Where Did I Go Wrong?

Davao Occidental, Nueva Camarines, and Province Creation in the Philippines

Prince Christian R. Cruz, Ph.D. (Economics) Candidate

University of the Philippines- School of Economics

prcruz@upd.edu.ph

ABSTRACT

Under what conditions will local elites agree to divide a province? Using a simple framework, the

paper analyzes the incentives faced by rulemakers that will lead to the creation of a new province, the

highest level local government unit (LGU) in the Philippines. 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. Using the cases of Davao Occidental and Nueva Camarines, the paper

provides a framework for analyzing province creation in the Philippines wherein the number of

provinces rose from 73 in 1986 and 81 in 2014.

JEL Classification Codes: H77, D72, B52Keywords: province creation, sub-national fragmentation, federalism, rent-seeking

Acknowledgement: The author thanks Emmanuel de Dios and Raul Fabella for useful advice and comments on the writing of this paper. Caroline Patacsil and Christina Epetia 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. An earlier version of this paper (Cruz 2012), utilizing four different case studies, was presented in the 2012 East Asia Economic Association Convention in Singapore where useful comments were provided by the assigned discussant and conference participants.

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1. INTRODUCTION

A province is the highest local government unit (LGU) in the Philippines. It is divided into cities and

municipalities and into one or more legislative district, whereas each district elects one legislator to

the House of Representative, 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 (LGC)—Republic Act (RA) 7160—the total number of provinces has risen to 81 as of 2014.1

The creation of a new province requires the passage of a law and the approval of the majority of

voters in a plebiscite.

In the 15th Congress (2010-2013), the House of Representatives passed two bills to create new

provinces: Nueva Camarines (from Camarines Sur) and Davao Occidental (from Davao del Sur).

Only one of the bills was passed into law and was ratified by voters through a plebiscite. Davao

Occidental became the newest province in the Philippines in 2013, although it is still waiting for its

first set of elected leaders in 2016. The Nueva Camarines bill, on the other hand, only managed to

pass the second reading in the Senate, the upper house. A key difference between the two proposals is

the strong opposition of the incumbent governor of Camarines Sur in dividing the province while the

governor of Davao del Sur tacitly agreed to the creation of Davao Occidental.

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, one of

the most dominant perspectives is that the creation of a new province is only meant to serve the

personal interests of the proponents, i.e. local elites create new provinces to allocate rent among them

and to ensure their continued stay in power, a form of gerrymandering.

1Under the 1991 LGC, existing sub-provinces where given the option to become separate provinces once approved in a referendum. In 1992, Biliran and Guimaras separated from Leyte and Iloilo, respectively. The 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. 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). In 2006, the Autonomous Region in Muslim Mindanao (ARMM) created the province of Sharif Kabunsuan from Maguindanao. The province was nullified by the Supreme Court in 2008 ruling that the creation of a new province includes the creation of a new legislative district, a power given only to Congress and cannot be delegated to the ARMM Council.

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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. Using the cases of Davao Occidental as a success and Nueva Camarines as a failure, 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.

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 two 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

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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

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 units—both national

and sub-national—that 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 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

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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.

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.

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 as pemekaran or blossoming, the number of provinces in

Indonesia increased from 26 in 1998 to 33 in 2008, while the number of kabupatens (districts or

regencies) and kota (cities and municipalities) rose from 319 to 510 (Niazi et. al., 2010). Malesky

(2009) examines how the local elite’s 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.

Internationally, 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

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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 and

Martinez-Vazquez, 2012).

While there are several books and articles on the history of individual provinces in the Philippines,

there are very few materials on the subject of province creation itself. The closest is “Fragmentation

vs. Consolidation: The Case of Philippine Local Governments” by LOGODEF (2005). It, 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. 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).

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 kilometers (sq. km.), as

certified by the Lands Management Bureau; or,

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(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.

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 people—and not the elite—the 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.

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 wherein approval from the national government was needed

for most actions and procurement (Diokno, 2003).

2 Although the mandatory plebiscite requirement was present in the 1972 Constitution and the 1983 LGC, political activity under the Marcos regime was strictly restricted. The first plebiscite conducted for creation of a new province was done for the division of Samar into three provinces in 1965. However, no plebiscites were needed for the creation of Camiguin and South 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 a plebiscite for the division of Agusan into two.

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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 center 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. 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 favor of a new province

can be summarized as follows:

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

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

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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 (LOGODEF 2005). 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. 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 favor 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.

