Deed of Donation in the Philippines
A Comprehensive Guide to Legal Requirements, Taxes, and Procedures (as of June 2025)
1. Concept and Governing Law
| Aspect | Key Provisions |
|---|---|
| Definition | A Deed of Donation is a contract whereby a person (donor) gratuitously transfers ownership of a present property or right to another (donee), who accepts it during the donor’s lifetime (Civil Code Arts. 725–733). |
| Primary Statutes | 1. Civil Code of the Philippines (Arts. 748–750, 752–760, 771–777). 2. National Internal Revenue Code (NIRC), as amended by the TRAIN Law (RA 10963, effective 1 Jan 2018) and CREATE Law (RA 11534, 2021) – governs donor’s tax, documentary stamp tax, withholding duties, exemptions, filing and penalties. 3. Local Government Code (RA 7160) – imposes a local transfer tax. 4. Property Registration Decree (PD 1529) – covers registration requirements for real property. |
2. Substantive Requirements
Capacity of Parties
- Donor must possess free disposal of the property (ownership + capacity to bind oneself).
- Donee must have capacity to accept; acceptance may be personal or through an authorized representative with a special power of attorney.
Cause and Object
- Cause is pure liberality.
- Object must be present property. Donation of future property is void (Art. 751).
Form & Acceptance
Kind of Property Formal Requisites Movables ≤ PHP 5,000 Oral or written; delivery is enough (Art. 748). Movables > PHP 5,000 Written Deed of Donation + Written Acceptance (in the same instrument or separate but contemporaneous). Immovables (real property, real rights) Public Instrument (notarized) specifying:
• Full description & valuation;
• Donor’s & donee’s TIN & details;
• Separate public instrument of acceptance or acceptance in the same Deed;
• Notification of the donor if acceptance is separate (must also be in a public instrument and noted in both deeds).Limitations
- Inofficiousness: Donations cannot impair the legitime of compulsory heirs; excess is subject to reduction (Arts. 752–763).
- Prohibited Donations: Between persons who are guilty of adultery/concubinage, to public officers regarding matters within their jurisdiction, to priests linked to the steering of confessions, etc. (Arts. 739–744).
3. Procedural Requirements
Drafting & Notarization
- Use a standard Deed format indicating parties, recitals of ownership, consideration of liberality, description of property, tax declarations, and acceptance clause.
- Sign before a notary public; ensure all pages are signed and sealed.
Documentary Attachments (Typical BIR/LGU Filing)
- Certified true copy of Transfer/Original Certificate of Title (TCT/OCT) or Tax Declaration.
- BIR-issued zonal valuation print-out or provincial/city assessor’s FMV certification.
- Proof of donor’s and donee’s TIN, IDs, and civil status (marriage certificate when conjugal/community property is involved).
- Sworn Statement of No Improvements (if vacant lot) or list of improvements with valuation.
- Authority to notarize, if notarized outside the Philippines (with apostille/consular authentication).
- Board resolution for corporate donors/donees.
Filing & Payment Timeline
- Donor’s Tax Return (BIR Form 1800) must be filed within 30 days from the date of donation.
- Documentary stamp tax (DST) is paid on or before the 5th day of the next month after execution if not paid simultaneously.
- LGU transfer tax: usually within 60 days of notarization (check local ordinance).
Certificate Authorizing Registration (CAR) / Electronic Certificate Authorizing Registration (eCAR)
- Issued by the BIR after tax compliance; mandatory before Registry of Deeds (RoD) transfer.
- Present CAR/eCAR, original title, notarized Deed, tax declarations, and clearance of real property taxes to RoD.
Registration & Issuance of New Title
- RoD cancels donor’s title and issues a new title in donee’s name.
- Assessor’s Office amends tax declaration; LGU Treasurer records transfer tax payment.
4. Taxation of Donations
| Tax | Base | Rate/Exemption | When & Where Paid |
|---|---|---|---|
| Donor’s Tax | Net gift (FMV or zonal value, whichever higher) minus PHP 250,000 aggregate annual exemption per donor | Flat 6 % (TRAIN Law) regardless of relationship. | BIR RDO where donor is domiciled; if non-resident, at RDO 39 (ERO, Manila). |
| Documentary Stamp Tax (DST) | Same FMV used for donor’s tax; applies only to deeds conveying realty or shares. | PHP 15 on each PHP 1,000 (rate under Sec. 196, as amended) for realty; PHP 1.50/PHP 200 par value for shares. | BIR via eFPS/AAB; file BIR Form 2000-OT (one-time). |
| Local Transfer Tax | FMV per assessor’s schedule or zonal value, whichever higher. | ≤ 0.5 % (provinces) or ≤ 0.75 % (cities); some LGUs grant inter-vivos donation exemptions. | Treasurer of city/municipality where property is located. |
| Registration Fees | Assessor and RoD schedule; often 0.25 %–0.50 % of FMV or fixed brackets. | Variable. | Registry of Deeds / Assessor. |
| VAT / CGT | Not applicable (gratuitous). | - | - |
4.1 Exemptions from Donor’s Tax
Donations to or for the use of:
- National Government or any entity created by it (Sec. 101(A)(1), NIRC).
