

province compared to proposed new LGU. The difference may be

anchored on religious, ethno-linguistic, or geographical grounds. The

distance between the people in the proposed new province and the

political centre of the mother province may be a valid ground for

separation. This problem can be exacerbated by geological conditions

such as separation by water (in case of islands) or mountains.


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Religious justifications were used for the division of Lanao into a

Christian-dominated Lanao del Norte and Muslim-dominated Lanao

del Sur (Bentley, 1994). As an archipelago, geographic reasons were

used for the creation of island-provinces such as Batanes, Camiguin,

and Siquijor even if their population and land-area are very small.

The way budget is allocated for LGUs under the 1991 LGC may

provide additional incentives for the creation of new provinces

(Gatmaytan, 2001). Of the IRA, 23% goes to provinces, 23% to cities,

34% to municipalities, and 20% to barangays (villages). The

allocation for provinces is divided on the basis of population (50%),

land area (25%), and equal sharing (25%). It is on the basis of equal

sharing that the divided provinces will be getting a bigger share at the

expense of other provinces.

Arguments in favour of a new province can be summarized as

follows:

1.Better delivery of services and better matching of needs;


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2.New infrastructure and projects for the new province will lead to

new jobs and development;

3.Ethno-linguistic, religious, or historical re-alignment ; and

4.Higher transfers (including IRA) from the national government

to the same area.

People who oppose the creation of new provinces highlight the

massive costs associated with the creation of new government units.

They also stress the inefficiencies and redundancies created with too

many government officials. With the prospect of smaller IRA

provision from the national government, existing provinces also have

an incentive to oppose the creation of new LGUs. Even so, the most

common argument against proposals for new provinces is that

political reasons are the main justification for their creation.

Opponents argue that the proponents care little about the welfare of

the people, instead the ruling elite simply want to divide rents and

ensure their stay in power.


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Arguments against creation of a new province can be summarized as

follows:

1.Higher costs and inefficiencies with more government offices;

2.High cost for the plebiscite and other start-up costs for the new

province;

3.Division of the province is done to accommodate the political

needs of local elites ;

4.Division of the province will weaken the lobbying power of the

unified province.

It is difficult to ascertain in reality the motives behind the proposals

for the creation of new provinces. In most cases, there are multiple

valid arguments in favour or against the creation of a specific

province. A track adopted by this paper is that if province creation

was done solely for rent allocation among competing groups of elites,

then what are the conditions for this to happen. Unlike most of the

studies mentioned in section 2, the paper focuses on the factors

affecting the decision made by local elites in supporting or opposing

proposals for a new province.


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4. A model of province creation for rent allocation

The difficulty in analyzing proposals to divide a province lies in the

uniqueness of each case with different players, motivations,

dynamics, and circumstances. One general observation, however, is

that political dynasties are involved in the process as either proponent

or opponent, or both. This is hardly surprising given the dominance of

dynasties in the Philippine political system (Querubin 2010).

Mendoza et al. (2012) find that around 70% of district-representatives

belong to a dynasty.

An approach adopted by this paper is to seek under what conditions

local elites will agree to divide a province if their main goal is simply

to divide the rent among themselves while keeping them in power to

assure the continuous collection of rents. To make the analysis

tractable, we assume that there are only two players and only one

position will be created: the governor of the new province.


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Assume a province is divided into two districts with each district

controlled by a particular group of local elites. Using a dynasty as a

unit of analysis, we assume that each group of elites is headed by a

leader whose actions represent the group. Assume further that there is

a dominant group that has established control over the province over

time. For our model we assume that Group A is the dominant player.

They control the entire province and the 1st district. Group B, the

emerging player, controls the 2nd

district. Assume also that the

province produces a certain amount of rent, r, which can only be

accessed by the governor. The problem of the two groups is how to

divide the provincial rent.

The most common set-up is a winner-take-all system wherein the two

groups take part in a competition with local elections as proxy. The

winner, i.e. the elected governor gets the rent leaving none, or very

little, for the loser. The problem with this system is that there is

uncertainty with the probability of winning the election,p. Also, the

total rent is reduced by the cost of getting elected, v. Each group may

spend as long as the available rent is greater than their cost (r v).


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Hence, the total cost of getting elected spent by the candidates can be

substantially greater than the rent, i.e., the aggregated cost of getting

elected can diminish all the possible gains from the rent (

.

To minimize the losses from competition, the two groups can set up a

contract that will set a scheme for dividing the rents. They can

alternately occupy the governors office while setting a fixed ratio or

amount of rent for each group. This set-up, however, has inherent

completeness and specificity problems rendering the contract unlikely

and unenforceable. This can also be observed in terms of unstable

coalitions between dynasties in every election cycle.

Another possible way for rent division is for the two groups to

formally divide the province into two. The groups compare the costs

and benefits of dividing the province and their level of utility in each

case. Expected utility without the division or no split (NS) is given by:

(1)


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where E (UNS) is the expected utility without the split;ris the

provincial rent3,pNS is the probability of winning elections without the

split, and vNS is the cost of getting elected under the no split scenario.4

If the province is split into two (S), then, the rent will also be divided.

