What To Know About The Law On Donation In the Philippines
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The ownership of goods and properties that are transferred from one party to another, whether it be a natural or juridical person, may be regarded as conveyance arising from, or by virtue of a donation, when said transfer does not entail any corresponding exchange of consideration, such as money or otherwise. Hence, we shall discuss the law on donation in the Philippines.

“In order to eat, we go to grocery stores or markets to buy the ingredients for the food that we place on our table.  We dine-in or take-out cooked food from restaurants by ourselves or even through delivery riders.  In order to have a roof over our head, we go to property developers to purchase the land where we build our own home or we even buy ready for occupancy house and lot from them. These are transactional exchanges.”

On the other hand, our ascendants, who made good with their lives and were able acquire properties during their lifetime, will leave those material things to their heirs when they join our Creator, either by law or by testament. This is a conveyance through succession.

Philanthropists show their generosity by giving donations to their chosen individuals or charities. These are transfer by reason of a act of liberality on the part of the giver. This popularly know and donation.

In all of these instances, there are transfers of ownership from one party to another.  Article 712 of the New Civil Code provides that:

“Ownership is acquired by occupation and by intellectual creation.  Ownership and other real rights over property are acquired and transmitted by law, by donation, by testate and intestate succession, and in consequence of certain contracts, by tradition.  They may also be acquired by means of prescription.”[1]Article 712, Civil Code of the Philippines

In this discussion, we will focus on “Donation”. 

The Relevancy of Donation 

Donation is defined in Article 725 of the New Civil Code as “an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it.”[2]Article 725, Civil Code of the Philippines Although its definition says “an act”, it is actually a contract with “liberality” being the cause or consideration.  It is a bilateral contract creating unilateral obligations, which all flows from the donor’s side. 

Similar to the typical contracts that we have learned in our Obligations and Contracts, donation have the following requisites:

  • Consent or capacity of the parties;
  • Cause or consideration, which as mentioned above is “liberality”;
  • Delivery of thing donated, or the object; and
  • Form as prescribed by law, which is either oral or written.

There are two parties in donation namely, “Donor” who is the party that gives his property and the person at the receiving end is called “Donee”.  All persons whether natural or juridical may be “Donors” provided they have the capacity to contract and dispose of their property at the time of the donation.  

On the other hand, the following can be Donees: 

1] All those who are “not specifically disqualified” by law.[3]Article 738, Civil Code of the Philippines  The “specifically disqualified” person refers to husbands and wives with respect to immoderate donations from each other and those mentioned in Article 739 such as: 

    • Those who were guilty of adultery or concubinage who made a donation between themselves.  In this kind of Donee, adultery and concubinage need not be proved in criminal action, and the guilt may be proved by mere preponderance of evidence;[4]Article 739, Civil Code of the Philippines
    • Those who were found guilty of the same criminal offense who made a donation between themselves, in consideration thereof.  In this kind of situation, it is imperative that there must be criminal conviction.  Hence, mere preponderance of evidence is not sufficient; and[5]Id.
    • Public officers or his wife, descendants and ascendants, who received donations by reason of his office.  The purpose of this kind is to prevent bribery;[6]Id.

2] Minors and others who cannot enter into contract, but acceptance shall be done through their parents or legal representatives;[7]Article 741, Civil Code of the Philippines and

3] Conceived and unborn children, which may be accepted by those persons who would legally represent them if they were already born[8]Article 742, Civil Code of the Philippines. 

In order for the donation to be perfected, acceptance by the donee is necessary (Art. 734, Civil Code).  In the case of Tanpingco vs. Intermediate Appellate Court [IAC][9]G. R. No. 76225 March 31, 1992, 207 SCRA 652, it was held that: “once a donation is accepted, the donee becomes the absolute owner of the property donated.”[10]Ibid. 

The object of a contract of donation or thing to be delivered may be movables or immovables.  When the donated property is movable, the donation may be made orally or in writing.  If it is made orally, the simultaneous delivery of the thing or the document representing the right donated is required. However, if it is in writing, simultaneous delivery is not required.  In either of the cases, the acceptance by the donee may be oral, in writing or tacit.  