- Educational, charitable, religious, cultural, social-welfare, and accredited non-profit organizations provided not > 30 % of donation is used for administration (Sec. 101(A)(3) & (B)).
- International organizations with existing treaties/agreements.
Encumbrance/Return Transfers (e.g., reconveyance to original donor because of failure of condition).
Donations to political parties/candidates (subject to special rules under Omnibus Election Code & campaign-finance regulations).
4.2 Special Cases
- Spouses & Relatives: Still subject to 6 % donor’s tax; however, donations to legitimate, illegitimate, or adopted children within legitime can be collated at succession.
- Non-resident Donor: Only property situated in the Philippines is taxable (intangibles enjoy reciprocity exemptions).
- Donation Mortis Causa vs. Inter Vivos: Mortis causa transfers are governed by estate tax, not donor’s tax.
- Conditional Donations (with reservations/reversions): Allowed, but BIR may tax on initial transfer; subsequent reversion may trigger a separate taxable event.
4.3 Penalties for Non-Compliance
- Surcharge: 25 % (late filing) or 50 % (filing with willful neglect or fraudulent return).
- Interest: 12 % per annum (or prevailing legal interest) on unpaid tax from due date until full payment (Sec. 249).
- Compromise penalties: Applied per BIR schedule.
5. Practical Drafting & Due-Diligence Tips
- Always quantify legitime before making donations if the donor has compulsory heirs.
- Secure updated zonal values and assessor’s FMVs to estimate tax exposure early.
- Confirm conjugal/community status of property; obtain spousal consent or judicial approval if required.
- For high-value gifts, consider split or staggered donations across calendar years to maximize PHP 250k annual exemption per donor.
- Accredit donee-institutions (PCNC/DOF) in advance to qualify for tax-free charitable donations.
- Keep contemporaneous acceptance in the same instrument to avoid challenges to validity.
- Track timeline: Notarize ➔ Pay DST ➔ File Form 1800 and pay donor’s tax ➔ Get CAR ➔ Pay LGU transfer tax ➔ Register with RoD/Assessor.
- Maintain complete docket: original notarized Deed, proof of tax payments, CAR, new title, tax declarations—needed for future conveyances or estate settlement.
6. Frequently Asked Questions
| Question | Quick Answer (2025) |
|---|---|
| Is donor’s tax always 6 %? | Yes, for donations made on or after 1 Jan 2018. Gifts cumulative per calendar year over PHP 250k attract 6 %. |
| Can I donate future income or expected inheritance? | No. Donation of future property is void (Art. 751). |
| Are donations between spouses allowed? | Yes (Family Code repealed former prohibitions), but they are taxable and require acceptance. |
| Must the donee sign the Deed? | Essential. The donation is perfected only upon valid acceptance. |
| What happens if I miss the 30-day BIR deadline? | Surcharge + interest accrue; CAR will not be issued until settled. |
| Do I pay capital gains tax on donated real property? | No. CGT applies only to sales, not to gratuitous transfers. |
| Is DST optional for donations to NGO? | No. DST applies regardless of donor/donee relationship; only donor’s tax may be exempt. |
| Do intangible donations (e.g., shares in a PH corporation) follow the same tax? | Yes—6 % donor’s tax on FMV of shares; DST at PHP 1.50 per PHP 200 par value, plus stock transfer fees with SEC/SPC. |
7. Summary Checklist (Immovable Donation)
- Draft & notarize Deed (with acceptance).
- Pay DST (BIR Form 2000-OT).
- File Form 1800 + pay Donor’s Tax within 30 days.
- Obtain CAR/eCAR and stamp on Deed + supporting docs.
- Pay Local Transfer Tax at Treasurer’s Office.
- Register at Registry of Deeds → new TCT/OCT.
- Update Assessor’s Office for tax declaration.
Adhering to these steps ensures both civil validity of the donation and tax clearance, preventing future title disputes, estate issues, or BIR/LGU penalties.
This article reflects Philippine law and revenue regulations in force up to June 28 2025. Always verify later issuances (e.g., BIR Revenue Regulations, LGU ordinances) or seek professional legal/tax advice for complex or high-value transactions.