Let us say, that ry is the rent accruing to group A and rx is to group B;

x andy are fractions ( showing the size of rent in the

divided provinces compared to the undivided province. The rent in

each province is definitely lower than the rent in the undivided

province (r> ry, rx). It is possible, however, that the combined rent in

the two provinces is higher than the rent in the undivided province (y

+ x 1).5

At this point, it is useful to differentiate the expected utility of the

emerging player, B, whom we assume to propose the split, from that

of the dominant player. Bs expected utility with the split is

(2)

where lis the lobbying cost associated with the split.6

The lobbying

cost is assumed to be large because it includes the cost of convincing


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the national elite to pass a law to formalize the division of the

province, and the cost of campaigning to get the people to approve the

division in a plebiscite.

B will push for the division of the province if the expected benefit

from the split () is greater than the expected benefit without the

split ( ), i.e.

(3)

(4)

(5)

Equation (5) highlights the first two main results from our simple

framework:

1.B will push for the split if the huge lobbying cost can be

recovered despite the lower rent in the divided province (rx < r),


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but with the assumed higher probability of winning (

),

and lower campaigning cost (

.

2.Assuming that winning the election is guaranteed when the

province is divided ( ) and that the cost of getting elected

is the same, equation (5) then can be re-written as

(6)

Group B will agree to divide the province only if the ratio of the

rent in the divided province is greater than the probability of

winning in the undivided province ( ). Generally, if a

groups probability of winning in the undivided province is very

high, then, it is unlikely that the group will propose or support

the division of the province.

If the division of the province pushes through, returns to the

proponent are expected to be huge. The proponents main problem,

however, is determining whether the returns are big enough to cover

the lobbying cost that is also very huge. The returns to the proponent

come greatly at the expense of the dominant player. It is then


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expected that A will reject the proposal to split the province, as seen

in several cases wherein the governor opposed the division of the

province. In the cases of Cebu and Quezon, the opposition by the

governor played a significant role in the defeat of the proposal.

To a certain extent, it may come as a surprise why the dominant

player, i.e., a sitting governor will agree with the proponent in

dividing his province. This was done even in cases where in the

proponent does not seem to pose a very credible threat of ousting the

dominant player.

Assuming that all lobbying costs are shouldered by the proponent, the

dominant player will agree to the division if the expected utility with

the split is greater than the utility with no split

.

(7)

(8)


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(9)

Equation (9) shows that condition for the dominant player to accept

the proposal. Continuing the enumeration of key results above, we

have:

3.The dominant player will agree with the split if the lower rent

( can be offset by the higher probability of winning

, and lower campaigning cost (

).

4. If elections costs are the same even with the split, and the

probability of winning in the divided province is equal to one

( ), then the ratio of the rent in the divided province

should be greater than the probability of winning in the

undivided province .

Looking at the players decision tree, the likelihood that the split (S)

will happen is significantly higher when groups A and B choose to

cooperate (Figure 1). In all successful cases of split since 1992, the

governor agreed to the proposal of one (or more) representatives to


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divide the province. It was only in Isabela that the proposal lost in the

plebiscite even if the parties agreed to the division. When the

dominant player chooses not to cooperate (A plays NC), there is a

strong likelihood that the proposal will fail. In most cases, the

proposal either fails to get through Congress (e.g. Cebu) or the law

was rejected in a plebiscite (Quezon). There is no known case of a

province created despite the opposition of the sitting governor. There

is also a strong likelihood that the proponent would stop pushing for

the division once the dominant player signalled his disagreement.

This may account for a significant number of proposals that were not

even filed as bills in Congress.

5. Quantifying the variables

The simple framework uses four key variables: the lobbying cost, the

rent, the probability of getting elected, and the cost of getting elected.

Except for the lobbying cost that we assume is shouldered by the

proponent, all the other variables were differentiated between the


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proponent-emerging player (B) and the dominant player (A). We also

differentiate the rent (r), the cost of getting elected (v), and the

probability of winning (p) between with split (S) and with no split

(NS).

5.1 Rent

In empirically validating the model, we assume that B wants to create

a new province in his district. This creates a new governors position

that we assume his group wants to control to gain access to provincial

rent. For the purpose of this paper, we define rent as the amount

subject to apoliticians spending discretion. For the governor, we

assume this to be around 20% of the provinces IRA. This is based on

the allocation for local development projects under section 287 of the

1991 LGC.7

This fund, in practice, is used as pork barrel and shared

among gubernatorial officials. Even if the entire 20% does not go to

the governor, the provinces chief executive has other funds that he

can use upon his discretion. Disregarding the possible changes in the

IRA and the discount rate, we aggregate the 20% of IRA for three

years (a single term) as the total amount of provincial rent.


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Aside from the rent taken from the governments coffers, rent can

also be collected by allowing the operations of illegal activities within

their jurisdictions. The difficulty of verifying the amount of rent

available to government officials, however, is inherent with its illegal

nature. Another possible source of rent is the presence of natural

resources such as timber for logging and minerals for mining. Access

to seaports that can be entry points for smuggling can also be a source

of rents.

For the representative, we assume the rent to be equivalent to the pork

barrelformally called the Priority Development Fund (PDAF)

which was set at P70 million per representative per year (PCIJ,

2007a). It should be noted that the calculated rents are significantly

smaller than the official salaries.

