DEED OF DONATION & TITLE TRANSFER TO HEIRS
(Philippine Law – Comprehensive Guide, 2025 edition)
This article is for general information only and is not a substitute for personal legal advice. Philippine statutes and revenue regulations are amended from time to time; always verify the latest issuances or consult counsel before acting.
1. What a Deed of Donation Is
| Donation inter vivos | Donation mortis causa |
|---|---|
| Takes effect while the donor is alive; ownership passes once the deed is accepted and registered. | Takes effect at death; treated like a will, so the formalities of wills, probate, and estate tax apply. |
| Governed mainly by Civil Code arts. 734-760 and Family Code arts. 92-98; taxed under NIRC (1997) § 98-104, as amended by the TRAIN Law (RA 10963). | Governed by the law on succession; not covered by donor’s tax but by estate tax. |
Most family transfers to children or grandchildren use the Deed of Donation inter vivos because:
- it removes the property from the future estate (minimizing estate tax);
- title can be transferred almost immediately;
- the donor can still reserve a usufruct or other conditions.
2. Parties, Capacity, and Consent
| Requirement | Key points |
|---|---|
| Donor | Must own the property, be of legal capacity, and not donate more than the “free portion” of the estate (see § 6). |
| Donee (Heir) | Must be identifiable (Art. 746) and capable of owning. Minors may accept through parents or judicial guardians (Art. 754, Art. 225 Family Code). |
| Acceptance | Must be express (same deed or a separate public instrument). If done separately, donor must be notified in writing and the fact noted in both instruments (Art. 749). |
| Spousal consent | If the property forms part of community or conjugal property, the other spouse must sign (Art. 96 & 124 Family Code). Donations between spouses during marriage are void except “moderate gifts” (Art. 87). |
3. Form and Substance of the Deed
- Public instrument (notarized).
- Complete description of the land: OCT/TCT number, Lot/Blk, survey plan, area, boundaries.
- Fair Market Value (FMV) – use the higher of:
- BIR Zonal Value; or
- Local Assessor’s Current Tax Declaration.
- Statement of consideration (“pure liberality,” or reserve usufruct/reservation clauses).
- Acceptance Clause by the heir(s).
- Acknowledgment before a notary in the province/city where any party resides.
- Documentary attachments commonly appended:
- Certified true copy of title & latest tax declaration;
- Sketch plan or vicinity map;
- IDs (with three specimen signatures);
- Proof of relationship (PSA birth certificates) – needed by BIR.
4. The Transfer Workflow (2025)
| Step | Where | Purpose / fees (illustrative) |
|---|---|
|1. Draft & notarize the Deed|Notary Public|₱1,500 – 3,000 typical (plus drafting fee).|
|2. BIR filing – BIR Form 1800 (Donor’s Tax Return) + DST|Revenue District Office where the property is located|➤ Donor’s Tax: 6 % of net gift exceeding ₱250,000 per donor per calendar yr.
➤ Documentary Stamp Tax: 1.5 % of FMV.
➤ Penalties after 30 days from date of notarization.|
|3. Secure CAR (Certificate Authorizing Registration)|Same RDO|Release time: 5-20 working days if complete.|
|4. Pay Local Transfer Tax|City/Municipal Treasurer|Up to 0.75 % of FMV (varies by LGU).|
|5. Register with Register of Deeds|Province/City where land is situated|Registration fee (LRA schedule) ≈ ₱8,000-15,000 for typical residential lot; includes entry, annotation, issuance of new TCT in heirs’ names.|
|6. Update Tax Declaration|Local Assessor|Issue new tax declaration to donee.|
|7. Real Property Tax (RPT) update|Treasurer / RPT Section|Heir becomes liable every January 1.|
5. Taxes & Rates in Detail
| Tax | Statute & basis | Rate (as of 1 Jan 2018 onward) | Notes |
|---|---|---|---|
| Donor’s Tax | NIRC § 99(A), TRAIN Law | 6 % of FMV or zonal value (whichever higher) minus ₱250,000 exemption per year | Each donor computed separately; related-company rule applies. |
| DST | NIRC § 196 | ₱15 for every ₱1,000 → 1.5 % | Payable by the donee but usually advanced by donor. |
| Local Transfer Tax | LGC § 135 | 0.5 % (province) to 0.75 % (cities) | Pay within 60 days of execution; surcharges apply. |
| Registration Fees | PD 1529, LRA circulars | Graduated schedule | Based on value stated in CAR. |
Estate vs. Donor’s Tax: Once validly donated inter vivos, the property is excluded from the donor’s gross estate and will not be subjected to estate tax later.
6. Limitations: Legitime & “Inofficious” Donations
| Compulsory Heirs | Guaranteed share (Civil Code arts. 888-897) |
|---|---|
| Legitimate children & descendants | ½ of estate divided equally (legitime). |
| Surviving spouse | Same portion as each legitimate child, drawn from legitime. |
| Legitimate parents & ascendants | ½ if no legitimate descendants. |
| Illegitimate children | ½ of what a legitimate child gets (but only from free portion after 2022 SAFAD-EL test). |
If a donation impairs the legitime, forced heirs may, after the donor’s death, sue for reduction (acción reivindicatoria). During the donor’s lifetime, heirs may only collate prior donations when the estate is finally settled (Art. 1061).
