Transferring Property Ownership as a Gift (Donation) in the Philippines

(A comprehensive legal‑practical guide as of July 2025)

Disclaimer: This material is for general information only and does not constitute legal advice. Laws change and facts vary—always consult a Philippine lawyer or tax professional before acting.

1. Concept & Terminology

Term	Philippine Meaning
Gift / Donation	A gratuitous transfer of ownership, usually called donation in the Civil Code.
Inter vivos	Takes effect during the donor’s lifetime (subject of this guide).
Mortis causa	Takes effect after death; governed by succession rules and estate tax, not donor’s tax.

2. Core Legal Framework

Statute / Issuance	Key Provisions on Gifts
Civil Code Articles 725‑773	Definition, capacity, formalities, revocation, legitime protection.
Family Code Arts. 96, 124, 87, 131‑133	Spousal consent rules; prohibition against donations between spouses during marriage except moderate gifts on special occasions.
National Internal Revenue Code (NIRC), as amended by RA 10963 (TRAIN)	Single 6 % donor’s tax on net gifts above ₱250 k per calendar year, regardless of kinship; filing via BIR Form 1800 within 30 days of the donation.
Revenue Regulations (RR) 12‑2018, 17‑2021	Implementing guidelines on valuation, zonal values, penalties.
Local Government Code (LGC), Sec. 135	Local transfer tax (0.25 %–0.75 % of zonal or fair‑market value).
Land Registration Act / PD 1529	Registration of deeds; issuance of new TCT/CCT.
Constitution (Art. XII, Sec. 7)	Land ownership restrictions for foreigners.
Other Special Laws	Condominium Act, CARL/ CARP (agrarian land), Indigenous Peoples’ Rights Act, Anti‑Dummy Law, Data Privacy in notarization, etc.

3. Requisites of a Valid Donation (Inter vivos)

Capacity of Donor & Donee
- Donor must have free disposal of property and capacity to contract.
- Donee must have capacity to acquire (minors accept via parents/guardians; foreigners restricted for land).
Intent of Liberality – Donor gives without valuable consideration.
Subject Matter – Present property, determinate, and within commerce. Future property cannot be donated (Art. 751).
Form & Acceptance
- Immovable property:
  - Public Deed of Donation and separate Acceptance deed or acceptance clause within the same instrument.
  - Both must be notarized, and the donee’s acceptance must be communicated in writing to the donor within the donor’s lifetime.
- Movables worth >₱5 000: Public or private written document with donor’s signature.

4. Legal & Practical Limitations

Situation	Effect
Legitime of compulsory heirs (Arts. 904‑907)	Donations that impair legitimes are reducible upon donor’s death.
Spousal Property Regime	Conjugal/ACP property cannot be donated without written marital consent (Family Code Arts. 96, 124).
Donations between spouses	Void except moderate gifts on anniversaries, birthdays, etc. (Art. 87).
Donation to future spouses	Permitted only in the marriage settlements (Arts. 126‑127).
Foreign donees	May receive land only via hereditary succession (Const., Art. XII §7); otherwise limited to condo units (≤40 %).
Prohibited Donees	Public officials concerning matters they supervise; donations “by reason of their office” are void (Art. 739).
Agrarian land	Subject to retention ceilings & DAR clearance.

5. Grounds to Revoke or Reduce a Donation

Failure to fulfill conditions expressly set in the deed.
Ingratitude—e.g., the donee commits serious offense against the donor (Art. 765).
Birth or adoption of a child after a donation made by a childless donor (Arts. 760‑761).
Reduction for legitime at donor’s death.

Revocation must be judicially demanded within the prescriptive period (generally 4 years from knowledge of the ground).

6. Taxation & Fees

Levy	Rate / Basis	Who Pays	When / Where
Donor’s Tax	6 % of net gift exceeding ₱250 000 per calendar year.	Donor (or estate if donor dies within 30 days).	File BIR Form 1800 within 30 days; pay at an AAB/RCO.
Documentary Stamp Tax (DST)	₱15 per ₱1 000 of FMV (RR 13‑2004).	Generally donor, but parties may agree.	Pay with donor’s tax.
Capital Gains Tax	Not applicable (gratuitous).
Value‑Added Tax	Not applicable (not in the course of trade).
Local Transfer Tax	0.25 % – 0.75 % of FMV (varies by LGU).	Donee (commonly).	Treasurers’ Office within 60 days from execution.
Registration Fees	Per LRA schedule (≈₱8 000–₱30 000 depending on value).	Donee.	Registry of Deeds.
Real Property Tax	Donee assumes prospectively.	Donee.	Annually at LGU.

FMV = the higher of BIR zonal value or LGU tax‑declaration value.