5.2 Cost of getting elected

Similar to other variables in the framework, the cost of getting elected

is not easily quantifiable. The law imposes a limit on how much a


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candidate can spend per voter. It is common that most candidates

exceed the mandated spending ceiling. The cost of getting elected

depends highly on the opponent and other factors such as popularity

and acceptability. To compute the budget for campaigning, the goal is

to target 50% + 1 (majority of votes) of the 75% (the average voter

turnout in the Philippines) of registered voters. Of the final number, it

is recommended that P200 per voter be allocated by gubernatorial

candidates and P250 per voter for congressional candidates (Go,

2006).

Another factor to be considered is the size of the fixed cost for

running a campaign. For members of political dynasties, running for

an elective position is relatively easiercompared to non-dynastic

neophytesbecause the huge fixed cost for setting up a working

political network (Coronel et al., 2004). The total cost spent by a

father-and-son tandem running for governor and representative is

expected to be lower compared to two unrelated people running for

the same positions. There is, however, no known estimate for this

fixed cost which is also likely to differ widely across the country.


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To operationalize these idiosyncratic features of the electoral system,

we assume that the cost of getting elected as governor is based on the

formulation by Go (2006), except that, for ease of calculation, we use

51% of voters instead of 50% +1. The campaign cost we use is P200

per voter for the 51% of the 75% of registered voters. If that district

becomes a separate province, the cost of running for governor for a

relative of the representative is assumed to be 50% lower than what

Go (2006) recommends i.e. P100 per voter instead of P200. In our

two district province model, we use the lower campaign cost

assumption for the governor in campaigning in the district under their

control.

An important note regarding the cost of getting elected is that it can

be deemed very high once we consider the level of political violence

in the Philippines. It is not uncommon that even candidates for the

lowest elected position, the barangay kagawad (village council

member) get killed. Political violence has claimed many lives with the

one of worst cases seen in the Maguindanao Massacre.8


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5.3 Probability of getting elected

Empirically, the probability of winning in an election is one of the

most difficult to estimate even for seasoned politicians and their

strategists. On the surface it seems that the division of provinces

benefitted all or most of the proponents. There are cases wherein the

proponents of the split ran unopposed after the split.9 In several cases,

however, the probability of winning after the province was divided

did not change significantly. One problem is that the framework asks

for a probability of winning ex-ante, what the data is showing is the

share of total votes of the candidate ex-post.

There are also inherent endogeneity problems regarding this variable.

While their probability of winning affects their decision whether to

push or support the division of the province, the division of the

province also affects their probability of getting elected afterwards.

Other issues with the probability of getting elected such as the impact

of term limits are discussed in section 7.2.


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For simplicity, we use as proxy for probability of winning,p, the

average of the percentage of votes received by a dynasty in running

for the same position in past elections for theNSscenario. For the S

case, we assume that the probability of winning is equal to one. For

new positions and in cases wherein a player has not run for a certain

position, we set the probability of winning to 50 per cent to reflect the

uncertainty over the probability of winning in the NS case. We can

also assume a lower value, like 25% to reflect a low probability of

getting elected. If the net gain is negative, we also presentp*, the

level ofp wherein the player will be indifferent between S and NS.

5.4 Lobbying cost

Of all the variables in the model, the lobbying cost is the most

difficult to quantify. Lobbying Congress for the passage of a bill can

be very high given that the stakes are similarly high. The lobbying

cost depends largely on the personal network of relationships of the

proponent to individual members of Congress, especially to key

legislative leaders. Lobbying may also be illegal in certain cases such

as the Supreme Court or paying journalists to promote their cause.


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Paid advertisements and billboards may be the only quantifiable

lobbying cost but this accounts very little of the total cost.

For our analysis, we just take the lobbying cost as the residual for the

proponent, i.e. given the rent and the cost and probability of winning,

we infer on how much a proponent might be willing to spend for

lobbying. Section 7.1 discusses the lobbying cost further.

6. Case Studies

To flesh out the simple framework provided, we present four case

studies. Two cases led to the successful creation of a new province:

Compostela Valley and Dinagat Islands. The remaining two cases

failed in their attempts to divide the provinces of Cebu and Quezon.

The possible returns leading the players to oppose or support the

proposal are presented. The net rent may provide a hint on how big

lobbying costs could be.

6.1. Success: Compostela Valley (1998)


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Lorenzo Sarmiento is considered as the main proponent for the

division of Davao Province into Davao del Norte (DdN), Davao del

Sur, and Davo Oriental in 1966. Throughout his term in Congress

(1967-1972, 1987-1992), he pushed for the creation of another

province by dividing DdN further. His son, Rogelio Sarmiento, who

succeeded him as representative of the 1st

district of DdN, continued

the push for the division after Lorenzo died in 1992 (Ortojan, 2011).

Interest in the place to be named Compostela Valley may have been

sparked by the discovery of gold in Mount Diwalwal in 1987.

The creation of Compostela Valley or ComVal was supported by

almost all DdN provincial leaders including the governor Prospero

Amatong and the two other legislators, Rodolfo del Rosario of the 3rd

district and Baltazar Sator of the 2nd

district (Monforte, 2009). The

bill creating ComVal was swiftly passed by Congress and signed into

law as RA 8470 on January 1998 by President Ramos. It was

approved in a plebiscite held on March 1998, in time for the local

elections in May (Ortojan, 2011).


