Understanding the Rules for Deeds of Donation in the Philippines

Acquiring a land title through the National Housing Authority (NHA) is a significant milestone for many Filipino families. However, once the "Transfer Certificate of Title" (TCT) is finally in your hands, you might wonder if you can immediately pass it on to your children or siblings through a Deed of Donation.

While the law generally allows property owners to dispose of their land as they see fit, NHA properties come with specific legal encumbrances and restrictive periods that you must navigate.

1. The 5-Year Prohibitory Period

The most critical rule regarding NHA-titled property is the prohibition on alienation and encumbrance. Under standard NHA awards and Republic Act No. 7279 (Urban Development and Housing Act), there is typically a five (5) to ten (10) year restriction period.

The Rule: You cannot sell, lease, mortgage, or donate the property within five years from the date of the final award or the issuance of the title without NHA approval.
The Purpose: This ensures that the socialized housing reaches the intended beneficiaries and prevents "professional squatting" or immediate real estate speculation.

Note: Check the back of your TCT. If there is an Annotation of Restriction by the NHA, any Deed of Donation executed without clearing this restriction may be considered void or a ground for the NHA to cancel the award.

2. Donating to Children (Compulsory Heirs)

Donating to your children is often seen as an "advance" on their inheritance. In legal terms, this is called Collation.

During the Prohibitory Period: You must request a "Letter of No Objection" or formal clearance from the NHA. They generally discourage transfers during the first five years unless there are extreme circumstances (e.g., the original beneficiary is elderly or incapacitated).
After the Prohibitory Period: Once the restriction period lapses, you may freely donate the property. You will need to execute a Deed of Donation Inter Vivos, have it notarized, and pay the corresponding Donor’s Tax.

3. Donating to Siblings

Donating to siblings is legally different because siblings are collateral relatives, not compulsory heirs (unless you have no children or spouse).

NHA Restrictions: The NHA is stricter with transfers to siblings than to direct descendants. They may require proof that the sibling is also "qualified" for socialized housing under NHA criteria if the transfer happens early.
Taxes: While the Donor's Tax rate is now a flat 6% (for amounts exceeding ₱250,000) under the TRAIN Law, regardless of the relationship, the NHA's internal rules on who can take over a housing unit still apply.

4. The Process: Steps to Formalize the Donation

If you have decided to proceed, follow these legal steps to ensure the title is successfully transferred:

NHA Clearance: Visit the NHA project office governing your area. Request a clearance to donate. If the property is not yet fully paid, you cannot donate it.
Execution of Deed of Donation: Draft a "Deed of Donation." Both the Donor (you) and the Donee (your child/sibling) must sign. The Donee must formally accept the donation in the same document or a separate instrument.
Notarization: The document must be notarized to be a public instrument.
Payment of Taxes:

Donor’s Tax: 6% of the zonal value or assessed value (whichever is higher) in excess of ₱250,000.
Documentary Stamp Tax (DST): 1.5% of the property value.

BIR Certificate Authorizing Registration (CAR): Once taxes are paid, the BIR will issue a CAR. You cannot transfer the title at the Register of Deeds without this.
Transfer at the Register of Deeds: Submit the CAR, the original TCT, and the Deed of Donation to the Register of Deeds to get a new title in the name of your child or sibling.

5. Potential Risks and Pitfalls

Void Donations

If you donate the property while it is still under NHA restriction without their consent, the NHA has the right to foreclose or revert the property to the government. The contract of donation can be declared null and void.

The "Reserved" Portion

Under the Civil Code, you cannot donate all your property if it leaves you with nothing to support yourself, or if it impairs the legitime (the inheritance share) of your other compulsory heirs (like your spouse or other children).

Summary Table: NHA Donation Rules

Feature	Within Restriction Period (0-5 Years)	After Restriction Period
Legality	Prohibited without NHA consent	Generally allowed
NHA Approval	Required (Highly Discretionary)	Not required (but title must be cleared)
Tax Rate	6% Donor's Tax (over ₱250k)	6% Donor's Tax (over ₱250k)
Risk	Cancellation of Award / Reversion	Standard Property Transfer

Would you like me to draft a basic template for a Deed of Donation or provide a checklist of the documents required by the BIR for the Transfer Certificate?