Donation

(Arts. 743-773)

Art. 743

Donations made to incapacitated persons shall be void, though simulated under the guise of another contract or through a person who is interposed.

Incapacitated Persons: The term incapacitated persons does not refer to minors or insane, or other merely suffering from restrictions in their capacity to act. Rather, it refers to persons expressly declared incapacitated to receive donations like those mentioned in Art. 739 and Art. 87 of the Family Code, the following are to wit:

(Art. 739, NCC Void Donations)

1. Those made between persons who are guilty of adultery or concubinage at the time of the donation;

2. Those made between persons found guilty of the same criminal offense in consideration thereof; and

3. Those made to a public officer or his wife, descendants ad ascendants, by reason of his office.

(Art. 87, FC Donations between: )

1. Husband and wife; and

2. Common law husband and wife.

Art. 744

Donations of the same thing to two or more different donees shall be governed by the provisions concerning the sale of the same thing to two or more different persons. (Double Donations)

Governing Law: These are governed by the provisions on double sale (Art.1544).

Art. 1544 If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the registry of property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

Art. 745

The donee must accept the donation personally, or through an authorized person with a special power for the purpose or with a general or sufficient power; otherwise, the donation shall be void.

Rationale: Acceptance is needed because the donee may not want to accept the donors liberality or if a donation is onerous, he may not agree with the burden imposed. Also, donation is perfected once the acceptance of the donation was made known to the donor. Accordingly, ownership will only revert to the donor if the resolutory condition is not fulfilled.

Applicability: The Article only applies to donations inter vivos, because mortis causa donations are effective only after the death of the testator.

Effect of Lack of Acceptance / Agent Without Sufficient Authority: If there is no acceptance, the donation is void. If the authority of the agent is not sufficient, such as when a special power of attorney is not notarized, the acceptance of a donation of immovable property shall be void. (Art.749)

Art. 746

Acceptance must be made during the lifetime of the donor and of the done.

Rationale: Donation is not perfected unless it has been accepted. The present Article provides that the present acceptance must be done during the lifetime of the donor and donee because it is personal between them. Otherwise, if there is no acceptance, the donation is void.

Art. 474

Persons who accepts donations in representation of others who may not do so by themselves, shall be obliged to make the notification and notation of which Art. 749 speaks.

Duty of Representatives: The representatives are required to notify the donor of the acceptance made in an authentic form which shall be noted in the deed of donation and in the deed of acceptance. Otherwise, the donation shall not be effective for not having been perfected.

Art. 748

The donation of a movable may be made orally or in writing.

An oral donation requires the simultaneous delivery of the thing or of the document representing the right donated.

If the value of the personal property donated exceeds five thousand pesos, the donation and the acceptance shall be made in writing. Otherwise, the donation shall be void.

Applicability: The present Article applies to donations of movable property. The formalities herein required are mandatory, non-compliance shall render the donations null and void.

Formalities Required:

Property P5,000 or less there must be simultaneous delivery of the thing or the document representing the right donated to the donee. The donation may be oral or written.

Acceptance: In oral donation, the delivery to the done is the equivalent of acceptance.

Property more than P5,000 The donation must be effected in writing, although it need not be in a public instrument. The donation shall be void, even if there is simultaneous delivery of the thing, as long as it was not done in writing.

Acceptance: Both the donation and the acceptance should be in writing. Or else, the donation shall be void. If the donation was made in writing but the acceptance was not made in the same form, the donation is void.

Art. 749

In order that the donation of the immovable may be valid, it must be made in a public document, specifying therein the property donated and the value of the charges which the donee must satisfy.

The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor.

If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments.

Applicability: Applies only to donations of immovable property. The herein formalities are mandatory and non-compliance shall render the donations null and void.

Formalities:

1. In a public instrument;

2. It must be notarized; and

3. The instrument must specify or describe clearly the property being donated and the value of the charges which must be satisfied by the donee, if any.

Exception: In cases of donations which are onerous, they need not be in public instruments because they are governed by the rules of contracts.

Acceptance:

1. Acceptance is done during the lifetime of the donor;

2. Acceptance may be made in the same instrument or deed of donation or in a separate instrument;

a. Donor must be notified of the acceptance in an authentic form; and

b. Such notification must be noted in the deed of donation as well as in the deed of acceptance.

3. If the deed of donation has to be recorded with the Registry of Property, the instrument of acceptance must also be recorded.

Effects:

1. Oral Donation of immovable property is void.

2. If there was no description of the real properties being donated, the donation is ineffective.

3. If registered land was donated but the deed was not recorded, third persons are not bound thereby.

4. The donation shall be valid if there is substantial compliance with the requirements of Art. 749.

5. The acts of respecting the terms of the donation and expressing gratitude for the donors benevolence constitute sufficient acceptance of the donation when embodied in a public instrument.