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The creation of ComVal deviates from our framework in such a way

that another legislative district was created. Although there were only

three legislative districts in the undivided DdN, there were two

districts each in ComVal and the new DdN. It also differs on the way

the districts are controlled by the players. Before becoming governor,

Amatong was mayor of the town of Nabunturan (1971-1978, 1980-

1986) which is under the 1st district of DdN represented by Sarmiento.

To accommodate both Sarmiento and Amatong, two districts were

created in ComVal. The first district, allotted for Sarmiento includes a

significant part of the mining activities in Mount Diwalwal. The

second district, allotted for Amatong, includes Nabunturan which

became the capital. To be able to do this, three coastal towns from the

then 2nd

district of DdN became part of ComVal.

In an interview, Sator said that Amatong and del Rosario pushed for

the creation of ComVal because they are already running-out of time

and term as they are both at the end of their allowed three-terms

(Monforte 2009). After the inauguration of ComVal, Amatong

initially chose to finish his term as officer-in-charge (OIC)-governor


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of ComVal. After one day, however, he resigned from his post to run

for Congress. Lorenzo Sarmientos widow, Luz, was appointed OIC-

governor (Ortojan, 2011).

Looking at the pay-offs for the three main proponents (Sarmiento,

Amatong, and del Rosario) shows the huge positive returns for them

given the positions they intended to occupy: the Sarmientos as

ComVal governor and 1st

district representative; Amatong as 2nd

district representative; and del Rosario as governor of DdN (Table 1).

Despite the split, returns for del Rosario are positive.

In the May 1998 local elections, the winners and loser from the

division was revealed. Amatong won as representative of the 2nd

district of ComVal. He won three terms (19982007) and was later

succeeded by his son Rogelio Amatong. Rodolfo del Rosario won as

governor of the smaller DdN.


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The Sarmientos, however, was not as successful. Luz Sarmiento ran

for a full-term but was challenged by Jose Caballero, vice-governor of

the undivided DdN from 1988 to 1992 and a former lawyer of a group

of miners from Mt. Diwalwal. With Prospero Amatong, surprisingly,

throwing his support behind Caballero, Luz Sarmiento lost. Rogelio

Sarmiento was re-elected as congressman in 1998, but now for the 1st

district of ComVal. Facing term-limits as representative, Rogelio ran

for governor against Caballero, but lost (Alama, 2004). Caballero

would serve as governor until 2007.10

6.2. Success: Dinagat Island (2006, 2011)

Dinagat Islands, carved from the 1st

legislative district of Surigao del

Norte (SdN) is one of the smallest provinces in the Philippines. The

undivided SdN is also relatively small with a land area of around

3,000 sq. km. and a population of around 481,416 in 2000. It had two

legislative districts: the 1st

district covering Dinagat group of islands

and Siargao islands (a popular surfing destination); and the 2nd

district

covering the capital, Surigao City and the other mainland

municipalities.


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The move to create a separate province of Dinagat Islands (DI) was

spearheaded by Glenda Ecleo, representative of the 1st

district of SdN

at the time. She is the widow of Ruben Ecleo Sr., the Supreme Leader

and founder of the Philippine Benevolent Missionaries Association

(PBMA), an organization described by many as a cult. After losing as

mayor of the municipality of Dinagat, Ruben Sr. invited his followers

to reside in the town. This guaranteed his win and he remained mayor

from 1963 until his death in 1987 (PCIJ 1995). His son Ruben Ecleo

Jr. inherited his post as Supreme Leader of PBMA. In 1989, the seat

of PBMA was converted into the municipality of San Jose, named

after Ruben Sr.s father. Ruben Jr. would serve as mayor of San Jose,

which became the capital of DI.11

Expanding the familys clout, Moises Ecleo, brother of Ruben Sr.,

became governor of SdN from 1987 to 1992. Glenda Ecleo was also

elected congresswoman of the 1st

district of SdN from 1987 to 1995.

She lost twice (1995 and 1998) before getting her post back in 2001.

After getting re-elected in 2004, Glenda Ecleo filed a bill creating the


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province of DI. It was co-authored with more than 50 congressmen

including Robert Ace Barbers, representative of the second district

and brother of the governor of SdN, Robert Lyndon Barbers. Other

co-authors were the House Speaker, the Deputy Speaker for

Mindanao and several representatives from Mindanao.

After passing the House and Senate, President Arroyo signed into law

RA 9355, the Charter of Dinagat Islands in October 2, 2006. The

plebiscite was set on December 2 with 52.6% (70,058) voting in

favour, while 47.4% (63,144) voted against. Voter turnout was at

44.7%. On January 2007, SdN Gov. Lyndon Barbers inducted

interim officials with Geraldine Ecleo-Villaroman, Glendas daughter,

as OIC-governor of DI. In the May 2007 election, Geraldine won a

full-term while Glenda won as the representative of the lone-district

of DI. They both run un-opposed. Five of the eight children of Glenda

and Ruben Sr. also won in different posts in DI and its municipalities

(PCIJ 2007).


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The case of DI slightly differs from our framework in terms of

territorial coverage of the proponent. Instead of proposing to convert

the entire 1st district into a separate province, the Ecleos maximized

their winning potential and set that only their turf, the Dinagat group

of islands, will be part of the new province. It should be noted that

Glenda had a difficulty winning the undivided 1st

district of SdN. She

lost twice to Constantino Navarro Jr. in 1995 and 1998 with margins

of around 500 votes.