Furthermore, if the value of the movable property donated does not exceed PhP5,000, the donation may be oral or in writing, and the acceptance may be oral, in writing or tacit.  However, if the value of the movable property donated is more than PhP5,000, the donation and acceptance must be in writing.  Otherwise, the contract of donation is void even if there is simultaneous delivery.[11]Article 748, Civil Code of the Philippines

On the other hand, if the donated property is immovable, the Donation must be in writing and notarized (public instrument).  Likewise, the acceptance by the donee may be made in the same deed of donation or in a separate public instrument during the lifetime of the donor, and the latter must be notified of it.[12]Art. 749, Civil Code of the Philippines

Donation Inter Vivos 

Donation Inter Vivos is a classification of donation that takes effect during the lifetime of the donor.  It must follow the formalities of donations and it cannot be revoked except for grounds that will be discussed later.  

In this classification of donation, the right of disposition is transferred to the donee completely, and his acceptance must be during the lifetime of the donor. Donation inter vivos is covered by Articles 729, 730, and 731 of the New Civil Code, which provides that: 

“Article 729. When the donor intends that the donation shall take effect during the lifetime of the donor, though the property shall not be delivered till after the donor’s death, this shall be a donation inter vivos. The fruits of the property from the time of the acceptance of the donation, shall pertain to the donee, unless the donor provides otherwise.”[13]Article 729, Civil Code of the Philippines

“Article 730. The fixing of an event or the imposition of a suspensive condition, which may take place beyond the natural expectation of life of the donor, does not destroy the nature of the act as a donation inter vivos, unless a contrary intention appears.”[14]Article 730, Civil Code of the Philippines

“Article 731. When a person donates something, subject to the resolutory condition of the donor’s survival, there is a donation inter vivos.”[15]Article 731, Civil Code of the Philippines

Revocation or Reduction | Donation Inter Vivos 

Donation Inter Vivos is irrevocable except: 

1] During the subsequent birth of the donor’s children.  There are two kinds of inofficious donations under this exception as follows: 

    • Where the donor either had no children or thought he had no more, at the time of donation;[16]Articles 760 and 761, Civil Code of the Philippines
    • Where at the time the donation was made, the donor had at least one child already.[17]Articles 771 and 752, Civil Code of the Philippines

The law allows the reduction or revocation under the presumption that had the donor knew he would have, or adopt, a child, or that the child he thought was dead was really alive, he would have made a smaller donation if not zero. 

Moreover, this is also to protect the legitime of the donor’s heirs.  Nevertheless, it must be noted that Article 763 of the New Civil Code provides for the prescriptive period of four years from the birth of the first child to file the action for revocation or reduction; 

2] Failure of donee to comply with the conditions imposed.[18]Articles 764 and 768, Civil Code of the Philippines “Conditions” means the charges or burdens imposed.  It can refer to resolutory conditions but not suspensive conditions, because in the latter, if it is not fulfilled, the donation never becomes effective.  Hence, nothing to revoke; 

3] Ingratitude of donee.[19]Articles 765, and 766, Civil Code of the Philippines The reason of the law on this ground is that for the donee not to turn ungrateful because gratitude here is a moral and legal duty.  The acts of ingratitude may be purely “Personal”, which the donee himself must have committed, or otherwise “Exclusive”; and 

4] When the donation is reduced by reason of inofficiousness.  It must be noted that the value of the estate is based at the time of the donor’s death but not at the time of donation.  Also it may not only be reduced but completely canceled especially when the donor does not have a free portion left for the compulsory heirs.[20]Articles 768, 771, and 772, Civil Code of the Philippines 

Donation Mortis Causa 

Donation Mortis Causa takes effect after the death of the donor.  As such, acceptance by the donee can only be done after the donor’s death, any prior acceptance is void.  It must follow the formalities of wills and testaments whether holographic or notarial, otherwise the donation mortis causa is void and does not transmit any right.  

It can be revoked by the donor at any time and for any reason like a change of mind, while he is still alive.  Hence, we follow the principle that “future inheritance cannot be contracted.”  Donation mortis causa is covered in Article 728 of the New Civil Code, which provides that: 

Article 728. Donations which are to take effect upon the death of the donor partake of the nature of testamentary provisions, and shall be governed by the rules established in the Title on Succession.”[21]Article 728, Civil Code of the Philippines

It must be noted that if the donor reserves the right to dispose of all the properties purportedly donated, there may be a donation mortis causa rather than inter vivos. 

Donation Inter Vivos versus Donation Mortis Causa 

Given the discussions above, for me the better classification of donation is that of inter vivos.  It is because it gets perfected at the time of donee’s acceptance while the donor is still alive.  In which case, the donor is immediately obliged to deliver the thing being donated. 

