Community Announcement Feb 2022

This community announcement is sent to all unit owners of Bohol Jewel in order provide updates and discuss issues. You can also leave comments and have discussions at the end of the announcement. Here are the topics for this announcement:

• Typhoon update
• Notes from the last community announcement
• What to expect when sub-renting and what are the responsibilities
• In summary

Typhoon Update

• I have received the estimates for repairs after the typhoon and we expect to begin soon. It is about 70,000 pesos for fixing the ceiling panels (spandrels) and about 2,500 for the broken balcony glass. The generator remains broken and we don’t yet have an estimate for the repair. The power is expected to be back by end of February.

• The Philippines is accepting foreign tourists that are vaccinated starting February 10th.

• We have no plans yet to open the restaurant. There is still no reliable power in Bohol. If tourists start to arrive at Bohol Jewel we will resume what we were doing before which is to serve breakfast, and provide delivery menu to some local restaurants in case the guests want to eat. The bar can be open anytime.

Notes from the last community announcement

Here are some of the things that were discussed among owners, staff and management.

Prior to the typhoon we had implemented cutting the following expenses:

1. Lights in and around pool will be off at 10pm. Pool light will be off earlier if no one is swimming. No more all night pool and tree lights, but we will keep the building lights on at night for security.
2. We have reduced from two helpers to one, Jerry had his last day on December 4.
3. We have reduced from two security guards to one. This was already done before but we used one of the helpers to fill in the guard house, now no more. If there are ANY security issues then we are ready to change this.
4. We changed from a full time manager to a part time manager. Romielyn has resigned after more than two years at BJC apparently after being accused of improprieties by a resident of BJC. We are not happy by this because Romilelyn never did anything wrong, and the House Rules state that all BJC employees are to be treated with courtesy and respect. Now we have to spend a lot of time and resources to train a new manager right after a typhoon. We hired Joy, She is professional, responsible, reliable and trustworthy. I hope that we will not have another occurrence of residents causing our staff to resign.

Details about our budget, reserves and accounting. I understand owners want details of our accounts so allow me to explain:

BJC operated at a loss from Nov 2019 to April 2021. The reason is because only 22 apartments were charged a monthly fee. When the pandemic hit and the owners could not enter Bohol, I made the decision not to start the monthly fee for building 1 until things improved. But things never improved. So by May of 2021 it was obvious we could not continue and we started monthly fee from everyone in building 1 on May 1, 2021. In hindsight we should have started charging the fee for building 1 much sooner.

From May 2021 we started to have more income than expenses. We currently have a negative balance of -270,202 pesos. A negative balance means that we had to borrow in order to pay our operating expenses.

We have documented all BJC income and expense since November 2019 here:

Click here for 2019/2020

Click here for 2021

Click here for 2022

Building 4 is still not paying the monthly fee. There are two apartments that are 95% finished, but the owners have not been able to come to Bohol and they wanted to choose the finishes like kitchens. Because their apartments are not finished and not livable, we don’t charge the monthly fee. The other apartments in building 4 are only about 50% complete. We have had no buyers and not even any renters for these in two years so we are not going to finish them only to have them sit empty.

We heard some owners are contacting our treasurer asking for where the reserves are, so I want to explain. The treasurer does not know anything about the monthly fees, or other maintenance reserves, this is handled by the management. We have a treasurer because it’s a requirement to comply as a corporation. He signs official documents that are provided to the government. He does not know anything about your monthly fees or the maintenance account, so please stop bothering him with this.

We also have an accountant who prepares financial statements that are required for us to comply as a corporation. This also has nothing to do with the monthly fees or the reserves of BJC.

Monthly fees are NOT considered income for the corporation when we report to the government. The only income BJC has for tax purposes is rental income from the apartments, so that is the only thing the accountant and treasurer would know about. When you pay your monthly fee, or your electric bill, this goes directly towards paying for the maintenance or paying Boheco. BJC does not make any profit on your electric bill, or on your monthly fee. Therefore we don’t report it for tax accounting purposes. The monthly fee and utility bills are a way for us to collectively pay for something together, and is not considered income for the corporation. This is what our licensed accountant instructed us to do.

A note about our accounting. BJC is a VAT-able corporation and therefore any income we report must have a VAT (tax) added. An “official receipt” in the Philippines does not have the same meaning. You can see below what an official receipt from us looks like, and this is used to report our income, and pay our VAT (taxes) to the BIR:

We don’t issue official receipts for monthly fees or utilities because they are not considered income.

Every time we issue an official receipt it must have a 12% VAT tax added, and all official receipts must be sent to the BIR and taxes paid. So if you want a receipt after paying your monthly fees or utilities, then we will issue an acknowledgement receipt, not an official receipt. I think this difference is only in the Philippines but if you ask for an official receipt from us, then we will have to add 12% to your bill so we can pay the VAT.

Eventually we will have a restaurant and other income in addition to rental income, but for now the only income that we have is the rental from the apartment lease agreements. To repeat: If you have questions for the accountant, treasurer, attorney or any other professional services we hire, please ask the management.

