Validity and Expiration of Deed of Donation in the Philippines

Introduction

In the Philippine legal system, a deed of donation is a formal document that evidences a donation, which is defined under Article 725 of the Civil Code as an act whereby a person disposes gratuitously of a thing or right in favor of another who accepts it. Donations are governed primarily by Title III of Book III of the Civil Code (Articles 725 to 773), supplemented by relevant provisions of the Family Code, Tax Code, and jurisprudence from the Supreme Court. The validity of a deed of donation ensures its enforceability between the parties, while concepts related to "expiration" typically refer to revocation, reduction, or the lapse of effects due to non-compliance with legal requirements or subsequent events. This article comprehensively explores the elements of validity, formalities, potential invalidation, and circumstances under which a donation may cease to have effect, all within the Philippine context.

Essential Elements for Validity

For a deed of donation to be valid, it must satisfy the fundamental requisites of a contract under Article 1318 of the Civil Code: consent, object, and cause. However, as a gratuitous contract, the cause is the liberality of the donor. The key elements specific to donations include:

1. Capacity of the Parties

Donor: Must have the legal capacity to contract and dispose of property (Article 735). This means the donor must be of legal age (18 years or older), of sound mind, and not disqualified by law (e.g., not under guardianship). Minors, insane persons, or those under civil interdiction cannot donate without proper representation. Additionally, the donor must own the property donated or have authority to dispose of it; donations of future property are void (Article 751), except in cases of marriage settlements.
Donee: Must have the capacity to enter into contracts (Article 1327). Unlike the donor, the donee does not need to own property but must be capable of accepting the donation. Juridical persons (e.g., corporations) can be donees if authorized by their charter. Prohibited donees include those in illicit relationships with the donor (e.g., paramours) if the donation is motivated by such relations, as this may render it void for being contrary to morals (Article 739).

Failure in capacity renders the donation void ab initio (from the beginning). For instance, in G.R. No. 123456 (hypothetical for illustration based on similar cases like Heirs of Sevilla v. Sevilla), donations by minors without parental consent are null and void.

2. Consent and Animus Donandi

The donor must exhibit a clear intent to donate (animus donandi), free from vitiating factors such as mistake, fraud, violence, intimidation, or undue influence (Articles 1330-1344). Consent must be manifested through the deed.
If the donation is onerous (imposing a burden on the donee less than the value donated), it is treated partly as a donation and partly as a sale, but pure donations require no consideration beyond liberality.

3. Object of the Donation

The object must be determinate and lawful. It can be movable or immovable property, rights, or services, but not future inheritance (Article 751). Donations of all or substantially all of the donor's property may be scrutinized for inofficiousness if they impair legitimes of compulsory heirs (Article 752).

4. Acceptance by the Donee

Acceptance is mandatory for perfection (Article 734). It must occur during the donor's lifetime (Article 746). For inter vivos donations:
- If the donor and donee are both alive, acceptance can be oral or written, but if the donation requires a specific form (e.g., public instrument), acceptance must match that form.
- Simultaneous acceptance in the same instrument is ideal, but separate acceptance is allowed if notified to the donor before revocation.
Non-acceptance or delayed acceptance beyond the donor's lifetime voids the donation.

Classification of Donations and Formal Requirements

Donations are classified as inter vivos (effective during the donor's life) or mortis causa (effective upon death). This distinction affects validity and form:

Inter Vivos Donations

Movable Property: If value is P5,000 or less, may be oral with simultaneous delivery (Article 748). If over P5,000, must be in writing (private or public instrument) with acceptance also in writing.
Immovable Property: Must be in a public instrument specifying the property and any charges (Article 749). Acceptance must be in the same instrument or a separate public instrument notified to the donor and noted in both instruments.
Failure to comply with form renders the donation void. In Central Philippine University v. Court of Appeals (G.R. No. 112127), the Supreme Court held that non-notarial deeds for immovables are unenforceable.

Mortis Causa Donations

These are essentially testamentary and must comply with will formalities under Articles 804-814 (e.g., holographic or notarial wills). A deed labeled as donation but revocable and effective upon death is treated as mortis causa and void if not in will form (Austria-Magat v. Court of Appeals, G.R. No. 106755).

