Transfer of Property Through Deed of Donation or Extrajudicial Settlement: Which is Appropriate?

Question: Which is more appropriate for transferring property: a Deed of Donation or an Extrajudicial Settlement?

In the Philippines, transferring property ownership can be done through various legal instruments, depending on the circumstances surrounding the transfer. Two common methods are through a Deed of Donation and an Extrajudicial Settlement. Understanding the differences between these legal processes is crucial for determining which one is appropriate for your specific situation.

Deed of Donation

A Deed of Donation is a legal document that facilitates the transfer of property from a donor to a donee without any monetary compensation. This method is typically used when the transfer is being made as a gift, such as between family members.

Key Considerations for a Deed of Donation:

1. Donative Intent: The donor must have a clear intention to donate the property without any conditions attached.
2. Acceptance by the Donee: The donee must formally accept the donation, which must be documented in the Deed of Donation.
3. Tax Implications: Donations are subject to donor’s tax, which varies depending on the value of the property and the relationship between the donor and the donee. Close relatives may enjoy lower tax rates, while donations to non-relatives can attract higher taxes.
4. Irrevocability: Once the donation is completed and accepted, it is generally irrevocable, except under certain conditions such as ingratitude or non-fulfillment of conditions if stipulated in the deed.

Extrajudicial Settlement

An Extrajudicial Settlement, on the other hand, is used primarily for the distribution of the estate of a deceased person among their heirs. This method is appropriate only when the decedent did not leave a will, and the heirs are in agreement regarding the distribution of the estate.

Key Considerations for an Extrajudicial Settlement:

1. Agreement Among Heirs: All legal heirs must be in agreement regarding the division of the property. If even one heir disagrees, the settlement cannot proceed extrajudicially and must be resolved in court.
2. Publication Requirement: A notice of the settlement must be published in a newspaper of general circulation once a week for three consecutive weeks. This is to notify potential claimants and creditors of the estate.
3. Tax and Fees: The settlement is subject to estate tax, which must be paid before the property can be transferred to the heirs. Other fees, such as documentary stamp tax and transfer fees, may also apply.
4. Affidavit of Self-Adjudication: If the decedent has only one legal heir, the heir can execute an Affidavit of Self-Adjudication, allowing for a more straightforward transfer process.

Which is Appropriate?

• Deed of Donation: This is suitable if your tita is still alive and wishes to transfer her property to you as a gift.
• Extrajudicial Settlement: This applies if your tita has passed away, and you, along with other heirs (if any), wish to distribute her estate.

If your tita is alive and intends to gift the property to you, a Deed of Donation would be the correct legal instrument. If she has passed away, and there are multiple heirs involved, an Extrajudicial Settlement is the appropriate process to transfer the property.

Always consult with a legal professional to ensure the proper legal procedures are followed based on your specific circumstances.