4. 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

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hardly surprising given the dominance of dynasties in the Philippine political system (Querubin

2010). Mendoza et al. (2012) find that around 70% of representatives belong to a political 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 groups and only one position will be created: the governor of the new province.

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). 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 (vA +vB ≥ r ¿.

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 governor’s office while setting a fixed ratio or

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

problems rendering the contract unenforceable.

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:

E (U NS )=r pNS−vNS (1)

where E (UNS) is the expected utility without the split; r is 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 and y are fractions (0<x , y<1¿ 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. B’s expected utility with the split is

E(U SB)=(rx ) pS

B−(v¿¿SB+l)¿ (2)

3 The governor also receives official wages and salaries but this are significantly smaller compared to the rent. In 2012, for instance, 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 determined simultaneously. Candidates facing strong competition may increase their spending, while high pre-official campaign period spending may deter competition. This is addressed in the model’s empirical validation.5 In the empirical testing, we assume the rent is a certain fraction of the IRA. The combined IRA of the divided province may be greater than the IRA of the undivided province because of the equal sharing provision.

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where l is the lobbying cost associated with the split.6 The lobbying cost is assumed to be large

because it includes the cost of convincing 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 (U SB) is greater than

the expected benefit without the split (U NSB ), i.e.

E(U SB)≥ E (U NS

B ) (3)

(rx ) pSB−(v¿¿SB+l)≥ (r ) pNS

B −vNSB ¿ (4)

r (x pSB−pNS )+(v¿¿ NSB−v S

B)≥ l¿ (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), but with the assumed higher probability of winning ( pSB ≥ pNS

B ),

and lower campaigning cost (vNSB ≥ v S

B¿.

2. Assuming that winning the election is guaranteed when the province is divided ( pSB=1) and

that the cost of getting elected is the same, equation (5) then can be re-written as

r ( x−pNS) ≥ l (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 (x> pNS). Generally, if a

group’s probability of winning in the undivided province is very high, then, it is unlikely that

the group will propose to divide or support the division of the province.

6The lobbying cost is a one-time outlay for pushing for the division of the province while the benefits are distributed over several years. For player B, this can be reflected more accurately as

E (U S )=psB∑j=1

m

( w j+x r j)−vsB

1+δ−l

(2’)

Where m is the number of terms a politician is expected to remain in power and δ is the discount factor. The higher is m the higher a politician is willing to spend for l. 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.

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If the division of the province pushes through, returns to the proponent are expected to be huge. The

proponent’s 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 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.7

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 (U SA ) is greater than the utility with no split(U NS

A ).

E(U SA)≥ E (U NS

A ) (7)

(ry ) pSA−(v¿¿S A)≥ (r ) pNS

A −(v¿¿ NSA)¿¿ (8)

r ( y pSA−pNS

A )+(v NSA −vS

A)≥0 (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 (ry<r ¿ can be offset by the

higher probability of winning ( p¿¿ SA> pNSA )¿, and lower campaigning cost (vS

A <v NSA ).

4. If elections costs are the same even with the split, and the probability of winning in the

divided province is equal to one ( pSA=1), then the ratio of the rent in the divided province

should be greater than the probability of winning in the undivided province ( y> pNSA ).

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 7 In the cases of Cebu and Quezon, opposition by the sitting governor played a significant role in the defeat of the proposal.

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1992, the governor agreed to the proposal of one (or more) representatives to 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.

Figure 1: Local Elites’ Decision Tree

5. QUANTIFYING THE MODEL

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A plays NC (not cooperate). A (dominant player) plays C (cooperate).

B (new player) proposes to divide the province

B continues proposal.

Proposal fails (F).Province not divided.

B stops proposal

Proposal succeeds. Province is divided (S).

Proposal fails (F).Province not divided.

A & B compete in next election

Proposal succeeds. Province is divided (S).

Examples: Davao

Occidental Dinagat

Islands Compostela

Valley Zamboanga

Sibugay Saranggani Kalinga Apayao

Example: Isabela

Example: Camarines

Sur Quezon Cebu Nueva Ecija Bukidnon

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 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 governor’s 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 a politician’s

spending discretion. For the governor, we assume this to be around 20% of the province’s IRA.8 This

is based on the allocation for local development projects under section 287 of the 1991 LGC.9 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 province’s 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.

Aside from the rent taken from the government’s 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.

