THE Lapu-Lapu City Government is awaiting an exit conference with the Commission on Audit (COA) after state auditors flagged the P395,500 in 2024 year-end festivities expenses as irregular.
The City’s irregular disbursement, which auditors ruled did not meet the public purpose requirement, was used for raffle prizes, parlor games, and contests for its employees during the 2024 Year-End Evaluation Program.
Lone District Rep. Junard “Ahong” Chan said in an interview on Thursday, Dec. 18, 2025, that the City Government already submitted its response to COA and is awaiting an exit conference to further justify its position.
Chan said the exit conference on the audit observation memorandum is expected to take place within the month of December.
In its 2024 audit report, auditors found that P395,500 expenditure was contrary to Sections 2 and 4(2) of Presidential Decree (PD) No. 1445, resulting in an irregular disbursement of public funds.
COA stressed that while the activities were intended to boost employee morale, the use of public funds for “chance-based and entertainment activities” did not directly benefit the public at large and therefore failed the public purpose test.
“It must be emphasized that the disbursement of public funds must be authorized by law and serve a public purpose,” said COA.
Section 4(2) of PD No. 1445 stipulates that government funds or property shall be spent or used “solely for public purposes.”
The disallowed expenses covered cash raffles, caroling contests, and various parlor games such as newspaper dance and “pera o bayong,” with individual prizes ranging from P400 to P50,000.
The audit team classified the expenses as irregular under COA Circular No. 2012-003, stating that such costs are considered non-essential and personal in nature.
Chan’s reply
In response, Chan, who was then mayor, cited provisions of Republic Act No. 7160 or the Local Government Code, which allow local government units to spend for general welfare and employee productivity.
He argued that the raffle prizes were part of an engagement strategy, rather than simply gratuities.
He added the expenses were covered through an approved supplemental budget and aligned with employee welfare programs permitted under Department of the Interior and Local Government guidelines and local government unit policies.
“The Year-End Evaluation and Christmas Celebration was framed not just as a social event but as an internal governance activity aimed at boosting employee morale and motivation, fostering unity and camaraderie, providing a venue for performance reflection, and recognizing and incentivizing outstanding performance,” Chan explained in his reply.
COA recommended the local government unit either provide a legal basis for the payment of raffle and contest prizes to employees or refrain from such expenses in the future, stressing the need for prudent use of government funds to ensure efficiency, economy, and effectiveness. / DPC