7. Step‑by‑Step Procedure for Immovable Property

Due Diligence
- Secure certified true copy of the Transfer / Original Certificate of Title (TCT/OCT).
- Check annotations (liens, pending cases, notice of levy).
Draft the Deed(s)
- Deed of Donation + Acceptance (if separate).
- State full description, value, conditions (if any), donor’s marital status, spousal consent clause when applicable.
- Attach Technical Description & Tax Declaration Nos.
Notarization
- Donor (and spouse, if needed) sign before notary.
- Acceptance may be signed later but must be notarized and communicated promptly.
Secure BIR Clearance
- Prepare BIR Form 1800 and documentary bundle:
  - Deed(s) of Donation (original & copies)
  - IDs, TINs, proof of relationship, birth/marriage certificates
  - TCT/OCT, approved plan, latest Real Property Tax Clearance, Tax Declaration, Sworn Declaration of No Improvement (if vacant).
- Submit to Revenue District Office where the property is located.
- Pay Donor’s Tax and DST; penalties apply after deadline.
- Receive Certificate Authorizing Registration (CAR) and Tax Clearance Certificate.
Pay Local Transfer Tax at Treasurer’s Office with CAR & notarized deeds.
Registration at Registry of Deeds
- Present CAR, LGU tax‑transfer receipt, original TCT/OCT, Deed, IDs.
- Pay registration fees, IT tax, and annotation fees.
- Receive new TCT/CCT in the donee’s name.
Update Assessor’s Office for issuance of a new Tax Declaration.
Record‑keeping—retain certified copies of:
- Deeds, CAR, receipts, new title, new tax declaration.

8. Special Scenarios & Nuances

a. Partial Gifts / Partition‑by‑Donation

Possible to divide property among multiple children while alive; must still observe legitime.

b. Conditional / Modal Donations

E.g., “I donate provided you maintain the ancestral house.” Non‑compliance triggers revocation.

c. Donation Propter Nuptias

Gifts in consideration of marriage but before the ceremony (Arts. 126‑127). Must be in marriage settlements or separate public instrument. Exempt from donor’s tax up to ₱10 000; excess subject to 6 %.

d. Donation to Minors

Acceptance via parents or legal guardian; register trust if condition requires preserving property until majority.

e. Foreign Donees & Condominium Units

Foreign spouses may receive condo units (up to 40 % project foreign equity cap). Deed should cite Condominium Act compliance.

f. Agrarian & Ancestral Lands

Must respect retention limits; need DAR Clearance and sometimes NCIP consent for IP domains.

g. Subsequent Sale by Donee

Donee’s acquisition cost = donor’s zonal value/FMV used for donor’s tax. Capital gains tax will apply on later sale.

9. Penalties & Consequences of Non‑Compliance

Violation	Civil / Tax Exposure
Late donor’s tax filing	25 % surcharge + 12 % annual interest + compromise penalties.
Undeclared or undervalued donation	50 %–75 % fraud penalty; possible criminal case for tax evasion.
Unregistered deed	Deed remains valid between parties but not enforceable against third persons; title cannot be transferred, hindering sale or mortgage.
Void donation (e.g., no spousal consent, foreign land donee, violation of legitime)	Subject to judicial rescission; property may revert with fruits/interests.

10. Practical Tips

Obtain a current BIR zonal valuation print‑out before drafting the deed to anticipate taxes.
Involve the LGU Assessor early—some require onsite inspection before issuing tax clearances.
Use clear conditions if imposing obligations (e.g., upkeep, non‑sale within X years).
Plan for legitime; consider leaving adequate free portion or using testamentary gifts.
Document spousal consent even if property is paraphernal but doubts exist; reduces later contest.
Keep deadlines: 30 days (donor’s tax), 60 days (transfer tax) to avoid surcharges.
If uncertain on valuation or relationships, attach a Sworn Donor’s Affidavit to clarify facts.

11. Comparative Snapshot: Donation vs. Will

Feature	Donation (Inter vivos)	Will
Timing of transfer	Immediately upon acceptance & registration	Only upon testator’s death and probate
Tax	Donor’s tax (6 %) payable within 30 days	Estate tax (6 %) due within 1 year of death
Revocation	Limited statutory grounds	Freely revocable any time before death
Control during lifetime	Donor loses ownership once accepted	Testator retains ownership until death

12. Conclusion

Transferring property by way of gift is both a generous estate‑planning tool and a technical legal exercise. Success hinges on (1) observing formalities under the Civil Code, (2) honoring spousal and legitime protections, (3) timely paying national and local taxes, and (4) meticulously registering the deed so the donee’s title is unassailable. With thorough preparation—and professional advice when complexity arises—a donation in the Philippines can achieve the donor’s objectives while minimizing future disputes and tax exposure.

Prepared July 22 2025—reflecting all statutes, regulations, and prevailing practices to date.

Transferring Property Ownership as a Gift (Donation) in the Philippines