8 There are no known estimates on the size of rents available to provincial officials or the amount of money taken by governors from projects funded by the IRA. On projects funded by their pork barrel, district representatives in the Visayas “take anywhere from 12 to 20 per cent of the total project cost” with some demanding “even 25 per cent” according to Parreño (1998). 9 According to Section 287 of the 1991 LGC: Local Development Projects – Each local government unit shall appropriate in its annual budget no less than twenty percent (20%) of its annual internal revenue allotment for development projects.

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For the representative, we assume the rent to be equivalent to the pork barrel—formally called the

Priority Development Fund (PDAF)—which was set at P70 million per representative per year (PCIJ,

2007). It should be noted that the calculated rents are significantly larger 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 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 easier—compared to non-dynastic

neophytes—because 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.

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 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.

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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.10

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.11 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.

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 the NS scenario. 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

10 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 a certificate of candidacy for governor of Maguindanao (see Human Rights Watch, 2010 for more details). 11An example of this is Glenda Ecleo and her daughter Geraldine Ecleo-Villaroman when they ran as Representative and Governor, respectively of Dinagat Islands. Priscilla Chiongbian, wife of the proponent of the creation of Sarangani James Chiongbian, was appointed as officer-in-charge (OIC) Governor of the new province in 1992. She ran unopposed in the May 1992 and 1995 elections, and served as governor until 2001 after being re-elected for the third time in 1998.

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reflect the uncertainty over the probability of winning in the NS case. If the net gain is negative, we

also present p*, the level of p 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. 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 two case studies. We start with the failed

attempt to create Nueva Camarines (from hereon NCam) from Camarines Sur (CamSur). We then

present the successful case of Davao Occidental (Davao Occ.) from Davao del Sur (DdS). 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.

6.4. FAILURE: CAMARINES SUR/ NUEVA CAMARINES

In November 2010, was Rep. Arnulfo “Noli” Fuentabella of the 4th district of Camarines Sur filed in

the House of Representatives a bill to create Nueva Camarines (from hereon N.Cam) from the fourth

and fifth districts of Camarines Sur (House of Representatives, 2014). Listed as co-authors were 41

other representatives, including three of the five other representatives of Cam Sur; only the

representative of the fifth district was against the measure. One of the co-authors was Luis Villafuerte,

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Sr., 3rd district representative, former governor of Cam Sur, and father of the incumbent governor,

Luis “LRay” Villafuerte, Jr.

Located in the Bicol Region, Cam Sur has a land area of 5,497 sq. km. and a population of 1,822,371

million in 2010. The proposed N.Cam would have had a population of 858,248 and a land area of

2,965 sq. km. while the new Cam Sur would have had a 964,123 people and 2,532 sq. km. Established

in 1579, Camarines was one of the oldest provinces in the Philippines. In 1829, the province was

divided into Camarines Sur and Camarines Norte with Camarines Sur retaining the capital Naga City.

In 1854, they were reunited once more as Ambos Camarines only to be divided, and reunited over the

next few decades. In 1920, the two Camarines were permanently separated.

Similar to the case of DdS, the Villafuertes and Fuentabellas were known as bitter political rivals in

Cam Sur. Both in power since the 1970s, the family patriarchs, Luis and Noli are political veterans. At

the time that the N.Cam bill was submitted, Noli Fuentebella was a Deputy Speaker in the House and

was at his third and last consecutive term. He represented CamSur in the Interim Batasan Pambansa

(National Assembly), with Luis Villafuerte from 1979 to 1984 and in the regular Batasan Pambansa

from 1984 to 1986. After the restoration of the bicameral Congress in 1986, he was representative for

15 years as representative of the fourth-district.12 He also served briefly as Speaker of the House of

Representatives in 2000-2001 (i-site.ph 2014).

Arnulfo and his family have been in government for a long time. His grandfather Mariano, served as

governor of Cam Sur during the American period. His father, Felix, was congressman from 1954 to

1972 under the 3rd to 7th congress. One of his uncles was legislator from 1925 to 1930 while another

was a legislator from 1910 to 1916, and from 1935 to 1945. Noli’s son, Felix William “Wimpy”

Fuentabella, warmed his House seat from 2001 to 2004 (i-site.ph 2014).

12 The fourth district is formerly the third district. Before stepping down as President in 2010, Gloria Macapagal-Arroyo moved to create a new district in Cam Sur to benefit his son, Dato Arroyo, and a long-time ally, former Budget Secretary Andaya. A new second district was carved from the then-first and second districts. Most of the areas represented by Luis Villafuerte became the new third district.

