CIVIL LAW

IX. PROPERTY, OWNERSHIP, AND ITS MODIFICATIONS

C. Different Modes of Acquiring Ownership

3. Donation

c. Classification of Donation

Under Philippine Civil Law, the classification of donations is crucial for understanding their legal implications, formalities, and effects. Donations are governed by Articles 725 to 773 of the Civil Code of the Philippines, which set forth their nature, requisites, and types. The classification of donations can be outlined as follows:

1. According to the Time of Effect

Donations may be classified based on when their effects occur:

a. Donations Inter Vivos

Definition: Donations that take effect during the lifetime of the donor.
Characteristics:
- The donor intends to transfer ownership immediately.
- Governed by the rules on contracts and obligations.
- Irrevocable except in specific instances provided by law (e.g., ingratitude, non-compliance with conditions, or when the donor suffers economic hardship).
- Requires formalities depending on the value:
  - If the value exceeds Php 5,000, it must be in writing.
  - If immovable property is involved, it must be made through a public instrument and comply with requirements of Article 749 (including acceptance by the donee).
- Subject to reduction in cases of inofficiousness (exceeding the free portion of the estate).

b. Donations Mortis Causa

Definition: Donations that take effect upon the donor’s death.
Characteristics:
- Considered part of the donor’s estate, similar to a disposition in a will.
- Governed by the rules on succession.
- Revocable at any time by the donor.
- Must be executed in accordance with the formalities of a will (holographic or notarial) as prescribed in Articles 805–806 of the Civil Code.

2. According to the Object

Donations are also classified based on the type of property donated:

a. Donation of Movable Property

Formalities:
- If the value is Php 5,000 or less, oral donations are valid but must involve immediate delivery of the object.
- If the value exceeds Php 5,000, the donation must be made in writing.
Example: A donor gives a car worth Php 500,000 to the donee via a written document, which must include the donee’s acceptance.

b. Donation of Immovable Property

Formalities:
- Must be executed in a public instrument.
- The donee’s acceptance must also be in the same public instrument or in a separate public instrument notified to the donor.
- Compliance with Article 749 is mandatory.
Example: A donor transfers ownership of a parcel of land to the donee through a notarized deed of donation, and the donee accepts it formally.

3. According to Purpose

The purpose behind the donation also classifies it as follows:

a. Pure Donation

Definition: Donation made without any condition or burden imposed on the donee.
Example: A person donates Php 1 million to a friend with no strings attached.

b. Conditional Donation

Definition: Donation subject to a condition or future event, the fulfillment of which determines its effectivity or resolution.
Types:
- Suspensive Condition: Donation becomes effective only upon fulfillment of the condition.
  - Example: A donor promises a house to the donee once the donee graduates from law school.
- Resolutory Condition: Donation is revoked upon the occurrence of a specified event.
  - Example: A donor donates a piece of jewelry but stipulates that it will revert to the donor if the donee divorces.

c. Onerous Donation

Definition: Donation made with a burden, charge, or obligation imposed on the donee.
Characteristics:
- Governed by the rules on contracts due to its onerous nature.
- The value of the burden must not exceed the value of the property donated; otherwise, it is considered a sale.
- Example: A donor gives a building to a university on the condition that it is used exclusively for educational purposes.

d. Remuneratory Donation

Definition: Donation made as a reward for services rendered to the donor.
Characteristics:
- Governed by the rules on contracts if the services have an ascertainable value.
- Example: A donor gives a car to a loyal household helper in appreciation of years of service.

4. According to Revocability

Donations are further categorized based on whether they can be revoked:

a. Irrevocable Donations

Applies to donations inter vivos.
Once perfected, the donation cannot be revoked except for legal grounds such as:
- Ingratitude (Article 765).
- Non-fulfillment of conditions.
- Economic hardship of the donor, requiring recovery of donated property.

b. Revocable Donations

Applies to donations mortis causa.
The donor retains the power to revoke the donation at any time before death.

5. According to Beneficiary

Donations may also be classified based on the intended recipient:

a. Private Donations

Donations made to private individuals or entities.
Governed by general rules on donations.

b. Public or Charitable Donations

Donations made for public interest, such as for education, religion, or social welfare.
Subject to special laws and tax incentives (e.g., donor’s tax exemptions under the Tax Code).

6. Tax Implications

Donor’s Tax: Imposed on the transfer of property by donation during the donor’s lifetime. Rates and exemptions are governed by the Tax Code of the Philippines (National Internal Revenue Code).
Estate Tax: Applies to donations mortis causa as part of the donor’s estate.

Summary

The classification of donations is fundamental in determining the legal requirements, validity, and effects of the transfer of ownership. It influences formalities, revocability, and tax liabilities. Practitioners must carefully assess the nature of the donation to ensure compliance with the Civil Code and other applicable laws.