In 1954, because of the many reports reaching his office regarding the territories lost to San Mateo Isabela, Congressman Luis Hora of the Third District of Mountain Province decided to visit Barrio Potia. Hiking from Mayoyao as there was no road yet except for the foot trails made by Col. Dosser during the American period, he arrived in Potia at Mun-uupag with his shoes worn out. He was welcomed at the house of Alfonso Lista and with gladness by the people as that was the only time an official of his rank has visited their place. Returning to work, Congressman Hora filed a bill creating the Municipality of Potia in the Mountain Province separating it from the municipality of Mayoyao whose Mayor at that time was Federico Juguiad Sr. The Bill eventually passed into law enacting Republic Act Number 1222 which was approved by President Ramon Magsaysay on May 11, 1955.

The new municipality was composed of nine Barrios with their respective Barrio lieutenants: Potia (former Mun-o-o-pag”) Elias Ragus; Dolowog, Emilio Andres; Santa Maria, Alberto Parinas; Busilac, Narciso Guillermo; San Juan, Juan Lajera; San Quintin, Quintin Romero; Cabicalan (now Santo Domingo) Cipriano Pascual; Pinto, Roberto Farinas and Namillangan. The seat of government was at Barrio Potia. In the meantime, Kiling was not included which was another settlement of lowlanders but was incorporated as a Barrio of Potia in another act of Congress sometime in the 1960’s. The creation of Potia was the fulfillment of the long aspirations of the people and recovered the lost territories from San Mateo, Isabela.

The task of organizing a new government and make it functioning was a very hard task for Mayor Alfonso Lista who could barely write his name. But because of perseverance and the support his people, they were able to function and had office at the previously constructed branch office even with only meager funds. He appointed Vicente Madarang as Municipal Secretary (a protegee of Congressman Hora from Manila who had no relationship with Vice Mayor Benjamin Madarang who a year later was replaced by Gaudencio Manuel). Amando Nebre was appointed as Municipal Treasurer with Silvestre Lamabong and Gaudencio Manuel as Collection Clerks.

The first Police Force was composed of Valeriano Martin, Sulpicio Balawag,Felix  Prudenciano, Rodolfo Pagatpatan, Peter Gumuwang, Elmo Elahe, Narciso Lungayan, Federico Nebre and Miguel Gumahi as Chief of Police. In 1957, a Justice of the PeaceCourt was established which was presided over by Judge Vivencio Cabalda. He had his office at the Municipal Hall. In I960, Judge Emelina L. Cattfling succeeded him until 1978. From that time on, it was included as Municipal Circuit Trial Court of Lamut. However, in 1985, the Regional Trial Court Branch 15 was created and established with Judge Wilfredo Tumaliuan as the presiding judge. In 1986, the Municipal Circuit Trial Court was also established with Judge Anastacio D. Anghad as its presiding judge.