COMMISSION ON AUDIT CIRCULAR NO.

78-77
TO

February 28, 1978

: All Department, Bureau and Unit Auditors; Auditors of Government-owned and

Controlled Corporations; Provincial and City Auditors; Heads of Departments;
Chiefs of Bureaus, Agencies and Offices; Managing Heads of Governmentowned or Controlled Corporations; Provincial Governors; City Mayors, Municipal
Mayors, Provincial, City, and Municipal Treasurers; and Others Concerned.

SUBJECT : Rules and Regulations to Implement the Instructions on Overtime-Payment as

Embodied in LOI No. 565.
In compliance with the provisions of LOI No. 565 directing the Commission on Audit to
issue the necessary rules and regulations to implement the guidelines therein on the approval
mechanism and related aspects of overtime payment, the following rules and regulations are
hereby promulgated for the guidance of all concerned.
I.

Guidelines Under LOI No. 565 Concerning Overtime Restated and Outlined:
A.

B.

General Guidelines
1.

Expenditure requirements for overtime payment must be within the

approved expenditure program of the organization, net of reserves and
shall be subject to the usual accounting and auditing rules and regulations.

2.

Expenditures for overtime payment may be suspended by the President

whenever the exigency of the situation so requires.

3.

The governing boards of profit-making government- owned or controlled

corporations may adopt of their own policies and approval mechanism
relative to overtime pay provided that the cost of implementing such policies
will not call for government equity inputs or borrowings guaranteed by
government. The phrase "profit-making government-owned or controlled
corporation" shall be understood to mean a corporation that realized a net
profit from its operation in the last calendar year of not less than seven per
cent (7%) of its operating capital.

Specific Guidelines:
1.

When overtime pay or compensation in lieu of overtime pay* may be

authorized. Overtime pay or compensation in lieu of overtime pay, may be authorized
where:

* "Compensation in Lieu of overtime pay" refers to honoraria, allowances and similar

payments usually applicable to special projects, teacher's overteaching or summer load, etc.

a.

The work or activity has to be completed on or before a certain fixed

date and the scheduled day of completion cannot be met by
rendition of regular work days and hours service;

b.

There is no fixed date of completion but the prolonged delay in or

non-completion of the work or activity will:
b.1) cause financial loss to the government or its instrumentalities;
b.2) embarrass the government due to inability
commitments whether local or international; and

to

meet

b.3) negate the purpose for which the work or activity was
conceived.
c.

The work is classified under specific activities for which necessary

overtime may be authorized, which include:
c.1) completion of infrastructure and other projects with set
deadlines;
c.2) relief work during calamities and disasters;
c.3) urgent work related to school graduation or registration;
c.4) work involving the preparation for and administration of
government examinations, including the prompt correction and
release thereof;
c.5) budget preparation to meet scheduled deadlines; and
c.6) annual closing of books of accounts and preparation of
financial statements/reports.

d.

The work involves a special project to be completed within a

specified time, subject to rules and regulations issued by the Budget
Commission;

e.

The work involves teachers' overteaching or summer load

(considering course preparation and examination correction time) in
the case of state colleges and universities or vocational and other
national schools; subject to guidelines as may be issued by the
Budget Commission.

In no instance, however, may an officer or employee who is on travel

status be allowed to render overtime services.

2.

3.

Persons authorized to approve the rendition of overtime services. a.

Division chiefs or equivalent, duly designated by the

Bureau/Office/Agency Heads or Regional Directors concerned may
authorize their respective subordinates to render overtime service
compensable on meal allowance basis.

b.

Department Secretaries, for agencies within their area of

responsibility may authorize overtime compensation computed on
an hourly basis.

c.

The governing body of a Special Projects, upon the

recommendation of its Project Manager concerned, may approve
the payment of honoraria, commutable allowances and other
compensation, provided that no project compensation may be paid
without the prior approval of the agency to which the recipient
official/employee belongs.

d.

Governing boards of state colleges and universities or heads of

vocational and other national schools, as the case may be, may
authorize compensation for teachers' overteaching or summer load.

e.

Approval of overtime services, whether on an hourly or meal

allowance basis shall in all cases be subject to applicable laws,
rules and regulations on the matter and to pertinent auditing and
accounting requirements.

Duration of Authority for the Rendition of Overtime Service. The authority to render overtime service shall state the specific period
within which such service is to be performed,
provided that no
authorization in any single instance shall be made for a period longer than
three months which may, however be renewed for a like or shorter period
and provided further that the overtime service under different
authorizations shall in no case extend beyond the end of the calendar
year during which the same were granted. All open-ended authorizations
for the rendition of overtime service expired on December 31, 1977,
unless reauthorized.

4.

The Form of Compensation for Overtime Services.a.

Meal allowance with reimbursement of reasonable transportation

expenses shall constitute the normal means of compensation for
overtime service.
Those who have been granted transportation allowances shall not
simultaneously be entitled to reimbursement of reasonable

transportation expenses when rendering overtime services on meal

allowance basis.
b.