A group led by former SdN Vice-Governor Rodolfo Navarro (a

cousin of Constantino Navarro Jr.) questioned the constitutionality of

RA 9355 in court, arguing that DI did not achieve the requisite for

either land or population set by the LGC. On February 2010, the 15

justices of the SC voided the creation of DI in a vote of 9-6. A motion

for reconsideration was filed, and this was dismissed on May 2010

rendering the Courts February decision final and executory (Te,

2011).


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In a twistdescribed as alarming and surprisingthe SC withdrew

its earlier decision and reversed it on April 2011. After a change in

leadership in May 2010 (Corona, a member of the original minority,

became chief justice), the SC decided in a vote of 6-9 that DI can

become a province. Three SC justices reversed their vote. An SC

justice wrote a dissenting opinion expressing his disappointment on

how the SC violated its own rules to issue the reversal. 12 The reversal

also shows the transactional nature of the SC (Te, 2011). The

decision was re-affirmed on September 2012.

Several factors may have contributed to the reversal. Despite the

February 2010 ruling by the SC, the Comelec proceeded to conduct

the election in the divided SdN and DI. The winners in the May 2010

elections, particularly the Matugas family, filed an appeal in the SC as

intervenors. Francisco Matugas, representative of the new and

smaller district 1 of SdN has started to expand his familys clout. In

1992, Francisco defeated Moises Ecleo to become governor of SdN.

After completing his three terms, he ran as representative of the 2nd

district of SdN in 2001 but lost to Robert Ace Barbers.


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After completing three terms as congressman in 2007, Robert Ace

tried to switch places with his brother Lyndon, who is the governor.

Ace won as governor, but Lyndon lost. In the 2010 election,

Franciscos wife ran for governor against Ace and won. Francisco

was also re-elected as district 1 representative. If the voiding of DI

continues, there will be new elections for SdN governor and 1st

district representative. Using our framework, the probability of

controlling the province and the first district is 100% with the split

while it is uncertain under the no split scenario. With the huge

possible returns if the split continues, the Matugases added to the

lobbying efforts exerted by the Ecleos. It appears that the possible

gains for the Matugases are bigger than for the Ecleos and Barbers

(Table 2).

6.3. Failure: Cebu (2006)


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Cebu is the oldest and most populous province in the Philippines.

Throughout history, it maintained its importance as the centre of

commerce, education, and administration for the Visayas. Its

economy and politics is intertwined with Cebu City even if the city is

governed independently of the province. In 2007, Cebu province had

six districts, a population of 3.85 million, and a land area of 5,331 sq.

km.

With its prominence and importance, control of the province is hotly

contested. For several years, the Garcia family has control over the

province. The family patriarch, Pablo Garcia, was governor from

1995 to 2004. After his maximum three terms as governor, Pablo was

succeeded by his daughter Gwendolyn. Before becoming governor,

Pablo Garcia was congressman of the 3rd district of Cebu (1987

1995), vice-governor (19691971) and provincial board member

(19671968). Alvin Garcia, mayor of Cebu City from 1998 to 2001,

is a nephew of Pablo.


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The case of Cebu also differs from our framework. Instead of a

province splitting into two, the proposals called for the splitting of

Cebu into four. In 2005, representatives from three of Cebus six

districts filed bills to create new provinces. Simeon Kintanar of the 2nd

district proposed to convert his district to Cebu del Sur. Antonio

Yapha Jr. filed a bill converting the 3rd

district to Cebu Occidental.

Finally, Clavel Martinez of the 4th district proposed that Cebu del

Norte be created from the district. If all these proposals are approved,

Cebu will just be composed of the 1st, 5

th, and 6

thdistricts.

The move was strongly opposed by Gov. Gwendolyn Garcia, the

representatives of the three other districts of Cebu province, and the

representatives of the two districts of Cebu City.13

The proposals were

contained in several bills that were filed on January 2005. After

passing the first reading, it was referred to the committee on local

government, headed by Negros Oriental Rep. Emilio Macias. On

September 2006, the bills were consolidated into one then passed to

the committee on rules. Antonio Cuenco of the 2nd

district of Cebu

City argued that the bills has defects and must be returned to the


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committee on local government (Malinao, 2006). After a heated

confrontation between Macias and Cuenco, the bill was stalled in the

committee on rules until Congress adjourned in 2007. The rules

committee was headed by Davao Rep. Prospero Nograles, an ally of

Cuenco (Bulambot 2007).

The pay-offs perceived by the proponents is highly dependent on their

assumed probability of getting elected. If the proponents assume that

they have a 50% chance of winning the governors office, their net

pay-off with the division is negative (Table 3). The proponents will be

indifferent between split and no split (p*) if their probability of

winning with no split is at around 40%. At a 25% probability of

winning, proponents perceive huge returns especially that they are

planning to run as governor and representative in their new provinces.

When a member of the Martinez family ran for governorand lost

in 2004, he received 38.9% of votes; lower than his groupsp* of

41%.


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As the dominant player, the Garcias will suffer a loss with the split

which probably led to their opposition. The calculated probability of

winning threshold level for the Garcias is at 47%; lower than the

average of 53.2% share of votes their family received in the past four

gubernatorial elections.