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In 2010, Luis was on his last term as representative of the third district of CamSur, a position he has

held since 2004. He was governor of CamSur from 1986 to 1992 and from 1995 to 2004. His father,

Mariano represented the province from 1928 to 1934 in the 8th and 9th Philippine Legislature and

was also a former governor under the American period. Although, considered as rivals Noli never ran

directly against Luis but would often support Luis’ rival.

After Luis reached the maximum three term limit as governor in 2004, he nominated his son, LRay, to

succeed him. LRay was pitted against Noli’s son, Wimpy, who was trounced by 95,069 votes

(246,785 versus 151,716) (Querubin, 2012; Comelec, 2014). Soon after LRay was elected, however,

he had a falling out with his father. LRay was reelected twice and was serving his last term as

governor when the proposal to divide the province was raised. Pitting father against son, LRay

opposed the division of the province and with the fifth district’s neophyte representative, Salvio

Fortuno, campaigned vigorously against N.Cam.

It is easy to establish that the Villafuertes are the dominant players in the province. The reason for

support or opposition to the division of the province can be analyzed using our framework. Rents are

positive for the Fuentebellas if N.Cam is created (Table 1). The rents are negative for LRay but

positive for Luis. The main driver of the divergence in the results for the three is their probability of

winning as governor of the undivided CamSur. For the Fuentebellas, we use as proxy for their

probability of winning the percent of votes received by Wimpy when he ran for governor against

LRay in 2004. Wimpy got 30.5% against LRay’s 49.7%. For LRay, we use 62.5% the average

percent of votes he got in the three times he ran and won as governor. For Luis, we use 48.8% the

average he got in the five times he ran for governor. There are no changes in the rents for congress as

the probabilities are unlikely to change with the division. Since LRay nor any member of his family

ran as representative in the relative new second district, we use 50% as his probability of winning.

Table 1: Returns for Proponents and Opponents of Nueva Camarines

Proponent (Rep. Fuentabella)

Proponent (Rep. Luis Villafuerte)

Dominant Player (Gov. LRay Villafuerte)

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GOVERNOR Nueva Cam Cam Sur Cam Sur

Provincial Rent: SPLIT 393,866,266 399,812,342 399,812,342

Provincial Rent: NO SPLIT 739,122,000 739,122,000 739,122,000

Probability of getting elected: SPLIT 1.000 1.000 1.000

Probability of getting elected: NO SPLIT 0.305 0.488 0.626

Cost of getting elected: SPLIT 25,670,608 27,522,443 30,624,595

Cost of getting elected: NO SPLIT 61,973,453 61,320,296 70,100,699

Total Gain: SPLIT 368,195,658 372,289,899 369,187,747

Total Gain: NO SPLIT 163,644,942 299,085,229 392,378,580

NET GAIN for GOVERNOR 204,550,717 73,204,670 -23,190,833REPRESENTATIVE 4th Dist Cam Sur/

1st Dist of Nueva Cam

3rd Dist Cam Sur 2nd Dist Cam Sur

Congressional Rent: SPLIT 210,000,000 210,000,000 210,000,000

Congressional Rent: NO SPLIT 210,000,000 210,000,000 210,000,000

Probability of getting elected: SPLIT 0.589 0.636 0.500

Probability of getting elected: NO SPLIT 0.589 0.636 0.500

Cost of getting elected: SPLIT 20,318,113 21,951,006 14,195,627

Cost of getting elected: NO SPLIT 20,318,113 21,951,006 14,195,627

Total Gain: SPLIT 103,316,619 111,665,042 90,804,373

Total Gain: NO SPLIT 103,316,619 111,665,042 90,804,373

NET GAIN for REPRESENTATIVE 0.00 0.00 0.00Source: Author’s calculations.

The problem with this framework is that the percentage of votes earned in the past elections is bad

predictor of probability of winning future elections. Predicting the probability of winning of a

particular candidate is a craft even seasoned politicians and their strategists cannot master. Still, the

probability of winning a divided or undivided CamSur undoubtedly plays a big role in the actions

taken by the key player. After the filing of certificates of candidacy in October 2012, it was revealed

that Luis wants to take the capitol back after LRay’s term but LRay wants to pass his seat to his son.

Luis probably thinks that the only way he can defeat LRay is by teaming up with the Fuentebellas.

If the division fails, Luis can now count on the support of the Fuentebellas and district they

represented for decades. If the division succeeds, Luis probably surmises that he can defeat LRay by

taking away his supporters from the fourth and fifth districts. The new CamSur will be left with only

three districts. The population of the third district that he currently represents in Congress is bigger

than the combined population of the first and second districts. Support for LRay from the fourth

district may be strong due to the development of tourism in the municipality of Caramoan which

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brought significant amount of jobs and income to its residents. Support from the fifth district may be

gleaned from the results of the congressional elections in 2010 with LRay’s candidate (Fortuno)

narrowly winning against the candidate supported by Luis and the Fuentebellas.

