Where’s my wife’s bank account?

We take a breather to respond to a couple of questions posed by readers of ABC:

Q. I was what you may say a “global” Filipino. I sent most of my earnings to my wife and even gave her a special power of attorney to invest money from a bank account under my name. We are now separated (she resides abroad) but still married on paper. She was able to redeposit our conjugal funds to Philippine bank accounts either under her name or under her siblings’ names. Can I run after these accounts? How can I locate her bank account or even those of her siblings?

A. Our bank secrecy law provides almost absolute confidentiality such that bank accounts may not be looked into by anyone unless the depositor himself or herself gives a written consent (but there may be a useful exception to your case).

Even the government or the Bureau of Internal Revenue (BIR), for that matter, could not readily access bank accounts of a delinquent taxpayer. If you are familiar with warrants of garnishment of bank accounts issued by the BIR when they are enforcing collection, these warrants are not considered violations of the bank secrecy law. They are orders to freeze the depositor’s bank account, and such orders are given “shotgun” to any or all banks where the taxpayer may have an account. The BIR does not know, and the bank will not disclose details of the account, but if there is one there, the bank is supposed to freeze it.

Back to your case — if you suspect that a certain bank has your wife’s accounts, it would not help even if you show you are still legally married to her, and thus you co-own the bank account. The bank assumes that the named depositor is the exclusive owner of the bank account entitled to protection. It’s either a joint bank account or not.

One exception to non-disclosure of information on bank accounts is where the money involved is subject to litigation and there is a court order requiring disclosure. In your case, you can either file a case against your wife for legal separation, or annulment. The case for separation of property is incidental to these cases. In the court hearing your case, you can file a motion for accounting of conjugal properties and allege where you think the accounts may be. You may not have evidence of her giving the money to her siblings, but you may have evidence of your remittances to her, and necessary or reasonable costs of living, so that you still have an estimate of the remaining conjugal funds. If you have transaction receipts, deposit receipts or like documents to suggest where the account may be, that will help in getting a court order for the bank to disclose and freeze such bank accounts while the separation of property case proceeds. Without a court order, no bank will entertain your inquiry.

It may be less difficult to locate the actual wife and deal with her, than to locate her bank account.

This topic also gives an important tip to all. The country is popular for kind husbands who give all they earn to the wife. The trademark of a wife that is also kind, is that she puts everything in a joint bank account.

Q. I live in Quezon City but I bought a condominium in Makati where I work. You can say this is my halfway house. I am in the process of selling my condo to buy a bigger one in same area. Is it true that I can get capital gains tax exemption on sale of my residence? How?

A. The sale of your residence can be exempted from the six percent capital gains tax, if that is your principal residence. Where you are a registered voter is a good indication where your principal residence is. Also, you must use the proceeds to construct or buy a new residence. Thus, it works to your disadvantage if you buy a new residence and fully pay that in cash, before you sell your old one. It shows you did not use the money from sale of your old residence to finance the purchase of your new residence. And you can only avail of the exemption once every 10 years. If you expect to switch residences more often than that, you can choose to avail the exemption on your bigger property.

So how is it done? You can go to the BIR district that has jurisdiction of the place where your real property is located, and have them compute the capital gains tax. Then, you would need to go to a nearby bank to deposit that amount of computed capital gains tax in escrow. Note that because the capital gains tax is held in escrow with the approval of the BIR, the buyer of your old residence should be able to secure a tax clearance to allow them to register the property in their name. Note that documentary stamp tax of 1.5 percent of the selling price should still be paid.

The bank will keep the deposit safe in escrow for a maximum period of 18 months. During that period, you should show the BIR that you used up the proceeds from your sale in constructing or paying for a new house or residence. At that point, your capital gains tax exemption is complete and permanent. If you do not show that you purchased or constructed your new residence within the 18 months, the BIR will assess capital gains tax and charge the escrow account.

There may be suggestions on these transactions for you to under declare the value of the selling price, no lower than the zonal value, to save on capital gains tax. Not only are these suggestions illegal, they can even be totally unnecessary. You may find that knowing what to do not only reduces in your capital gains tax; it may even give you a complete and legal exemption. 

When confronted with this tax burden though, this can be a useful thought: the cost of capital gains tax – six percent of the selling price; the value of a peaceful good night’s sleep – priceless!

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Alexander B. Cabrera is the chairman and senior partner of Isla Lipana & Co./PwC Philippines. He also chairs the tax committee of the Management Association of the Philippines (MAP). Email your comments and questions to [email protected]. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.