Executive Summary

A Deed of Donation is a civil-law instrument by which a donor (e.g., a parent) irrevocably transfers ownership of present property to a donee (e.g., a child) without valuable consideration, accepted by the donee. For immovable property (land/condo/house), it must be in a public instrument (notarized) that describes the property and any charges, and it must be accepted by the donee in the same deed or in a separate deed notified to the donor during both parties’ lifetimes. After execution, you must pay donor’s tax (if any) and local transfer tax, secure an eCAR from the BIR, and register the transfer with the Registry of Deeds and Assessor.

Donations can be powerful estate-planning tools (e.g., lifetime transfers, reservation of usufruct, conditional gifts), but they must respect legitime (compulsory shares of heirs). Poorly planned donations risk later reduction or annulment, tax exposure, or title defects.

When to Use a Deed of Donation (and When Not)

Use it when:

Parents wish to transfer now (inter vivos), not at death.
Family wants to consolidate title, avoid future estate proceedings on the donated asset, or set up use-rights (e.g., usufruct for parents; naked ownership to child).
The property is clearly titled and taxes are current.

Avoid / reconsider if:

The donation would impair legitimes of compulsory heirs (spouse/children/other descendants). Such “inofficious” donations are reducible later.
The donor would not retain enough for their support or is donating future property (void).
There are spousal-property issues (community/conjugal asset without the other spouse’s written consent; family home restrictions).
The plan actually calls for consideration (price)—use a sale or partition, not a donation.

Parties, Capacity, and Consent

Donor (Parent): Must own the property, be of legal capacity, and reserve enough for support/obligations.
Donee (Child): Must accept the donation. If a minor, the parents/guardian accept on the minor’s behalf.
Spousal consent:
- If property is under absolute community or conjugal partnership, both spouses must sign to donate.
- Family home: disposition generally requires both spouses’ consent (and is subject to protective rules).
- Exclusive property of one spouse may be donated by that spouse alone, but donations between spouses during marriage are void (parents → children is allowed).

Formal Requirements for Immovables

Public Instrument (Notarized Deed): Precisely identify the property (TCT/CCT No., lot/block, area, location) and any liens/encumbrances.
Acceptance by the Donee:
- In the same deed, or
- In a separate deed—but then the donor must be notified in authentic form, and the original donation must note this acceptance/notification. Both donor and donee must be alive at acceptance.
Delivery/Tradition: For land/condo, registration in the donee’s name constitutes constructive delivery.

Types of Donations You Can Structure

Pure Donation (absolute) – outright transfer now.
Donation with Condition – e.g., “subject to paying real property taxes” or “to be used as family residence.” Non-fulfillment can justify revocation.
Donation with Reserved Usufruct – parents keep lifetime use (right to live, collect fruits/rents); child gets naked ownership now, full ownership on termination of usufruct.
Donation propter nuptias – made in consideration of a child’s upcoming marriage (special rules apply).
Donation to multiple children – specify shares or co-ownership; consider partition by donation if dividing specific lots/units.

Do not donate “future property.” Only present assets may be donated.

Tax & Cost Overview (Practical)

Donor’s Tax: Payable by the donor on the net gifts for the calendar year. For real property, the tax base is generally the fair market value at the time of donation (for real property, typically the higher of BIR zonal value or LGU schedule of values). File the donor’s tax return and pay within the statutory period from the date of donation.
No Capital Gains Tax (CGT) on donations (CGT applies to sales/exchanges), but documentary taxes/fees on instruments, registration fees, and notarial fees apply.
Local Transfer Tax: Provinces/cities impose a transfer tax on transfers by donation as well as sale; rates commonly differ for provinces vs. highly urbanized cities.
Real Property Tax clearance may be required for registration.
eCAR (BIR Certificate Authorizing Registration): Issued after tax compliance; you need it to transfer title at the Registry of Deeds.

Tip: Align donation timing with the annual donor’s-tax computation (consider other gifts that year). Always gather TINs for donor and donee for BIR filings.

Registration Workflow (Land/Condo)

Draft & sign the Deed of Donation (with donee’s acceptance and any conditions/usufruct).
Notarize the deed; prepare IDs, TINs, title, tax dec, RPT clearances, and location plan if requested.
BIR step: File the donor’s tax return and supporting docs, pay donor’s tax (if any) and applicable documentary taxes/fees; secure the eCAR.
LGU step: Pay local transfer tax at the city/municipal/provincial treasurer; obtain tax clearance if needed.
Registry of Deeds: Present owner’s duplicate title, deed, eCAR, transfer tax receipt, realty tax clearances, and IDs. RD cancels the donor’s title and issues a new TCT/CCT in the donee’s name (with any annotations, e.g., usufruct, conditions).
Assessor: Update the Tax Declaration to the donee; ensure real property tax statements now go to the donee (or usufructuary if agreed).
Aftercare: Keep certified true copies; if there’s a reserved usufruct, confirm the annotation appears on both Original and Owner’s duplicate titles.

Civil-Law Effects and Safeguards

Irrevocability (with narrow exceptions)

Donations inter vivos are generally irrevocable, except for:

Ingratitude (e.g., serious offenses by donee against donor);
Non-fulfillment of conditions;
Other narrow grounds provided by law (certain cases involving birth/adoption of a donor’s child, subject to statutory terms).

Protection of Compulsory Heirs (Legitime)

Lifetime donations that invade legitime are reducible upon the donor’s death at the instance of compulsory heirs (e.g., other children, spouse).
Collation: Gifts to children/descendants are brought into the hereditary mass to ensure fair computation. A child who already received a lot/condo may receive less later so that everyone’s legitime is intact.

