Donation is an act of liberality whereby a person (the donor) disposes gratuitously of a thing or right in favor of another (the donee), who accepts it. When the subject of the donation is immovable property, such as land, the Civil Code of the Philippines imposes strict formal requirements for the transfer to be legally valid and enforceable.
I. Requisites for a Valid Donation
For a donation of real property to be valid, the following essential elements must concur:
- Capacity of the Parties: Both the donor and the donee must have the legal capacity to enter into a contract. The donor must have the right to dispose of the property at the time of the donation.
- Donative Intent (Animus Donandi): The donor must intend to transfer ownership of the land without receiving any legal consideration (payment) in return.
- Delivery: The property must be delivered, which, in the case of land, is usually accomplished through the execution of a public instrument.
- Acceptance: The donee must accept the donation. If there is no acceptance, the donation is void.
II. Formal Requirements (Article 749, Civil Code)
Under Philippine law, the donation of land is a solemn contract. Failure to comply with the following formalities results in the donation being null and void:
- Public Instrument: The donation must be made in a public document (notarized Deed of Donation). It must specify the property donated and the value of any charges the donee must satisfy.
- Formal Acceptance: The acceptance may be made in the same Deed of Donation or in a separate public document.
- Notice of Acceptance: If the acceptance is made in a separate instrument, the donor must be notified thereof in an authentic form, and this step must be noted in both instruments.
- Timing of Acceptance: The acceptance must be made during the lifetime of the donor.
III. Mandatory Taxes and Fees
The transfer of land via donation triggers several tax obligations that must be settled with the Bureau of Internal Revenue (BIR) and local government units:
| Tax/Fee | Rate | Basis |
|---|---|---|
| Donor's Tax | 6% | Total gift value in excess of ₱250,000 (per calendar year). |
| Transfer Tax | 0.5% to 0.75% | Fair Market Value (FMV) or Zonal Value, whichever is higher (depends on the LGU). |
| Documentary Stamp Tax | 1.5% | FMV or Zonal Value, whichever is higher. |
| Registration Fees | Graduated Scale | Based on the value of the property. |
IV. Step-by-Step Procedure for Title Transfer
- Execution of the Deed of Donation: The donor and donee sign the Deed of Donation before a Notary Public.
- Issuance of Tax Clearance: Apply for a Tax Clearance from the local Treasurer’s Office to ensure all real property taxes (Amilyar) are paid.
- Payment of Taxes at the BIR: File the Donor’s Tax Return (BIR Form 1800) and pay the corresponding taxes and Documentary Stamp Tax at an Authorized Agent Bank (AAB) under the Revenue District Office (RDO) where the property is located.
- Obtaining the CAR: Upon verification of tax payments, the BIR will issue a Certificate Authorizing Registration (CAR). This is a mandatory document for the Registry of Deeds.
- Payment of Transfer Tax: Pay the transfer tax at the City or Provincial Treasurer’s Office.
- Cancellation and Issuance of New Title: Submit the CAR, Deed of Donation, Tax Clearance, and the Owner’s Duplicate Copy of the title to the Registry of Deeds. They will cancel the old Transfer Certificate of Title (TCT) and issue a new one in the name of the donee.
- New Tax Declaration: Apply for a new Tax Declaration under the donee's name at the Assessor’s Office.
V. Limitations and Void Donations
- Legitime: A donor cannot donate more than what they can give by will. If a donation exceeds the "disposable free portion" and impairs the legitime (hereditary share) of compulsory heirs, it is considered inofficious and may be reduced or revoked upon the donor's death.
- Spousal Donations: Under the Family Code, donations between spouses during the marriage are generally void, except for moderate gifts on occasions of family rejoicing.
- Prohibited Donations: Donations made between persons found guilty of adultery or concubinage at the time of the donation are void.