With their combined influence, Arnulfo Fuentebella and Luis Villafuerte managed to push for the

passage of the bill creating N.Cam through the lower house on August 2011 with a vote of 229 to 1.

The lone dissenter was Fortuno of the 5th district. The battle then shifted to the Senate. It is customary

in the Philippine Congress that laws of local significance were debated more fiercely in the lower

house with the Senate’s function deemed to be ministerial. In this case, however, several senators who

traces their roots to the Bicol region objected to the proposed division. In September 2012, a Senator

even bolted the majority coalition citing his displeasure on how the Senate President allegedly tried to

railroad the bill (Tan, 2012).

Trying to break the impasse, the Chairman of the Senate Committee on Local Government, who

belonged to the same party as the proponents, offered an alternate bill wherein N.Cam would only

include the fourth district (Reyes, 2012). Under that proposal, N.Cam would only have a population of

398,422 and a land area of 2,011 sq. km., still within the minimum requirements set by the LGC. If

this proposed earlier, LRay Villafuerte might have agreed as our framework shows that the returns for

him was still positive even with the division (Table 2). Returns for the Fuentabellas would be smaller

but are still positive.

Table 2: Returns with a smaller Nueva Camarines (4th District only)

Proponent (Rep. Fuentabella)

Proponent (Rep. Luis Villafuerte)

Dominant Player (Gov. LRay Villafuerte)

GOVERNOR Nueva Camarines(4th district only)

Camarines Sur(Districts 1-3, & 5)

Camarines Sur(Districts 1-3, & 5)

Provincial Rent: SPLIT 285,658,636 508,019,972 508,019,972

Provincial Rent: NO SPLIT 739,122,000 739,122,000 739,122,000

Probability of getting elected: SPLIT 1.000 1.000 1.000

Probability of getting elected: NO SPLIT 0.305 0.488 0.626

Cost of getting elected: SPLIT 8,127,245 45,065,806 48,167,957

Cost of getting elected: NO SPLIT 61,973,453 61,320,296 70,100,699

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Total Gain: SPLIT 277,531,391 462,954,166 459,852,015

Total Gain: NO SPLIT 163,644,942 299,085,229 392,378,580

NET GAIN for GOVERNOR 113,886,450 163,868,937 67,473,434 Source: Author’s calculations.

The revised proposal failed to dampen the opposition to N.Cam. The debate already turned personal

with the feuds among the Villafuertes and between the Senate President and the other Senators taking

the limelight away from the real issue (Calonzo, 2012). By the time the Senate adjourned on March

2013, the bill failed to pass the third and final reading (Escandor, 2013). As the main proponents are

on their last term, it is unlikely that the bill will be revived in the next Congress. The battle then

shifted to the control of the province.

Term-limited, Luis ran for governor and asked his wife to run for representative of the 3 rd district.

LRay tapped, Migz, his 24 year old son to fight his 78 year old father for governor. LRay, also term-

limited, ran for representative in the 2nd district. Arnulfo fielded his son Wimpy for the 4th district,

while LRay drafted a popular actor to fight Wimpy. In the 5th district, Fortuno ran for reelection

against the former representative that used to occupy his seat.

Perhaps reflecting the sentiment of the people in opposing the division of Camarines Sur, political

neophyte Migz defeated his veteran grandfather, (209,547 versus 162,812) in a 5-way race. All the

other members of the Villafuerte family lost. LRay was defeated by the incumbent son of the former

president (57,106 against 49,346). In the 3rd district, Luis’ wife was defeated in a landslide by the wife

of a well-respected cabinet secretary who died in a plane crash (123,843 versus 35,160). In the 4 th

district, the battle was extremely close with Wimpy Fuentabella edging by 2,225 votes (82,534 versus

80,309). Finally in the 5th district, Fortuno was reelected with a wider margin than before (75,178

against 42,295) (Comelec, 2014).

6.1. SUCCESS: DAVAO OCCIDENTAL (2013)

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Davao Occidental, the newest province in the Philippines, was carved from five of the eight

municipalities of the second district of Davao del Sur (DdS). It is located in Davao Region, which was

once the Davao Province before it was divided into Davao City and the provinces of Davao del Norte,

Davao Oriental, and Davao Occidental in 1967. In 1998, Compostela Valley was carved from DdN.