Overtime compensation may be computed on an hourly basis under

instances where the rendition of overtime service is necessary for
prolonged hours; assignment outside of normal place of work or
otherwise requiring unusual hardship on the part of individuals
assigned to work overtime.
Employees/officials granted overtime pay computed on an hourly
basis shall not simultaneously be entitled to meal allowance with
reimbursement of reasonable transportation expenses.

5.

c.

Honoraria, allowance, and other compensation which are paid in

lieu of overtime pay shall be computed on the basis of actual salary.
This applies to special projects as mentioned in B(1) and B(2) (c)

d.

Subject to 5(d) below, compensation in lieu of overtime pay may

also be paid for teachers' overteaching or summer load.

Ceiling for Overtime Pay or Compensation in Lieu of Overtime Pay.a.

The total amount of overtime pay which may be granted an

employee for a given calendar year shall not exceed fifty percent
(50%) of his basic salary, except in case of honoraria, allowances
and other compensation as stated in (c) below; provided that the
ceiling may be increased in meritorious cases to a maximum of
100% of the basic salary under the conditions embodied in the Joint
Budget Commission and Commission on Audit Circular Letter
implementing Item No. 9 of LOI 565, which in any case shall not in
the aggregate exceed agency savings from personal services.

b.

Overtime pay by the hour shall be computed on the basis of actual

monthly salary/wage of P300 per month, whichever is lower; unless,
otherwise, specifically provided by law.

c.

All honoraria, allowances and other compensation in lieu of overtime

pay shall be computed on the basis of actual salary; provided that
the total amount received by an individual in a given calendar year
as additional compensation from projects shall not exceed his
annual salary; and provided further that allowances drawn for actual
official expenses incurred shall be excluded from the said ceiling.

d.

Professors, instructors, teachers, or members of the faculty of

government schools, colleges and universities, when required to
teach more than their regular teaching loads may be paid additional
compensation not exceeding seventy- five percentum of their basic
salary. (P.D. 1177, Sec. 73)

II.

Procedure for Computation: Explained/Illustrated.1.

Overtime pay in the form of meal allowances with reimbursement of reasonable

transportation expenses:
Until the meal allowance rate is increased by the Office of the President, it
remains at a minimal rate of P2.00 per meal.
A.

Said meal allowance is granted where the employee works in his office
during the whole day and renders overtime work from 6 p.m. until 9 p.m.
Another meal is allowed if the overtime service extends beyond 12
midnight.
A claim for reimbursement of transportation expenses from office to home
is allowable if the work extends beyond 9 p.m. Transportation expenses
are deemed to be reasonable where the mode and class of transportation
taken is most advantageous to the government from the standpoint of
economy. Thus, only the ordinary public conveyances or customary
modes of transportation shall be used. The use of taxis, special hires and
other extraordinary means of transportation shall not be allowed unless
justified by the circumstances.

B.

In order to be entitled to meal allowance on Saturdays, Sundays and

legal holidays, the employee must render overtime service as follows:
Luncheon : From not later than 9 a.m. to 12 noon and from 1:00 p.m.
to 4:00 p.m.
Supper

: If he continues working from 1:00 p.m. to beyond 8:00 p.m.

Reimbursement of reasonable transportation expenses will
be allowed from home to office and vice versa on these
days.

Reimbursement of reasonable transportation expenses will be allowed

from home to office and vice versa on these days.
2.

Overtime pay on an hourly basis.Overtime pay on an hourly basis shall be paid at such rate corresponding to the
monthly salary/wage divided by the number of working hours in the month during
which such overtime service was rendered; except in the case of employees
receiving above P300 per month, who shall be paid overtime compensation
based on the salary of P300 per month, unless expressly authorized by law. The
50% or 100% limitation contained in 5(a) above shall apply.
The same procedure shall be followed in the case of employees paid on a daily
basis. Necessarily, for computation purposes, for the employee concerned is
assumed to have rendered full service for the given month.

3.

Honoraria, allowances and other compensation in lieu of overtime pay.Illustration 1.

Employee A, whose annual salary is P8,400 (or P700 per month), has been
granted an honorarium of P750 per month for his participation in a twelvemonth-special project.
Said employee could choose between two options:
a.

He may ask to be paid P750 per month for eleven months and the
remaining P150 on the twelfth month.

b.

He may ask to be paid P700 per month for twelve months (and still
get a total of P8,400).

The excess of P600 (P9,000-P8,400) becomes part of the savings of the

agency to which the grantee belongs.
2.

Employee B, whose annual salary is P6,000 (or P600 per month), has been
granted an honorarium of P700 per month for his participation in a 6- month
special project.
Said employee shall be entitled to receive the whole amount of P700 per
month for the said 6- month period since the total amount (P4,200) does
not exceed his annual salary.

III.

Miscellaneous Instructions to All Auditors

In accordance with COA Circular No. 76-26, the payment of overtime pay shall
not be subject to pre-audit procedures. Nonetheless, the auditor shall verify in post audit
whether or not the claims for overtime payment are made in accordance with the
regulations on approval and the rates or ceilings.
All regulations inconsistent with the above are hereby revoked or amended
accordingly.

(SGD.) FRANCISCO S. TANTUICO, JR., Acting Chairman