In retaliation for the proposal to divide Cebu, proponents of the

division were punished by the electorate while the Garcias were

rewarded handsomely. Antonio Yapha Jr. ran for governor, while

Clavel Martinez ran for vice-governor. They both lost to re-electionist

Gwendolyn and her running mate. Running against Yaphas wife,

Gwendolyns brotherPablo John Garcia won and reclaimed the 3rd

district. Pablo Sr. moved his residence to the 2nd district, ran, and won

against Kintanars cousin, Carmiano. An ally of the Garcias, Benhur

Salimbangon, won against Martinez son, Celestino Martinez III in

the 4th

district (Salva-Alueta and Aragon, 2007).


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6.4. Failure: Quezon (2007)

Quezon Province is the eight the biggest province in terms of land

area (8,926 sq. m.). It has four legislative districts and a population of

around 1.8 million. A bill to make a separate province called Quezon

del Sur from the 3rd

and 4th

districts was first filed by 4th

district

representative Wigberto Taada in 1996. The bill was re-filed in 1998

and 2001. On September 2004, representatives from the four districts

filed the bill dividing Quezon. They were Rafael Nantes of district 1,

Proceso Alcala of district 2, Danilo Suarez of district 3, and Lorenzo

Taada III (son of Wigberto Taada) of district 4.

Despite the opposition of the governor, Wilfrido Enverga, the bill was

passed by the lower house in December 2006. It was forwarded to the

Senate where it was passed on June 2007. After ironing out the

differences between the Senate and House versions, the final bill was

passed on July 2007 during the closing sessions of Congress. Not

signing the bill, President Arroyo allowed it to lapse into law in

September 7, 2007, as RA 9495. The new law is supposed to take

effect 15 days after its publication in the Official Gazette and two


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newspapers of general circulation. A routine ministerial function,

publication in the Official Gazette was only done after one year, on

September 2008. The plebiscite was then set to be conducted 60 days

after the publication, in December 13, 2008, after the Comelec was

provided funds by the executive department.14

The case of Quezon diverges from our framework in such a way that

one of the proponents became an opponent of the split. In the May

2007 elections, Rafael Nantes who was on his last term as 1st

district

representative ran for governor and won. He defeated David Suarez,

son of 3rd district representative Danilo Suarez. As congressman,

Nantes co-authored the bill in his three-terms with the Taadas,

Alcala and Suarezes. As governor, however, Nantes made a complete

reversal and opposed the bill.

Instead of showing the payoffs to all other proponents and opponents

of the division of Quezon, we instead present the payoffs to Rep.

Nantes as proponent and Gov. Nantes as the opponent of the split.

After winning the election, he is guaranteed control of the undivided


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rent of Quezon. If the division pushes through, it is uncertain if he

will gain control of the smaller divided rent (Table 4).

The constitutionality of RA 9495 and the subsequent Comelec

resolutions for the plebiscite were questioned in SC on November

2008. The SC issued a temporary restraining order (TRO) with a

win-win solution, the plebiscite was allowed to continue on

December 13 but the Comelec was barred from announcing the result.

After campaigning against the split, Nantes later softened his

opposition said that it is up to the people of Quezon to decide

(Depasupil, 2008). The proposal was rejected in the referendum:

56.6% voted No (205,265), while only 43.4% (157,457) voted

Yes. Voter turnout was low at 37.9% (364,427 out of the 957,199

voters).

In the 2010 election, a rematch was set between Rafael Nantes and

David Suarez. In a possible retaliation for Nantes betrayal, Taada


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and Alcala declared their support for David Suarez at the last minute,

after initially supporting the re-election of Nantes. Alcalas brother

campaigned as Suarez vice-governor, even if they belonged to

different parties. Nantes lost with only 64,566 votes against Suarez

397,858 votes. In their first matchup in 2007, Nantes won by 14,824

votes (Mallari, 2010).

7. General findings

Empirically validating the framework is relatively difficult given the

nuances of each case of province creation. Of the four case studies,

not one exactly fitted our simple framework even in terms of

territorial division or the number of players involved. In this section,

we flesh out some general findings regarding the lobbying cost and

the probability of getting elected.

7.1 Lobbying cost

The four cases studies show that the lobbying cost differs in each

case. Even with the potentially huge returns available to the

proponents of the division of Cebu, it was still not enough to counter


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the huge lobbying effort exerted by the opponents. The lobbying costs

include both financing and influence-peddling. For the monetary-

quantifiable cost, there is no guarantee that the huge amount spent

upfront can be recovered as the result of the plebiscite can be

unpredictable. There is huge risk involved in spending the amount

that can otherwise be used for other purposes. The amount spent for

lobbying for creation of new province is significantly bigger than

what the proponents spend for their campaigns.

In terms of influence-peddling, there are three main constraints faced

by proponents of new provinces: 1) convince other local elites to

cooperate with them; 2) convince the national elite to pass the law;

and 3) convince the citizens to approve the law in a plebiscite.

Lobbying Congress to pass the law is difficult even without

opposition from other influential groups of local elites. Unless the

proponents have the support of leaders of the executive and legislative

departments, three years is very short. Contrasting two cases, passing

the bill in January (for ComVal) instead of July (for Quezon) has


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serious repercussions on the pay-offs faced by the players. Getting

the approval of Congress involves creating an intricate web of

connections and relationships. An influential congressman can request

the House leadership to insert his bill in the agenda.