Builders/Improvements

If a child builds improvements before full registration and disputes arise, good-faith possessor rules may apply (indemnity or removal). Best practice: complete registration first.

Reservations & Conditions

Usufruct reservation lets parents keep income/use.
Right of reversion/revocation clauses should mirror Civil Code causes (avoid overly broad clauses that might be void).
Prohibitions on sale/mortgage by the donee are enforceable only within lawful limits; absolute restraints on alienation are generally disfavored—use conditions framed around purpose (e.g., family residence) and term.

Special Property Regimes and Edge Cases

Conjugal/Community Assets: Don’t donate community/conjugal property without both spouses’ signatures; otherwise, the donation may be void or voidable.
Family Home: Heavily protected; alienation needs spousal consent and must respect family-home protections.
Co-owned Property: Co-owners can donate only their undivided share, unless there’s partition first (consider partition by donation).
Public Land/Untitled Property: Donation requires clear title; if property is only tax-declared, expect additional hurdles (and risk).
Foreigners as Donees: Constitutional/Statutory restrictions on land ownership apply (e.g., foreign children cannot own land unless they have dual/Philippine citizenship; condos are subject to foreign-ownership caps).

Comparing Donation vs. Alternatives

Feature	Donation (inter vivos)	Sale to Child	Testamentary Transfer (will)
Timing of ownership	Now (upon registration)	Now	On death
Taxes	Donor’s tax; local transfer tax	CGT/creditable WT, DST, transfer tax	Estate tax later
Control for parents	Via usufruct/conditions	Via mortgage/lease-back	Full control till death; no lifetime transfer
Risk to legitime	Possible (reduction later)	Also possible (collation/reduction)	Computed in estate plan
Probate needed for this asset	No (already donated)	No	Yes (part of estate)

Model Clause Ideas (for your lawyer to tailor)

Usufruct Reservation: “Donor reserves a lifelong usufruct over the Property, including the right to possess, use, and enjoy all fruits and rentals, with corresponding obligations to maintain and pay taxes thereon. Naked ownership is transferred to Donee; full ownership consolidates upon termination of usufruct.”
Purpose/Condition: “This donation is made for the establishment of the donee’s family home. Failure to use the Property as principal residence for an uninterrupted period of two (2) years from transfer, without Donor’s written consent, shall be a ground for revocation.”
Acceptance (same instrument): “I, [Donee], of legal age, hereby accept this donation under the stated terms and conditions.”
Spousal Consent: “I, [Spouse], consent to the foregoing donation of our [community/conjugal] property, and waive any objection to the transfer as executed.”

(Always adapt to the actual facts and governing law.)

Practical Checklists

Deed & Execution

Identify title numbers, exact technical description.
State liens/encumbrances, if any.
Include acceptance (same deed or separate + authentic notification).
Include TINs, IDs, civil status of parties.
If applicable: spousal consent, usufruct/conditions.

Taxes & Registration

Compute FMV (zonal vs. schedule of values).
File & pay donor’s tax within the statutory deadline.
Secure eCAR from BIR.
Pay local transfer tax; get RPT clearance.
Register at RD; obtain new TCT/CCT; annotate usufruct/conditions.
Update Tax Declaration at Assessor.

After Transfer

Keep owner’s duplicate title (donee) and CTC copies.
Update RPT billing address.
If leased out under usufruct, align lease in the usufructuary’s name.

Common Pitfalls (and How to Avoid Them)

Missing acceptance or late acceptance → donation void. Solution: Accept in the same deed.
No spousal consent for community assets → defect in title. Solution: Verify property regime; secure consent.
Ignoring legitime → heirs later reduce the gift. Solution: Run a legitime/estate simulation before donating.
Unannotated usufruct/conditions → unenforceable against third persons. Solution: Ensure annotation on title.
Lapsed donor’s tax filing → penalties, delayed eCAR. Solution: Calendar the filing window and prepare docs early.
Donating tax-declared or encumbered land without curing defects → registration problems. Solution: Clean title first (subdivision, release of mortgage, etc.).

Frequently Asked Questions

1) Can parents donate to only one child? Yes, but the gift is subject to collation/reduction later if it impairs legitime of other compulsory heirs.

2) Is a donation better than selling the property to a child for ₱1.00? A nominal-price “sale” can be treated as a disguised donation (still subject to donor’s tax and collation). Use the correct instrument.

3) Can parents take the property back? Donations are generally irrevocable. Revocation is limited (e.g., ingratitude, breach of condition). Draft the deed carefully if a reversion trigger is intended.

4) What if the donee is abroad or a minor? Use a SPA (apostilled/consularized) for acceptance/registration; for minors, have the legal representative accept and manage, subject to guardianship rules for dispositions.

5) What happens to the family home exemption? Transferring the family home affects protective rules and may require consents. Consider reserving usufruct so the parents’ right to reside continues.

Bottom Line

A Deed of Donation is a legitimate, flexible way for parents to transfer property now, especially when paired with usufruct reservations or clear conditions. Make sure the deed satisfies formalities (acceptance!), honors spousal/property-regime rules, and respects legitimes to avoid later challenges. Pay donor’s and local transfer taxes, secure the eCAR, and register promptly so title reflects the change—only then is the transfer complete and opposable to the world.

This guide offers general information on Philippine practice. For live transactions, have counsel run a title and tax check, model legitimes, and draft terms that match your family’s goals.