Legal Guidance for House and Lot Donation in Quezon City

Legal Guidance for House and Lot Donation in Quezon City (Philippines)

House and lot donations are a common way for individuals to transfer property to family members, loved ones, or charitable institutions without requiring a sale or other commercial transaction. In the Philippines—and specifically in Quezon City—this legal process is governed by the Civil Code of the Philippines, the National Internal Revenue Code, and various local regulations. Below is a comprehensive guide to understanding the requirements, processes, and legal considerations for donating real property in Quezon City.

1. Basic Concepts of Donation

  1. Definition of Donation
    Under Philippine law, a donation is an act of liberality whereby a person (the donor) disposes of a thing or right in favor of another (the donee) who accepts it. A donation is perfected only upon the donor’s intent to give and the donee’s acceptance.

  2. Donation of Real Property
    When the subject of a donation is real property (such as a house and lot), the law imposes specific formalities to ensure the validity of the donation.

  3. Governing Laws

    • Civil Code of the Philippines (Articles 725–773): Outlines the nature, formalities, obligations, and effects of donations.
    • National Internal Revenue Code (NIRC): Governs donor’s tax and documentary stamp tax obligations.
    • Local Government Code: Guides local government units (LGUs) such as Quezon City in assessing real property taxes and transfer fees.
    • Quezon City Local Regulations: Sets forth local procedures for titling, tax declarations, and property registration.

2. Types of Donations

  1. Donation Inter Vivos

    • Takes effect during the donor’s lifetime.
    • Accomplished through a Deed of Donation and requires acceptance from the donee.

  2. Donation Mortis Causa

    • Becomes effective upon the donor’s death.
    • Typically included as part of a will and subject to estate tax rules rather than donor’s tax.

This article focuses on Donation Inter Vivos, which is the most common form of property transfer by donation.

3. Formal Requirements

  1. Public Instrument

    • For real property donations, the donation must be in a public instrument (notarized deed).
    • This deed must clearly describe the property donated, identify the donor and donee, and include the donor’s intention to donate.

  2. Acceptance by the Donee

    • The donee must accept the donation in the same deed or in a separate public instrument.
    • If acceptance is made in a separate instrument, the donee must notify the donor of said acceptance in an authentic form.

  3. Notarization

    • The Deed of Donation must be notarized by a Philippine notary public for it to be a public instrument.
    • Notarization provides the document with legal force and ensures compliance with formalities.

  4. Consent and Capacity

    • Both donor and donee must have legal capacity.
    • Donor must be the lawful owner of the property.
    • Donor must not be incapacitated (e.g., minors, those of unsound mind) unless assisted by authorized representatives.

4. Donor’s Tax and Other Taxes

  1. Donor’s Tax

    • Governed by the National Internal Revenue Code.
    • TRAIN Law (Republic Act No. 10963) simplified donor’s tax into a flat rate of 6% on total gifts made in excess of PHP 250,000 per year (subject to amendments or other specific exemptions).
    • To compute: The donor must aggregate the total value of donations made within a calendar year. Any amount over PHP 250,000 is subject to the 6% donor’s tax.

  2. Documentary Stamp Tax (DST)

    • Typically imposed on transactions involving the transfer of real property.
    • The applicable rate is imposed on the Deed of Donation based on the property’s fair market value or the zonal value (whichever is higher).

  3. Real Property Tax (RPT)

    • After the donation is completed, the donee becomes the new owner and will be responsible for real property taxes going forward.
    • It is essential to update records with the Quezon City Assessor’s Office to ensure proper tax billings.

  4. Transfer Tax / Local Taxes

    • Quezon City may impose local transfer taxes or fees for the issuance of a new tax declaration or transfer certificate of title.
    • These local taxes must be settled before the property can be effectively re-registered under the donee’s name.

5. Step-by-Step Process in Quezon City

  1. Obtain a Certified True Copy of the Title

    • Secure a certified true copy of the property’s Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) from the Register of Deeds.
    • Check if there are any liens, encumbrances, or annotations that might affect the transfer.

  2. Draft the Deed of Donation

    • Engage a lawyer to prepare the Deed of Donation ensuring all legal formalities are met.
    • Include the specific acceptance clause for the donee if acceptance will be in the same document.

  3. Notarize the Deed of Donation

    • Appear before a notary public in Quezon City (or any part of the Philippines) to have the deed notarized.
    • If acceptance is in a separate instrument, ensure that instrument is also notarized and properly referenced in the main deed.

