The Bureau of Internal Revenue through Revenue District Office No. 42 - San Juan City of Revenue Region (RR) No. 7, Quezon City temporarily suspended/closed last Dec. 3, 2018 the restaurant operations of three corporations for violating the provisions on Value Added Tax (VAT) of the National Internal Revenue Code of 1997, as amended (Tax Code).
Shuttered was Mann Hann located in Little Baguio, San Juan City and 17 of its branches operating in various locations in Metro Manila.
The popular Chinese restaurant is being operated by three domestic corporations namely: Lim Keng Hua Foods Corp. (1 main and 6 branches]; Shin Mann-Hann Corp. (1 main and 4 branches) and MH. Capital Foods Corp.(1 main and 5 branches).
The 18 Mann Hann restaurants were closed through Closure Orders signed by Deputy Commissioner Arnel SD. Guballa after their mother companies failed to comply with the requirements specified in the 48-Hour Notice and 5-day Value Added Tax (VAT) Compliance Notice.
The case started with the issuance of Letters of Authority (LOA) for the examination of the books of accounts and other accounting records of the subject corporations. Then, separate POS (Point-of-Sales) Z-readings were conducted on the various POS machines used by the said restaurants to determine their correct sales.
A comparison of the results of the Z-readings and the declarations made with the BIR showed that Lim Keng Hua Foods Corp., Shin Mann-Hann Corp,, and MH. Capital Foods Corp. substantially underdeclared their 2017 sales by 120.19% or PhP98,227,372.24, by 244% or PhP138,738,371.82, and by 148% or PhP92,947,662.30, respectively.
Section 115 of the Tax Code, as implemented through Revenue Memorandum Order No. 03-2009, authorizes the BIR to suspend or close the business operations of a taxpayer for a period of not less than five (5) days for failure to: (1) register; (2) issue VAT official receipts or sales invoices; (3) file correct VAT returns; or (4) pay the correct VAT.
Revenue District Officer (RDO) Thelma D. Mangio said that she recommended the said closures after the subject companies failed to rectify their violations and pay their VAT liabilities despite the service of the required notices. The recommendation was concurred by the Regional Evaluation Board of Revenue Region No. 7, Quezon City headed by Regional Director Marina C. De Guzman.
The implementation of the closure orders was led by Regional Director Marina C. De Guzman, together with Assistant Regional Director Albino M. Galanza, RDO Thelma D. Mangio, Assistant RDO Ramon D. Navarro, and other regional officials and revenue employees, pursuant to the Oplan Kandado program of the BIR under the current leadership of Commissioner Dulay.