As for the income, some of you have questioned if everyone is paying their monthly maintenance fee. I understand this is a valid question. To clear up: we never give anyone a break on the monthly maintenance fee, everyone has to pay, even Elsie and me for our apartments. This can be seen in the detailed income and expense report I provided above.

I can provide the following details about the monthly fees as of this writing:

We have 23 different owners who own all 44 apartments at Bohol Jewel
Of the 44 apartments, 34 are currently required to pay a monthly fee every month

Of those 34 apartments:

Apartments that are up to date	28
Apartments late less than 30 days	1
Apartments late 30-60 days	0
Apartments late 60-90 days	1
Apartments late more than 90 days*	4

We will not be able to pay for the repairs after typhoon until these past due monthly fees are paid. I will also remind those who are more than 90 days past due that there is a clause in our lease agreement that penalizes late payments more that 6 months. The corporation has the right to terminate the lease agreement if the monthly fees are more than 6 months late.

What to Expect When Sub-renting and What Are The Responsibilities

Before tourists come back to the Philippines it would be a good time to discuss sub-renting and what is to be expected. When you rent an apartment in the Philippines you create income, and this can be considered a business under certain conditions. When you have income or engage in business, then you are expected to be responsible, and follow the requirements. What are the requirements and who is affected depends on the situation.

I am not an accountant and it is not my job to tell you what your responsibilities are. I am busy enough doing my best to comply with our BJC requirements, and it’s very difficult. You are the only one who can determine what your responsibilities are if you decide to be in business here. However, it is my job to make sure that BJC is complying with all requirements so we can remain open.

For those of you who were in Bohol in 2018, you might remember when the Henann Resort was closed by the B.I.R. because they didn’t pay their correct taxes. The B.I.R. put a chain on the gate and closed the resort until all back taxes were paid. No one was allowed to enter.

Or maybe you remember when they shut down Alona Kew and the Bellvue for underpaying their taxes in 2019.

Or you may remember when McDonalds in Alona opened in 2020, then it was shut down by the LGU for failing to obtain the correct permits. I can continue with many more examples that were not mentioned in the media.

In our community this means that if just one owner breaks the rules, the entire Bohol Jewel Residences including restaurant can be shut down until that person settles their requirements.

So as a community we need to decide if we want to operate in compliance with the laws and local ordinances, or if we let owners do whatever they want?

If we want to operate in compliance, then we need to pay the correct taxes on rental, and personal income. We need to have proof of taxes paid at the management office. If the apartment is not paying taxes we need to have lease agreements or rental contract (like the receipt from Airbnb) available for each unit at the management office.

The BIR can come to inspect at any time they want, and if we don’t have proof of taxes paid, or evidence of what the rental agreement is, then we will be in violation. In the Philippines they are very strict about keeping everything at the main office so they can surprise visit anytime . This means that it is my responsibility to keep all documents AT THE FRONT DESK in case the BIR visits and wants to verify that everything is in compliance. If the documents are not at the front desk when the BIR visits its the same as if they don’t exist and we will be penalized.

It is up to you to research and determine what taxes you have to pay. I will provide some examples of places where you can find such information but if you decide to have income in the Philippines it is up to YOU to research, read, and find out all the information you need to be in compliance. I have enough to keep up BJC in compliance I don’t need to also do this for each owner’s personal business, no thanks:

https://www.globalpropertyguide.com/Asia/Philippines/Tax-Pages

http://www.kwphilippines.com/blog-post.html?id=1748

We will require that the following be at the management office before any guests are allowed to check-in:

1. Proof that taxes have been paid or will be paid, or evidence that taxes do not need to be paid.
2. Contract or lease agreement with the tenant showing the names, dates, amounts, and details of the rental agreement.

Responsibilities towards your guests: If you rent your apt on Airbnb or to a friend and you collect all income, and BJC does not receive any commission from your guest, then please don’t expect the management to provide services to your guests. We are just not set up to do this because our front desk manager is only on shift that is required. Catering to guests takes a lot of time and effort. When we leased an apartment to you we only agree to provide front desk service for you. We only have a part time manager now and her responsibilities are communications and billing for owners, not sub-renters. Our list of services we provide can be found here:

https://docs.google.com/spreadsheets/d/1pZEhQA4T6M6TYg7arPxjufoUVGtTf-TCcK8QNl-VMlk/edit?usp=sharing

We also don’t want to receive bad reviews from your guests on Facebook, Google, Tripadvisor or anywhere else if you choose to handle them yourself and they are not happy. We have good reviews right now because we have worked very hard for that, with a lot of communication, service, and attention to the guest when they are here. We have found that reviews are mostly about the service that guests receive. So if the the guest is yours then it’s not our service they are reviewing, it’s yours. Please keep this separate.

In Summary

I understand everyone is going through difficult times. I am also fully aware that many buyers who invested in Bohol Jewel wanted to have an income, or maybe resell, have been waiting 2 years and there is still almost nothing. It is becoming very challenging for us as a community, and many people are upset, rightly so. We are 23 different owners in Bohol Jewel, and my goal is that we can make decisions for the collective best interest. In order to do that we need to communicate. What I am trying to do here is open dialogue and get the opinions of as many of you. We’re not going to change anything about the pandemic or the typhoon. But we can use this time to operate in the best interest of the community.