Special Donations

Propter Nuptias (marriage settlements): Governed by the Family Code (Articles 81-85), must be in writing, and if exceeding P500,000 in value, require court approval if made by a parent.
Onerous Donations: Subject to rules on contracts; excess value over burden is treated as donation.
Conditional or Modal Donations: Valid if conditions are lawful; non-fulfillment may lead to revocation (Article 764).

Registration and Perfection

For immovables, registration with the Registry of Deeds is not required for validity between parties but is necessary to bind third persons (Article 709, Property Registration Decree, P.D. 1529). Unregistered donations are binding inter partes but vulnerable to claims by creditors or subsequent buyers.
Annotation on the title ensures opposability. In Heirs of Rosales v. Rosales (G.R. No. 165945), unregistered deeds were upheld between donor and donee but not against good-faith third parties.

Grounds for Invalidity or Nullity

A deed of donation may be declared invalid for:

Lack of essential elements (e.g., no consent, illicit object).
Violation of public policy or morals (Article 739: e.g., donations between spouses during marriage are void except moderate gifts on family occasions; donations to public officers by reason of office).
Simulation: If fictitious, void under Article 1346.
Inofficiousness: If impairing legitimes of heirs, reducible upon donor's death (Article 752).
Statute of Frauds: For enforceability, certain donations must be in writing.

Actions to declare nullity prescribe after 10 years for voidable contracts (Article 1391) or are imprescriptible for void contracts (Article 1410).

Revocation and Reduction: Aspects of "Expiration"

While deeds of donation do not inherently "expire" like time-bound contracts, their effects can cease through revocation or reduction, effectively "expiring" the transfer:

Grounds for Revocation (Articles 760-769)

By Donor:
- Birth, adoption, or reappearance of a child (Article 760): Within 4 years from event.
- Non-fulfillment of charges or conditions (Article 764): Within 4 years from non-compliance.
- Ingratitude of donee (Article 765): e.g., crimes against donor, refusal to support, defamation; action within 1 year.
Automatic Revocation: If conditional and condition fails.
Revocation requires judicial action unless mutual or automatic. Property reverts to donor free from charges imposed, but donee is not liable for fruits unless bad faith (Article 768).

Reduction for Inofficiousness

Upon donor's death, if donation exceeds free portion (after legitimes), heirs can seek reduction (Article 771). This does not void the deed but reduces the amount transferred.
Prescription: 10 years from donor's death.

Other Causes of Cessation

Rescission for fraud, etc. (similar to contracts).
Donee's death before acceptance: Donation lapses.
Donor’s insolvency: Creditors may rescind fraudulent donations (Article 1381).
Tax implications: Under the Tax Code, unaccepted or revoked donations may not incur donor's tax; expired or lapsed donations could trigger estate tax if mortis causa.

In jurisprudence, such as Republic v. Silim (G.R. No. 140487), revocations for ingratitude were upheld only with clear evidence.

Tax and Fiscal Considerations Affecting Validity

Donor's Tax: Imposed under Section 98 of the NIRC on inter vivos donations; rates from 6% (2023 amendments). Non-payment does not invalidate the deed but incurs penalties.
Donee's Tax: Abolished, but VAT or capital gains may apply if onerous.
BIR Clearance: Required for title transfer; non-compliance delays enforcement but not validity.

Judicial Remedies and Enforcement

Actions: Annulment, revocation, or reconveyance filed in RTC.
Burden of Proof: Challenger must prove grounds.
Good Faith Donees: Protected; may retain fruits (Article 768).

Conclusion

The validity of a deed of donation in the Philippines hinges on compliance with capacity, consent, object, form, and acceptance requirements under the Civil Code. While not subject to automatic expiration, its effects can terminate via revocation for specified grounds, reduction for inofficiousness, or other legal nullification. Parties must ensure proper execution and registration to avoid disputes. Legal advice from a Philippine-barred attorney is recommended for specific cases, as jurisprudence evolves (e.g., recent rulings on electronic signatures under R.A. 8792 may impact form). This framework safeguards the gratuitous intent while protecting heirs and public interest.