Concept and definition

Concept and definition | Donation | Different Modes of Acquiring Ownership | PROPERTY, OWNERSHIP, AND ITS MODIFICATIONS

CIVIL LAW > IX. PROPERTY, OWNERSHIP, AND ITS MODIFICATIONS > C. Different Modes of Acquiring Ownership > 3. Donation > a. Concept and Definition

Concept of Donation

Donation is a juridical act by which a person, called the donor, voluntarily transfers ownership of a thing or a right to another, called the donee, without any equivalent monetary consideration, with the intent to gratuitously enrich the latter. It is essentially an act of liberality, creating an obligation to deliver property or rights without expectation of reciprocity, subject to the acceptance of the donee.

The legal foundation of donations is found in the Civil Code of the Philippines, specifically Articles 725 to 773, which comprehensively regulate the nature, requisites, limitations, and effects of donations.

Definition under Philippine Law

Under Article 725 of the Civil Code of the Philippines, a donation is defined as:

“An act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it.”

This definition establishes three critical elements:

  1. Liberality - The primary intent of the donor is to enrich the donee without receiving anything in return.
  2. Disposition - The donor must alienate or transfer ownership of the thing or right to the donee.
  3. Acceptance - The donation must be accepted by the donee for it to take effect. Acceptance may be made explicitly or impliedly, but it must be manifested during the lifetime of both parties.

Nature and Characteristics

  1. Unilateral Act - The donation primarily emanates from the intent and will of the donor, though the donee’s acceptance is essential to complete the act.
  2. Gratuitous - There is no monetary or equivalent consideration exchanged between the donor and the donee.
  3. Formal and Onerous Elements - While generally a gratuitous act, some donations (e.g., onerous donations) may impose charges or conditions that must be complied with by the donee.
  4. Irrevocability - Donations are generally irrevocable once perfected, except for specific grounds allowed by law (e.g., ingratitude or non-fulfillment of conditions).

Requisites of Donation

  1. Donor’s Capacity:

    • The donor must have the legal capacity to make a donation. This includes full ownership and legal capacity to dispose of the property being donated.
    • Persons incapacitated by law, such as minors and the insane, cannot make donations.
    • Donors must not donate property if such act would impair their family’s subsistence or violate mandatory provisions on legitimes.

  2. Donee’s Capacity:

    • The donee must not be legally incapacitated to accept the donation.
    • Certain persons, such as public officers and their relatives, may be prohibited from receiving donations under specific circumstances, such as during their tenure in public service.

  3. Subject Matter:

    • The property or right donated must be legally owned by the donor and capable of being transferred.
    • Future property cannot be the object of a donation.

  4. Intent and Consent:

    • There must be clear intent from the donor to transfer ownership gratuitously.
    • Acceptance by the donee must be communicated and made within the donor’s lifetime.

  5. Form:

    • Oral Donations: Allowed if the value of the donation is modest (typically personal property) and immediately delivered.
    • Written Donations: Required for real property and for personal property exceeding PHP 5,000 in value. Acceptance must also be in writing for validity.
    • Public Document: Donations of real property must be executed in a public instrument, and acceptance must be recorded in the same or a separate public instrument.

Types of Donations

  1. Inter Vivos - Donations made during the donor’s lifetime with immediate effect upon acceptance by the donee.

    • Governed by provisions under the law on donations.
    • Subject to limitations on donations affecting future legitimes or creditors’ rights.

  2. Mortis Causa - Donations that take effect upon the donor’s death and are akin to testamentary dispositions.

    • Governed by the rules on succession.
    • Must comply with the formalities of a will under the Civil Code.

  3. Onerous Donations - Donations that impose a burden, condition, or charge upon the donee.

    • The onerous element makes it subject to additional rules, treating it partially as a contract.
    • The value of the charge or condition may affect tax implications.

Limitations and Prohibitions

  1. Disposal of Family Property:

    • Donations cannot impair the legitime of compulsory heirs (Articles 752 and 772, Civil Code).
    • Donations are subject to rescission if they prejudice creditors' rights or exceed the donor’s capacity to dispose freely.

  2. Prohibited Donees:

    • Certain individuals are disqualified by law from receiving donations, including:
      • Public officers and employees, their spouses, descendants, and ascendants, in connection with their office.
      • Religious leaders for acts directly related to their religious office.

  3. Tax Implications:

    • Donations are subject to donor’s tax under the National Internal Revenue Code.
    • Proper valuation and compliance with tax obligations are prerequisites for the validity and enforceability of the donation.

Grounds for Revocation

Under Article 760 to 768 of the Civil Code, donations may be revoked for specific reasons:

  1. Ingratitude of the Donee:
    • The donee commits an offense against the donor or the donor’s family (e.g., crime, serious insults).
    • The donee fails to fulfill the conditions attached to the donation.
  2. Non-compliance with Conditions:
    • Any failure to comply with an imposed charge or obligation can result in revocation.
  3. Birth of Children:
    • A donation made by a childless donor can be revoked if a legitimate child is subsequently born.

Effects of Donations

  1. Transfer of Ownership:
    • Upon perfection and delivery, ownership is transferred to the donee.
  2. Obligations of Donee:
    • The donee may be obligated to comply with conditions or charges attached to the donation.
  3. Preservation of Donor’s Rights:
    • The donor may impose conditions to preserve rights, such as usufruct or revocation clauses.
  4. Taxation:
    • Donations are subject to proper documentation and donor’s tax, ensuring compliance with the Bureau of Internal Revenue (BIR) regulations.

This meticulous framework ensures that donations are properly regulated to balance the donor's intent with the rights and obligations of the donee, while protecting the interests of third parties, including creditors and compulsory heirs.

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