The old Davao province is now the most subdivided former province.

Davao Occ. was created by virtue of RA 10360, enacted in July 23, 2013 and approved in a

referendum held on October 2013. Although Davao Occidental’s first set of provincial officials is yet

to elected in the next local election in 2016, it was already allotted its IRA in 2014 to be administered

by the provincial government of DdS. The municipality of Malita, which had the biggest population

and land area in Davao Occ., will serve as the capital of the new province.

Prior to division, Davao del Sur had a population of 868,690 in 2010, lower than the national average

population of 998,762 but well above the cut-off of 250,000 set in the LGC. Its land area of 4,327 sq.

km. was slightly above the national average of 4,008 sq. km. in 2010. The five municipalities of

Davao Occidental were the southernmost municipalities of DdS including the island municipality of

Sarangani (not to be confused with the province of Sarangani). The new province would have a

population of 293,780 (slightly above the minimum) and a land area of 2,163 sq. km. Davao del Sur

was left with a land area of 2,164 sq. km. and a population of 574,910. If the entire second district of

DdS became Davao Occ., the distribution of population would have been more equitable with 405,856

for Davao Occ. and 462,83 for Dds, while the area would have been 2,895 sq. km. for the new

province and 1,433 for the mother province.

The players involved in the division of DdS included political dynasties with decades of experience.

The bill creating Davao Occ. was first filed in the 15th Congress (2010 – 2013) by the representatives

of DdS, Marc Douglas Cagas of the first district and Franklin Bautista of the second district (Senate

2014). The two representatives were both on their second term (first elected in 2007). The Cagases of

the first district and the Bautistas of the second district are bitter political rivals in DdS. Marc Cagas is

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the son of the incumbent governor, Douglas Ralota Almendras Cagas, a seasoned politician having

held various offices since 1984 (i-site.ph 2014).

The elder Cagas, is a nephew of former Senator Alejandro Almendras, who played a key role in the

division of the larger Davao province into three provinces. Douglas was elected Assemblyman in the

Batasang Pambansa in 1984-1986. After serving in the Ministry of Interior of Local Government at

the closing months of the Marcos Regime, he won as governor of DdS in 1988 but lost in his

reelection bid in 1992 (i-site.ph 2014). He ran again in 1995 but lost (see Table 3). In 1998, Douglas

ran for representative of the first district of DdS against his cousin, Alejandro Almendras Jr., who was

running for reelection. Douglas won and was successfully reelected in 2001 and 2004. After reaching

the maximum three term limit, he ran for governor in 2007 and won against Claude Bautista with a

margin of 7,576 votes (148,931 versus 141,355). In a rematch, Douglas was reelected as governor in

2010 with a slimmer margin of 3,913 votes (163,440 versus 159,527). Douglas was succeeded by his

son, Marc, as 1st district representative of DdS in 2007 (i-site.ph 2014).

Table 3: The Families of Cagas and Bautista in Davao del Sur

Years Governor, DdS Representative, 1st District

Representative, 2nd District

Mayor, Malita

1988-1992 Douglas Cagas Camasura B. Bautista, Sr. Franklin Bautista1992-1995 Rogelio Llanos Almendras Sr. B. Bautista, Sr. Franklin Bautista1995-1998 Rogelio Llanos Almendras Jr. B. Bautista, Sr. Franklin Bautista1998-2001 Rogelio Llanos Douglas Cagas Franklin Bautista Claude Bautista2001-2004 Reynerio Llanos/

B. Bautista, Jr.Douglas Cagas Claude Bautista Franklin Bautista

2004-2007 B. Bautista, Jr. Douglas Cagas Claude Bautista Franklin Bautista2007-2010 Douglas Cagas Marc Cagas Franklin Bautista B. Bautista, Jr.2010-2013 Douglas Cagas Marc Cagas Franklin Bautista B. Bautista, Jr.2013-2016 Claude Bautista Didi Cagas Franklin Bautista B. Bautista, Jr.Source: Gutierrez, Torrente, and Narca 1992, Querubin 2012, Comelec 2014.