It is also important to note that elections are done every three years,

wherein the governor and congressmen are elected together. Also,

local government officials are subject to a three-term limit, a total of

nine years. The President, however, is elected on a single term of six

years. A dynastys hold on a position is most vulnerable at the end of

three terms. Political realignment at the national level after a

presidential election can have serious consequences on coalition

building at the local level. To get the support of the national elite,

especially the president, the proponents must be able to prove that

they can deliver votes. The credibility and reputation for vote delivery

can most easily be proven by local elites with long electoral

experience, best exemplified by political dynasties.


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Proponents must also ensure that President does not veto the bill. If

vetoed, the bill will require a two-thirds vote in both Houses of

Congress. It is highly unlikely that Congressional leaders who are

typically political allies of the President will defy the veto and pass

the law. In theory, the President cannot block a move to create a new

province aside from the veto. The Executive Department, however,

has other ways to derail the move as seen in the case of Quezon.

While the law is being deliberated in Congress, lawmakers typically

ask the Department of Budget and Management (DBM) to provide a

certification that funds are available to the Comelec for the conduct of

the plebiscite. Lack of funds can sway lawmakers to shelve the bill.

The availability of funds, however, is subject to the level of support

given by the President on the move.

The one year lag in the publishing of the Quezon del Sur Law in the

Official Gazette is also illustrative. The momentum and awareness

built during the campaign to pass the bill into law may be lost due to

the time lag. This can lead to additional costs for campaigning and

mobilizing support.


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Finally, the proponents must also lobby the SC, which is most

difficult because it is inherently illegal. Constitutional challenges can

derail or totally block the measure. If the proponents get the SCs

cooperation, it simply has to do nothing on the petitions forwarded to

it.

7.2 Probability of getting elected

As mentioned in section 5.3, it is difficult to empirically verify the

implications of the framework on the probability of winning. Aside

from the endogeneity problem, there are three other issues that must

be considered: 1) the existence of terms limit; 2) the change in

constituencies involved after the split; and 3) the existence of more

than two groups in each province. These factors also have

repercussions on the cost of getting elected and the prospective

payoffs.

The 1991 LGC sets a three-term limit for local government officials, a

total of nine years in office. This term limit was cited as a reason for


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the push for a new province. In the cases of ComVal, Cebu and

Camarines Nueva, the proponents of the division are officials facing

term limits. Because of the limit, the proponents of the new province

end up running for a different position after the split.

Even for those running for the same position after the creation of a

new province, a change in the constituency affects the probability of

winning. Take for instance the case of Compostela Valley. As

representative of the 1st

district of DdN, Rogelio Sarmiento

represented the municipalities of Moncayo, Montevista, Compostela,

Nabunturan, New Bataan, Mawab, and San Mariano (Maragusan).

After the creation of ComVal in 1998, he represented its first district

which now excludes Nabunturan and New Bataan. As representative

of DdN, Sarmiento received 61% of votes in 1992, improving to

98.6% in 1995. As ComVal representative, he only received 53.3% of

votes.

The simple framework also assumes that there are only two groups of

local elites competing for control of the province. In reality, there are


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a significant number of groups vying for control. As in game theory,

analysis of results is very difficult once the number of players exceeds

two. Coalition building can be very fickle because of the lack of

strong political parties and the dominance of family or personality-

based politics.

8. Conclusion

Over a century, the number of provinces in the Philippines has more

than doubled from 35 in 1907 to 80 in 2011. Its number is set to

increase further with several proposals to create new provinces. By

using a simple framework showing the payoffs with and without the

division of a province, the paper shows that it is possible that

provinces can be created even if the main goals of the proponents is to

allocate rents among themselves and prolong their stay in power. For

the proponent, the huge lobbying cost is evaluated against the smaller

rent in the divided province, the higher chance of winning, and the

lower cost of getting elected. For the dominant player, the lower rent

in the divided province is weighed against the lower campaigning cost

and the higher probability of getting elected.


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Aside from the four cases studies presented, the framework can

likewise show the payoffs faced by proponents and opponents of

other proposals for new provinces. The framework can also be used

to analyze other political phenomena such as the relative ease of

creating legislative districts or the conversion of municipalities into

cities. It can be shown that there are very little losses for the dominant

players in these cases while the returns are potentially huge.

It is worth noting that, excluding existing sub-provinces, all the new

provinces created in the Philippines since 1992 were found in

Mindanao. This can be explained by the two opposing effects of the

1991 LGC. In the case of provinces proposed in Luzon and Visayas,

well-entrenched dynasties are better able to protect their turfs and

prevent the division of their province. In the case of Mindanao, the

sudden increase in the funds available to them might have led to rent

sharing among otherwise competingby ballots or bulletslocal

elites. The possibility, however, that there are deeper cultural, socio-


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economic, and geo-political behind the creation of new provinces

cannot be discounted.

A banana republic originally refers to a politically unstable country

that is extremely dependent on the export of a primary-commodity

such as banana. In the case of our study, we can refer to IRA-

dependent LGUs ruled like a fiefdom by political dynasties as banana

republics. Since we model their intent for province creation as purely

for rent allocation and power-preservation, we can then ask when

does a banana republic split.

As one of the first studies on province creation in the

Philippines, there are several issues that we have not dealt

with. The historical precedents on how the number of

provinces reached 80 throughout the decades have not been

discussed. It is also interesting to know why the move to

divide Isabela failed despite the agreement among local elites.