7. Revocation & Other Causes of Loss
| Ground | Articles | Effect on Title |
|---|---|---|
| Ingratitude (e.g., serious insult, attempt on life) | Art. 765 | Donor may file an action to revoke within 1 year after learning the cause. |
| Birth of a subsequent child (when donor had none at time of donation) | Art. 760 | Automatic revocation; donee must reconvey. |
| Non-fulfilment of conditions | Art. 764 | Donation void upon donor’s suit; annotate cancellation. |
| Reserving usufruct | Art. 749 | Title shows usufructuary right; extinguishes at donor’s death unless otherwise agreed. |
8. Special Situations
- Family Home – cannot be donated if it would prejudice the legitime of minor children or the spouse (FC Art. 162).
- Reserve Troncal – property donated or inherited from an ascendant and donated onward may revert to relatives within the direct line if donee pre-deceases the donor (Arts. 891-896).
- Donation by Parents to Children Who Later Marry – property donated becomes exclusive property of the child (FC Art. 109).
- Non-resident Donor – donor’s tax applies only to property situated in the Philippines; intangible personal property of a non-resident alien may be exempt under reciprocity (NIRC § 104).
- Multiple Heirs / Co-ownership – the new TCT may list heirs as “pro-indiviso” owners until a later partition. A simultaneous Deed of Assignment/Partition may be executed to avoid future co-ownership issues.
9. Documentary Checklist (Practical)
- □ Notarized Deed of Donation (with acceptance)
- □ Certified true copy of Transfer/OCT
- □ Latest Tax Declaration (land & improvements)
- □ Vicinity map / lot plan (when required)
- □ BIR Form 1800 + sworn Statement of FMV
- □ Computation sheets (Donor’s Tax & DST)
- □ IDs of all parties, TINs, & photos
- □ Proof of kinship (PSA birth/marriage certs.)
- □ Official receipts for all taxes/fees paid
- □ CAR (both donor & donee copies)
- □ Transfer Tax receipt & clearance
- □ Owner’s duplicate title (for cancellation)
10. Advantages and Risks for Estate Planning
| Pros | Cons / Risks |
|---|---|
| Avoids probate and estate tax on the donated property. | Irrevocable once accepted, except on grounds in § 7. |
| Donor may reserve usufruct for life. | May unintentionally prejudice legitime, inviting future litigation. |
| Faster and simpler registration (weeks vs. probate years). | 6 % donor’s tax is payable within 30 days – cash-flow needed. |
| Useful when children live abroad; title can list local attorney-in-fact. | Loss of control: property can be sold or encumbered by donees unless restrictions are annotated. |
11. Frequently Asked Questions
“Can I donate now but keep living on the property?”
– Yes, reserve a usufruct or right to repurchase in the deed; annotate it on the new title.“Do my children pay anything?”
– They shoulder DST, transfer tax, and registration fees unless you agree otherwise. Income-tax-wise, donations are excluded from gross income (NIRC § 32(B)(3)).“How many times can I donate ₱250,000 tax-free?”
– The exemption is per donor, per calendar year; the excess aggregate gifts for the year are taxed at 6 %.“Is a waiver enough to transfer my share to a co-heir?”
– If the property is already titled in your name, a Deed of Donation or Deed of Sale is required; a mere waiver is insufficient for the Register of Deeds.“What if the title is still in my late father’s name?”
– Settle the estate first (either court probate or Extrajudicial Settlement with heirs) before any donation can be registered.
12. Timeline Snapshot (Assuming complete papers)
| Calendar days | Action |
|---|---|
| 0 | Execute & notarize deed |
| 1-10 | File BIR Form 1800, pay taxes |
| 10-30 | Wait for CAR release |
| 31-45 | Pay transfer tax & register deed |
| 46-60 | New TCT & Tax Declaration issued |
Delays usually stem from valuation disputes, missing IDs, or unpaid real-property taxes.
13. Final Tips
- Double-check the property’s tax arrears before donating; CAR will be withheld if RPT is delinquent.
- Keep two notarized originals: one for BIR, one for Register of Deeds; have additional certified copies for your files.
- Where heirs are overseas, secure Apostilled Special Powers of Attorney (SPA) for signing or for an attorney-in-fact in the Philippines.
- After registration, remind the donee-heirs to update the barangay clearance, homeowners’ association records, and utility billing so the paper trail matches the new title.
Bottom line: A Deed of Donation inter vivos is a powerful, tax-efficient tool for transferring Philippine real property to heirs, but it is rigid once perfected. Ensure that (1) the legitime of compulsory heirs remains intact, (2) tax payments and BIR clearances are timely, and (3) the formalities of execution, acceptance, and registration are strictly followed.
For complex estates (mixed assets, foreign heirs, prior marriage issues), engage counsel and a licensed tax adviser to avoid costly revocation suits or BIR deficiency assessments later on.