The Bautistas, on the other hand, was able to ascend to the governor’s office when Gov. Reynerio

Llanos died in October 2002. Vice-governor Benjamin Bautista Jr. became governor and was

successfully elected to a full term in 2004, after defeating the Llanos’ widow. Reynerio succeeded his

brother, Rogelio Llanos, as governor after Rogelio reached his three-term limit. It was Rogelio who

defeated Douglas in 1992. Benjamin Bautista Jr. is the son Benjamin Bautista Sr., former mayor of

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Malita town from 1968 to 1978, Assemblyman from 1978 to 1984, and Representative of the second

district of DdS from 1987 to 1998. After the maximum three-terms, Benjamin Sr. was succeeded by

his son Franklin, who was mayor of Malita from 1988 to 1998. After a single term in Congress (1998-

2001), Franklin, returned as mayor of Malita, serving from 2001 to 2007. In 2007, Franklin returned

to Congress and was reelected in 2010 (Official Website of the Municipality of Malita, 2014).

Benjamin Jr., on the other hand, did not run for reelection as governor in 2007 but instead run for

mayor of Malita. After being reelected twice, Bautista Jr. was on his last term as mayor (2013-2016).

It was a sibling of Franklin and Benjamin Jr., Claude, who ran for governor in 2007 and 2010 against

Douglas Cagas. Claude was mayor of Malita from 1998 to 2001 and representative of the 2nd district

from 2001 to 2007.

The rivalry between the Bautistas and the Cagases is marked by political violence. In 2007, the first

election that pitted the two clans for the gubernatorial post, a shooting incident in Malita which

involved Claude Bautista, led to the death of three people (Aguirre, et. al 2007). In June 2010, a

journalist was killed by gunmen allegedly under orders of Gov. Douglas Cagas and others (Torres-

Tupas, 2014). DdS had been declared in 2007, 2010, and 2013 as an election hotspot, places where

election-related violence are likely to occur (Tocno, 2013). The declaration allows the Comelec to

take control of the province and impose curfew. It also paves the way for the deployment of police

and military personnel to the area to provide security for the conduct of election.

After their successful reelection bids in 2010, Representatives Cagas and Bautista filed the bill calling

for the division of DdS into two. With bitter political rivals working together, the move was

welcomed as a development that can lead to peace in the region, especially during elections. Applying

the framework above, the returns for both families can be seen as positive with the division of the

province (Table 3). Although provincial rent is lower, the probability of winning is assumed to be

higher and the cost of campaigning is also lower with the division. It seems that the Cagases and the

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Bautistas were hoping that they would no longer run against each other in the May 2013 elections.

The shift to automated elections, however, forced them to change their plans.

Table 3: Returns for Proponents of Davao Occidental

Proponent(Bautista)

Dominant Player (Cagas)

GOVERNOR Davao Occidental Davao del Sur

Provincial Rent: SPLIT 217,077,671 277,424,734

Provincial Rent: NO SPLIT 498,593,240 498,593,240

Probability of getting elected: SPLIT 1.000 1.000

Probability of getting elected: NO SPLIT 0.404 0.419

Cost of getting elected: SPLIT 6,349,653 13,426,515

Cost of getting elected: NO SPLIT 30,751,738 28,576,766.25

Total Gain: SPLIT 210,728,018 263,998,219

Total Gain: NO SPLIT 170,435,101 180,547,952

NET GAIN for GOVERNOR 40,292,916 83,450,267

The bill was passed by the House of Representatives on November 28, 2012 and by the Senate on

December 5, 2012. It was signed as RA10360 by the President on January 14, 2013. It was hoped that

the plebiscite would be done quick enough that by the May 2013 election, there can be elections for

the new province. The shift to automated elections, however, required the filing of candidacies to be

set early so that the machine-readable ballots can be printed. Instead of the usual March or April, the

deadline for filing of candidacy was moved to October of the prior year. Even if the plebiscite is done

60 days after the enactment of the law (around April), it is unlikely that elections for the officials of

the new province can be done in May 2013. Busy preparing for the local elections, the Comelec also

announced that no plebiscites will be conducted before May 2013.

The deadline for filing candidacies for the May 2013 election was set on October 5, 2012, way before

the passage of the law creating Davao del Sur. The Bautistas fielded again Claude as their candidate

for governor. His brother, Franklin, ran for reelection as representative of the second district. Instead

of running for his third and last term as governor, Douglas Cagas opted to run for Mayor of Digos

City. The Cagases fielded Rep. Marc Cagas for governor. Douglas’ wife Didi ran for representative of

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the first district. Although Marc authored the bill creating Davao Occ., he changed his position and

campaigned for governor opposing the division of DdS.

In May 2013 election, Claude Bautista won over Marc Bautista with a huge margin (126,713 versus

94,420). Claude’s brothers were reelected as representative of the 2nd district and mayor of Malita.

