The Giant Lantern Festival is an annual festival held in December (Saturday before Christmas Eve) in the City of San Fernando in the Philippines. The festival features a competition of giant lanterns. Because of the popularity of the festival, the city has been nicknamed the "Christmas Capital of the Philippines".
The first lantern festival was held to honor President Manuel L. Quezon. At that time, Quezon made Arayat his rest area and converted Mount Arayat into a tourist resort. As a show of gratitude to Quezon, the people of San Fernando held a Christmas lantern contest to honor the first family. Quezon himself donated the prize for his lantern contest, which was personally awarded to the winner by First Lady Aurora Aragon Quezon.
In the years that followed, more innovations were introduced to the giant lanterns. Colored plastics replaced traditional papel de hapon. Large steel barrels called rotors also substituted the hand-controlled switches to manipulate the lights. And lanterns have grown in size, approximately 20-feet today, and illuminated by about 3,500 to 5,000 light bulbs.
source: wikipedia
According to Ivan Henares, the festival started from Bacolor.
The San Fernando lantern industry evolved from the Giant Lantern Festival of San Fernando. The festival, which is held every December, finds its roots in Bacolor where a much simpler activity was held. Following the transfer of the provincial capital from Bacolor to San Fernando in August of 1904, this parul event followed as well. "Ligligan Parul" was said to have started in San Fernando in the year 1904. But some say that the "Ligligan Parul" did not happen immediately after the transfer and in fact began in 1908.
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