In the Philippines, the donation of real property is a formal act that triggers specific tax obligations under the National Internal Revenue Code (NIRC) and local government regulations. Navigating the jurisdictional rules for where to pay these taxes is critical; filing in the wrong venue can lead to penalties, surcharges, and significant delays in the issuance of the Electronic Certificate Authorizing Registration (eCAR), which is the ultimate document required to transfer the title.
1. The Dual Nature of Taxes in Land Donation
When land is donated, two distinct taxing authorities are involved: the Bureau of Internal Revenue (BIR) for national taxes and the Local Government Unit (LGU) for local transfer taxes.
National Tax: Donor’s Tax
The act of donation is subject to a 6% Donor’s Tax on the total value of the gift in excess of ₱250,000 per calendar year (as per the TRAIN Law).
Local Tax: Transfer Tax
The Local Government Code of 1991 empowers provinces and cities to impose a tax on the sale, donation, or any other mode of transferring real property ownership. This is typically 0.50% to 0.75% of the property’s value, depending on the location.
2. Jurisdiction for Donor’s Tax and eCAR (BIR)
The eCAR is the BIR's "clearance" stating that all national taxes have been paid. The jurisdiction for filing the Donor's Tax Return (BIR Form 1800) and securing the eCAR is strictly defined by the residence of the donor.
The Rule of Residence
- Individual Donors (Residents): The return must be filed and the tax paid at the Revenue District Office (RDO) having jurisdiction over the place of residence of the donor at the time of the donation.
- Non-Resident Citizens: If the donor is a Filipino living abroad, the return is filed with the RDO where the donor is registered or, if not registered, at RDO No. 39 (South Quezon City).
- Non-Resident Aliens: If the donor is not a Filipino citizen and does not reside in the Philippines, the return is filed with RDO No. 39.
- Corporations: The return is filed at the RDO where the donor corporation’s principal place of business is registered.
Note: Unlike a "Sale" of real property (where Capital Gains Tax is paid where the property is located), a Donation follows the person (the donor). However, the eCAR will still be processed by the RDO having jurisdiction over the donor’s residence.
3. Jurisdiction for Local Transfer Tax (LGU)
While the BIR looks at the donor’s residence, the Local Government Unit (LGU) looks at the location of the land.
- Venue: The Transfer Tax must be paid to the Office of the Provincial/City Treasurer where the property is physically situated.
- Deadline: This is usually due within 60 days from the date of the execution of the Deed of Donation.
- Requirement for Registration: The Register of Deeds (RD) will not record the transfer of ownership unless the Treasurer’s Receipt for the Transfer Tax is presented.
4. The eCAR Issuance Process
The eCAR is the final gatekeeper for the Register of Deeds. To obtain it, the following must be submitted to the BIR RDO of the donor's residence:
- Deed of Donation (notarized).
- Certified True Copy of the Original/Transfer Certificate of Title (OCT/TCT).
- Certified True Copy of the Tax Declaration (issued by the Assessor’s Office at the time of donation).
- Proof of Payment of Donor’s Tax (or proof of exemption).
- BIR Form 1904 (for Taxpayer Identification Number registration of the donee, if applicable).
5. Summary Table of Jurisdictions
| Tax / Document | Responsible Office | Basis of Jurisdiction |
|---|---|---|
| Donor’s Tax | Bureau of Internal Revenue (BIR) | Residence of the Donor |
| Local Transfer Tax | City or Provincial Treasurer’s Office | Location of the Property |
| eCAR Issuance | BIR Revenue District Office (RDO) | Residence of the Donor |
| New Title Issuance | Register of Deeds (RD) | Location of the Property |
6. Common Pitfalls and Clarifications
- Donations to Government/Exempt Entities: Even if the donation is tax-exempt (e.g., to the Government or certain NGOs), a Donor’s Tax Return must still be filed to process the eCAR. The jurisdiction remains the donor’s residence.
- Multiple Donors: If a piece of land is owned by multiple individuals (e.g., a married couple donating conjugal property) who live in different RDO jurisdictions, separate returns might be required in their respective RDOs, though the BIR often allows consolidated filing in the RDO of the primary donor for administrative ease.
- Valuation: For both BIR and LGU purposes, the tax is based on the Fair Market Value (FMV). The BIR uses the higher value between the Zonal Value (set by the BIR) and the FMV shown in the Tax Declaration (set by the Provincial/City Assessor).