Outgoing governor Douglas Cagas lost his bid to be mayor but his wife won the seat vacated by their

son. Marc Cagas filed a petition in the Supreme Court to stop the plebiscite but his petition was

dismissed. The plebiscite for the creation of Davao Occidental pushed through on October 28, 2013

with the Barangay Elections. Out of the 553,092 registered voters in DdS, only 235,301 votes were

casted for the plebiscite, with 180,162 (76.6%) voted "yes," while 55,139 (23.4%) voted "no,"

according to the Comelec. In October 2014, Douglas Cagas was arrested for the 2010 killing of a

journalist (Torres-Tupas, 2014).

7. GENERAL FINDINGS

Empirically validating the framework is relatively difficult given the nuances of each case of province

creation. In this section, we further 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 Nueva Camarines, it was still not enough to

counter 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.

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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. 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. The combined clout of Noli Fuentabella and Luis Villafuerte was able to

draw in as many as 40 co-authors for the Nueva Camarines bill but it was not enough to get the bill

through Senate. For Davao Occidental, there was no clear opposition to the bill in the Senate.

It is also important to note that elections are done every three years, wherein the governor and

congressmen are elected together. Further, 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 dynasty’s

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. In the

case of Davao Occidental, both the Cagases and the Bautistas were considered allies of the incumbent

President but only the Bautistas were members of the President’s party. In terms of CamSur, Noli

Fuentebella belongs to another party but is key member of the dominant coalition in the House as

evidenced by his position as one of the Deputy Speakers.

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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. 13 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 support or impede the proposal. 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. In the case of Nueva Camarines, the Executive gave

assurances that funds will be provided for the conduct of the plebiscite (Balana, 2012).

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 SC’s

cooperation, it simply has to do nothing on the petitions forwarded to it. In the case of Davao

Occidental, Marc Cagas was fined and declared by the Supreme Court in “contempt of court” in

March 2014. Marc accused that the Supreme Court that decision was deceitful (Macairan, 2014).14

With the shift to automated elections, the cases of N.Cam and Davao Occ. showed that the timeline

for province creation should be at least six years or two local election cycles. Proponents of new

provinces should start working on the division immediately after reelection (Davao Occ.) and not

within their last term (N.Cam). This longer timeline implies that lobbying costs will be higher and

political ties with other national politicians should be stronger.

13 In the case of Quezon, the President allowed the bill to lapse into law. The publication of the law in the Official Gazette was then delayed for a year. 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 which may have contributed to its loss in the referendum.

14 In the case of Dinagat Islands, the Supreme Court flip-flopped in determining whether it was able to satisfy the minimum requirements set by the LGC (Te 2011). The reversal of the decision was one of the grounds for the impeachment of Chief Justice Renato Corona (Romero 2012). Although he was convicted based on other grounds, Corona’s removal left a strong message on how the Supreme Court should deal with political decisions.

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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 the push for a new province. In the case of N.Cam, 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. It is still unclear how the probability of winning will change upon the election of leaders

in Davao Occidental. The Cagases may also be able to claim back the province of DdS in 2016.15

The simple framework also assumes that there are only two groups of local elites competing for

control of the province. In reality, there are 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 difficult due to 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

81 in 2014. 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

15 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.

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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. With Davao Occidental successfully created while Nueva Camarines will likely never be

created, Noli Fuentabella might be asking “where did I go wrong?”

The paper shows that it might be in the composition of the proposed new provinces. If N.Cam only

included the fourth district which is his usual bailiwick and not the fourth and fifth districts, the

proposal might have been more palatable for the dominant players in the province. The paper also

shows that the approval of an incumbent governor in dividing the province implies waning dominance

as seen in Davao del Sur.

Aside from the two 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 is almost no loss for the dominant

players in these cases while the returns remain huge.

The impact of recent political developments on province creation is still unclear. In November 2013,

the Supreme Court declared the pork barrel and any similar funding structure as unconstitutional

(Rappler, 2013). The pork barrel was traditionally regarded as one of the privileges of lawmakers. In

the past, creation of new legislative districts was a key factor in the creation of new provinces (Cruz,

2014). Its nominal abolition can lead the local elite to be more protective of their other source of rents,

the provincial budget. This indirectly discourages province creation. Further, the decision in voiding

the pork barrel shows that the current Supreme Court is less accommodating of state actions favoring

traditional politicians. The contempt of the current Supreme Court of political dynasties was also seen

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in the dissenting opinion on Dinagat Islands, which sends a message that similar moves in the future

will no longer be accommodated.

33

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