Since the possession and ownership goes to the donee without the need to wait for the donor’s death as in mortis causa, the donee has more time to enrich the property by cultivating it if it’s land, renovating and renting it out if house and lot, investing it as in the case of liquid assets, and the like.  

It is a well-known principle that with investment, “time is our friend.”  We can multiply the value of the donated property overtime by using the power of compounding.  To simply put, the more time that the donee has, the more chance for him to enrich and multiply the value of the property.  

Although there are possibilities that the donated properties may be reduced or even revoked, at least there are still more probabilities favorable to the donee in donation inter vivos than in mortis causa, especially that in the latter, the donor may change his mind or even cancel the donation for any reason.  

Donation mortis causa is in reality a testamentary disposition. Being such, it has to comply with the formalities of making a will, whether notarial or holographic. Otherwise, such donation will not be valid as an instrument of conveyance.

Donation Between Husband and Wife 

Article 87 of the Family Code provides that:

“Art. 87. Every donation or grant of gratuitous advantage, direct or indirect, between the spouses during the marriage shall be void, except moderate gifts which the spouses may give each other on the occasion of any family rejoicing. The prohibition shall also apply to persons living together as husband and wife without a valid marriage.” [22]Article 87, Family Code of the Philippines

As a general rule, donations between spouses, whether direct or indirect, shall be void except for moderate gifts which they can give to each other on the occasion of any family rejoicing.  What is moderate is dependent on the financial status of the concerned parties.  The following are the void, indirect donation to a spouse: 

  • To stepchild when his only compulsory heir is the other spouse at the time of donation;
  • To common child who has no compulsory heirs other than the other spouse at the time of donation;
  • The parents of the other spouse;
  • The other spouse’s adopted child in cases when, at the time of donation, the only surviving relatives of the adopted is the adopted spouse, the illegitimate children of the adopted, and the surviving spouse of the adopted; and
  • To a common adopted child who has no other surviving heirs.

The following are the reasons for the general prohibition of donation between spouses: 

  • To protect the creditors;
  • To prevent the weaker spouse from being influenced by the stronger spouse; and
  • To prevent an indirect violation of the rule prohibiting modifications of the marriage settlement during the existence of marriage.

Although the donation between spouses is void, it can only be assailed and taken advantage by those prejudiced by the transfer.  

Final Thoughts 

Donations are made voluntarily by any person, whether natural or juridical, with no expectation of remuneration. They could be made up of cash, personal goods, or even real estate. Donations are not to be confused with gifts, which are also freely given but are done so as an act of grace and with the intention of receiving anything in return. The difference between donations and presents can be seen in the motivation behind these actions. A donation is made with the intention of being generous, whereas a present is given with the intention of being grateful.

Do you know that donation is a biblical act?  According to the scripture in 2 Corinthians 9:6-7, “The point is this: whoever sows sparingly will also reap sparingly, and whoever sows bountifully will also reap bountifully.  Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver.”  

We know that God loves us for whoever we are, but the scripture says “God loves a cheerful giver”.  We receive more love from God when we cheerfully give according to the conviction of our heart.  

Donation also follows the law of “Karma”, that when you give, it will return to you a thousand folds.  While it is not a good reason to give simply because you expect something in return, it is always good to give with the right intentions.  Do you notice that when you give, sooner or later something good comes back to you? 

On the other note, with the recent winning by Ms. Hidilyn Diaz of the Philippines’ very first gold medal in the Olympics which is being held in Tokyo, Japan, a lot of philanthropists showed their appreciation and generosity to Ms. Diaz’s accomplishment by rewarding her with tons of cash gifts, house and lot and other benefits.  

Hard work really pays off.  We have seen Hidilyn rise from her small beginnings until she achieved the country’s very first gold medal in the Olympics.  Her story inspires us, that in the midst of all the struggles that our society is going through with the COVID-19 pandemic, volcanic eruptions, earthquakes, and typhoons that bring flood to our communities, Filipinos remain resilient and positive that all of these shall pass and together as a country, we will conquer all of these trials.  

Last, a gift of donation is an expression of a person’s kindness to the community. It would be beneficial if the Philippines adopted the same principles and legislation regarding donation and donations. This is a habit that should be continued to help our community grow.

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RALB Law | RABR & Associates Law Firm

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