Ultimately, the long-term goal is to assess whether the


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creation of new provinces actually led to better accountability

and delivery of basic services.

Acknowledgements

The author thanks Emmanuel de Dios and Raul Fabella for useful

advice and comments on the writing of this paper. Caroline Patacsil,

Christina Epetia, and Rommel Rabanal provided useful discussions on

several aspects of the paper. The overall approach and topic benefitted

greatly from the Ronald Coase Institute (RCI) Beijing 2012

Worskhop and the UPSE Institutions and Development Workshops.

Special thanks are given to John Nye and Phil Keefer for their

insights shared during the workshops. He is also grateful to Pablo

Querubin for sharing his data on election results. The author takes full

responsibility for all the remaining errors in the paper.

ENDNOTES

1 In 2006, the Autonomous Region in Muslim Mindanao (ARMM) created the province of Sharif Kabunsuan fromMaguindanao. The province was nullified by the Supreme Court in 2008 ruling that the creation of a new province includesthe creation of a new legislative district, a power given only to Congress and cannot be delegated to the ARMM Council.2 Although the mandatory plebiscite requirement was present in the 1972 Constitution and the 1983 LGC, political activityunder the Marcos regime was strictly restricted. The first plebiscite conducted for creation of a new province was done forthe division of Samar into three provinces in 1965. However, no plebiscites were needed for the creation of Camiguin andSouth Cotabato in 1966. There was also no plebiscite for the separation of Benguet, Ifugao, and Kalinga-Apayao from the

Mountain Province in 1966. In 1967, when Davao was divided into three, there was also no plebiscite; but there was aplebiscite for the division of Agusan into two.3 The governor also receives official wages and salaries but this are significantly smaller compared to the rent. In 2012, forinstance, the salary of a governor ranges from P947,352 to P 1.02 million, depending upon the income class of the LGUs.

The salary of a representative ranges from P1.08 to P1.17 million per year.4 In reality, the cost of getting elected and the probability of getting elected are strongly interrelated and may be determinedsimultaneously. Candidates facing strong competition may increase their spending, while high pre-official campaign periodspending may deter competition. This is addressed in the models empirical validation. 5 In the empirical testing, we assume the rent is a certain fraction of the IRA. The combined IRA of the divided provincemay be greater than the IRA of the undivided province because of the equal sharing provision.6The lobbying cost is a one-time outlay for pushing for the division of the province while the benefits are distributed overseveral years. For player B, this can be reflected more accurately as

()

(2)

Where m is the number of terms a politician is expected to remain in power and is the discount factor. The higher is m thehigher a politician is willing to spend forl. The inclusion of the discount rate shows that the proponent evaluates the present

value of future rents. For simplicity, we complete the analysis using equation 2.7

According to Section 287 of the 1991 LGC: Local Development ProjectsEach local government unit shall appropriate inits annual budget no less tha twenty percent (20%) of its annual internal revenue allotment for development projects.


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8 In November 2009, fifty-eight people, including 34 journalists were killed when a group of armed men led by members of

the Ampatuan Family allegedly ambushed the convoy of the wife and supporters of a rival candidate who is about to file acertificate of candidacy for governor of Maguindanao (see Human Rights Watch, 2010 for more details).9An example of this is Glenda Ecleo and her daughter Geraldine Ecleo-Villaroman when they ran as Representative andGovernor, respectively of Dinagat Islands. Priscilla Chiongbian, wife of the proponent of the creation of Sarangani JamesChiongbian, was appointed as officer-in-charge (OIC) Governor of the new province in 1992. She ran unopposed in the May1992 and 1995 elections, and served as governor until 2001 after being re-elected for the third time in 1998.10 After three terms as governor, Caballero challenged Rogelio Amatong for the 2nd district of ComVal, where in Rogelio

Amatong won. Electoral records show that Caballero ranand was defeated thrice by Satorfor representative of thesecond district of DdN in 1987, 1992, and 1995.11 In 2002, Ruben Ecleo Jr. was accused of brutally murdering his wife. Attempt to arrest him led to a bloody siege in the

Dinagat Islands, leaving one policeman and 16 PBMA followers dead. His wifes parents and brother was shot by a PBMAmember on the same day of the siege. Ruben Jr. was also accused of graft for diverging funds sourced from his motherspork barrel. Despite his conviction, Ruben Jr. was elected congressman of the lone district of DI in 2010. After his

conviction was deemed final and executory in 2011, he was expelled from the House of Representatives in 2012.12 The Corona court has done several reversals of final and executory decisions, and this was one of grounds when Coronawas impeached by the House of Representatives in December 2011. Corona was subsequently convicted and removed asChief Justice by the Senate sitting as an Impeachment Court on March 2012.13Opponents of the division of Cebu called the move Sugbuak, from Sugbu and buakwhich means Cebu and break in

vernacular, respectively. Proponents of the move called their campaign Sugbuhi;buhi means life in vernacular (Israel 2006).

14After his son David was defeated in the gubernatorial race, Danilo Suarez of the 3rd district apparently became morepersistent to divide the province. A close ally of the President, he was able to secure funds for the plebiscite. He evenpersonally funded the publishing of RA 9465 in two newspapers (Pulgar, 2011).


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