COMMISSION ON AUDIT CIRCULAR NO. 78-77 February 28, 1978

TO : 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 Government-owned 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. 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.

B. 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 to meet commitments whether local or international; and

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. 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.

3. 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.

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.

5. 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 twelve-month-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