  4. Pay the Donor’s Tax and Other Fees to the BIR

    • Bring the notarized Deed of Donation to the Bureau of Internal Revenue (BIR) having jurisdiction over the location of the property (Quezon City).
    • Submit all required documents (e.g., Deed of Donation, title copy, Tax Identification Numbers, etc.).
    • Compute and pay the donor’s tax and documentary stamp tax within the prescribed period (generally within thirty [30] days from the date the donation is made).

  5. Secure a Certificate Authorizing Registration (CAR)

    • The BIR issues the CAR once all taxes have been paid.
    • The CAR is essential for the next step—registration with the Register of Deeds.

  6. Register the Donation with the Register of Deeds

    • Submit the following to the Quezon City Register of Deeds:
      • CAR from the BIR
      • Original owner’s duplicate copy of the TCT/CCT
      • Notarized Deed of Donation
      • Other documentary requirements (e.g., valid government-issued IDs of donor and donee).
    • Pay the registration fees at the Register of Deeds.

  7. Obtain the New Title

    • After registration, the Register of Deeds will cancel the old title and issue a new Transfer Certificate of Title in the name of the donee.

  8. Update Tax Declaration

    • Proceed to the Quezon City Assessor’s Office to update the property’s tax declaration under the donee’s name.
    • Bring the new title, CAR, Deed of Donation, and other required forms.
    • This step ensures correct billing of real property taxes.

6. Special Considerations in Quezon City

  1. Zonal Values

    • The BIR uses zonal values for the computation of taxes. Quezon City has designated zonal values that may be higher or lower than a property’s assessed or market value.
    • Check the latest BIR revenue issuance for current zonal values.

  2. Local Transfer Tax

    • Quezon City imposes a local transfer tax (rate may vary) on the property’s fair market value or zonal value.
    • Must be paid to the Quezon City Treasurer’s Office.

  3. E-Governance Initiatives

    • Quezon City has been innovating local government services with online systems. Some steps (e.g., scheduling, forms submission) may be done via Quezon City’s official website.
    • Verify current procedures or any online portal that simplifies the donation registration or tax payment process.

  4. Exemptions or Reductions

    • Certain donations to government or accredited charitable institutions might have tax exemptions or reduced tax rates.
    • Always verify eligibility for any tax incentives through the BIR and relevant local ordinances.

7. Possible Grounds for Nullity or Revocation

  1. Lack of Required Formalities

    • If the donation of real property is not executed in a public instrument or is not duly accepted, it may be deemed null and void.

  2. Donor’s Incapacity

    • A donation made by someone without the legal capacity to do so (e.g., mentally incapacitated individuals) can be contested.

  3. Fraud or Undue Influence

    • If the donor was manipulated, coerced, or defrauded into executing the donation, legal action could invalidate the deed.

  4. Failure to Pay Donor’s Tax

    • While failure to pay the correct donor’s tax does not automatically invalidate a donation, it can delay or prevent issuance of the CAR and subsequent title transfer, effectively undermining the donation’s completion.

  5. Ingratitude

    • Under the Civil Code, a donor may revoke a donation due to ingratitude or for other reasons mentioned in Articles 765–767 of the Civil Code (e.g., donee committing an offense against the donor).

8. Practical Tips and Reminders

  1. Consult a Lawyer Early

    • Legal assistance ensures the deed is properly drafted, all formalities are satisfied, and tax obligations are accurately computed.

  2. Transact Only with Legitimate Offices

    • Always verify you are dealing with the official offices of the BIR, Register of Deeds, Assessor’s Office, and licensed professionals.
    • Watch out for fixers or unauthorized intermediaries.

  3. Keep Copies of All Documents

    • Organize and keep copies of the notarized Deed of Donation, CAR, official receipts of tax payments, and the new title.

  4. Timely Tax Payments

    • File and pay donor’s tax within thirty (30) days from the date of donation to avoid penalties and surcharges.
    • Delayed payments can result in steep interest and penalties.

  5. Check for Updates

    • Laws and local regulations can change. Always refer to official issuances from the BIR, Quezon City local government, and the Land Registration Authority for the latest policies.

  6. Consider Family Arrangements

    • Where possible, discuss the donation with other family members or heirs to prevent future inheritance disputes.

9. Conclusion

Donating a house and lot in Quezon City is governed by both national law and local regulations. Compliance with the Civil Code’s formal requirements, prompt payment of donor’s tax and documentary stamp tax, and proper registration of the donated property are all crucial steps. By following these legal and administrative procedures—and seeking professional advice when needed—donors and donees can facilitate a smooth and valid property transfer.

Disclaimer: This guide provides general information on the laws governing donations of real property in Quezon City, Philippines. It should not be taken as legal advice. For specific concerns and to address unique circumstances, consult a licensed Philippine attorney or relevant government offices.

Disclaimer: This content is not legal advice and may involve AI assistance. Information may be inaccurate.

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