A Deed of Donation is a legal document used to voluntarily transfer ownership of property—whether real or personal—from one party (the donor) to another (the donee) out of pure liberality or gratitude, without any monetary consideration.

Under Philippine law, specifically the New Civil Code and the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the process involves specific formal requirements and tax obligations to be legally binding and validly registered.

I. Essential Requirements for a Valid Donation

For a donation to be legally effective, it must meet several criteria under Articles 725 to 773 of the Civil Code:

Capacity of Parties: The donor must have the legal capacity to dispose of their property at the time of the donation.
Donative Intent: The donor must clearly intend to transfer the property for free.
Delivery: There must be a delivery of the property, whether actual or constructive.
Acceptance: The donee must accept the donation. If the donee is a minor or incapacitated, acceptance is made through their legal representatives.
Formality (The Deed): * For Real Property (Land/House): The donation must be made in a public instrument (notarized). The acceptance by the donee may be made in the same deed or in a separate public document. If in a separate document, the donor must be notified in an authentic form, and this step must be noted in both instruments.

For Personal Property: If the value exceeds ₱5,000, the donation and the acceptance must be in writing to be valid.

II. Necessary Documentation

When processing a Deed of Donation, especially for real estate, the following documents are typically required by the Bureau of Internal Revenue (BIR) and the Register of Deeds:

Notarized Deed of Donation: Executed by both the donor and donee.
Owner’s Duplicate Copy of the Title: (TCT or CCT).
Tax Declaration: For both the land and any improvements (buildings/houses).
Certificate of No Improvement: If the land is vacant.
Tax Clearance: Proof that real property taxes have been paid to the local government.
Official Receipts: For the payment of the Donor’s Tax.
TIN (Taxpayer Identification Number): For both donor and donee.

III. Applicable Taxes and Costs

The transfer of property via donation is not "tax-free." Under the TRAIN Law (Republic Act No. 10963), the tax structure was simplified.

1. Donor’s Tax

This is a direct tax imposed on the privilege of transmitting property.

Rate: A flat rate of 6% on the total value of the net gifts in excess of ₱250,000 made during the calendar year.
Exemption: The first ₱250,000 of the total gift value per year is exempt from tax.
Deadline: The Donor’s Tax Return (BIR Form 1800) must be filed and paid within 30 days after the date the gift is made (notarization of the deed).

2. Documentary Stamp Tax (DST)

Rate: For real property, the DST is ₱15 for every ₱1,000 (or 1.5%) of the property’s value.
Basis: The tax is based on the fair market value (FMV) or the zonal value, whichever is higher.

3. Transfer Tax

Rate: Usually ranges from 0.5% to 0.75% of the property's value, depending on the local government unit (Province or City) where the property is located.
Deadline: Typically within 60 days from the date of notarization.

4. Registration Fees

Paid to the Register of Deeds for the issuance of a new title in the name of the donee. This follows a graduated table of fees based on the property value.

IV. Valuation of the Property

For tax purposes, the BIR determines the value of the donated property based on the higher of:

The Zonal Value (determined by the Commissioner of Internal Revenue); or
The Fair Market Value (as shown in the schedule of values of the Provincial and City Assessors).

V. Void and Prohibited Donations

Not all donations are legally permissible. The following are considered void under Philippine law:

Donations between spouses during the marriage (except moderate gifts on family rejoicings).
Donations between persons living together as husband and wife without a valid marriage.
Donations to persons found guilty of adultery or concubinage with the donor.
Donations to public officers by reason of their office.

VI. Process of Transferring Ownership

Execution: Sign and notarize the Deed of Donation and the Deed of Acceptance.
BIR Filing: Submit documents to the Revenue District Office (RDO) having jurisdiction over the property. Pay the Donor’s Tax and DST.
eCAR Issuance: Obtain the Electronic Certificate Authorizing Registration (eCAR) from the BIR. This is the "green light" for the transfer.
Local Government: Pay the Transfer Tax at the City or Provincial Treasurer’s Office.
Registry of Deeds: Submit the eCAR, the old title, and tax receipts to have the title cancelled and a new one issued to the donee.
Assessor’s Office: Apply for a new Tax Declaration in the donee's name.