6. No valid acceptance shall render the supposed donation void.

Ratification by Heirs of the Donor: If the donor died before the acceptance had reached him, the donation is not perfected. It does not obligate the donors heirs to deliver the thing supposedly donated. However, if the heirs of the donor ratified the donation and the done accepted, the donation subsists, although, in reality, it is a new and valid one.

Although the ratification is binding upon the heirs who ratified the donation, the ratification cannot have any retroactive effect to the prejudice of the creditors of the deceased donor.

Effect of Donations and Limitations thereon

Art. 750

The donation may comprehend all the present property of the donor, or part thereof, provided he reserves, in full ownership or in usufruct, sufficient means for the support of himself, and of all relatives who, at the time of the acceptance of the donations, are by law entitled to be supported by the donor. Without such reservation, the donation shall be reduced on petition of any person affected.

Present Property: it refers to all the properties of the donor which he could dispose of at the time of the donation.

Applicability: The following are not covered by the instant provision:

1. Donations mortis causa because there can be no reservation since it only takes effect after the death of the decedent.

2. Donation propter nuptias because it is not reducible.

3. Onerous donations because they are governed by the rules on contract.

Rationale: the claims of the family of the donor should not be disregarded. The donor should reserve sufficient amount of property or assets for his own support and that of his dependents. Non-compliance shall not render the donation void but merely reducible to the extent that the support to himself and his relatives is impaired or prejudiced.

Donations in Fraud of Creditors: If the donor did not reserve enough assets to pay his creditors whom he owed before the donation, the donation is presumed to be in fraud of creditors. The creditors may rescind the donation to the extent of their credits by filing an accion pauliana.

Art. 751

Donations cannot comprehend future property.

By future property is understood anything which the donor cannot dispose of at the time of the donation.

Exception: Marriage Settlements of future spouses other than absolute community of property wherein they may donate not more than 1/5 of their present property. (Art. 84, FC)

Future inheritance: it is future property, but not all future property is future inheritance. Future inheritance like future property cannot be disposed of by donation.

Accrued Inheritance: even if not yet delivered may be alienated by the heir because hereditary rights are transmitted at the moment of the death of the decedent.

Excessive / Inofficious Donations

Art. 752

The provisions of Article 750 notwithstanding, no person may give or receive, by way of donation, more than he may give or receive by will.

The donation shall be inofficious in all that it may exceed this limitation.

Restrictive Acts

1. A donor may not donate more than what he can give by will.

Rationale: excessive donations impair the legitimes of the compulsory heirs.

2. A donee cannot receive by way of donation more than what he may receive by will.

Rationale: If the donee can receive by donation (devise or legacy) more than what the testator is allowed by law to give, the donation is inofficious and it may be suppressed totally or reduced as to its excess.

Art. 753

When a donation is made to several persons jointly, it is understood to be equal shares, and there shall be no right of accretion among them, unless the donor has otherwise provided.

The preceding paragraph shall not be applicable to donations made to the husband and wife jointly, between whom there shall be a right of accretion, if the contrary has not been provided by the donor.

Accretion: a right by virtue of which, when two or more persons are called to the same inheritance, devise or legacy, the part assigned to the one who renounces or cannot receive his share, or who died before the testator, is added or incorporated to that of his co-heirs, co-devises, or co-legatees. (Art. 1015)

No Accretion: in case of joint donees, they will share equally if the donation is perfected. By and among them, there shall be no accretion there shall be no accretion, unless the donor had expressly provided in the deed of donation that there would be accretion.

Exception: Spouses who are made joint donees has the right of accretion between them, unless the donor has provided expressly that there shall be no accretion.

Parallel Provision in the Family Code Article 113

Effect of Accretion: when accretion is proper, the share of the one who cannot receive the donation, will pertain to his co-donee/s. (Art. 1015)

Art. 754

The donee is subrogated to all the rights and actions which in case of eviction would pertain to the donor. The donee is subrogated to all the rights and actions which in case of eviction would pertain to the donor. The latter, on the other hand, is not obliged to warrant the things donated, save when the donation is onerous, in which case the donor shall be liable for eviction to the concurrence of the burden.

The donor shall also be liable for eviction or hidden defects in case of bad faith on his part.

Eviction: dispossession by process of law. Eviction takes place when the done is deprived of the whole or part of the property donated.

Subrogation: In case the done is evicted from the property donated to him, the said donee assumes all the rights and actions available to the donor.

Donor in Bad Faith: Effect: when the donor acted in bad faith and resulted to eviction of the done, the latter may sue both the source of the property and the donor for recovery of damages suffered. If there is deceit and damage, a criminal case may also be pursued.

Art. 755

The right to dispose of some of the things donated, or of some amount which shall be a charge thereon, may be reserved by the donor; but if he should die without having made use of this right, the property or amount reserved shall belong to the donee.

Reservation: The donor may make certain reservations in the deed of donation. He is allowed to reserve the right to dispose of some, not all, of the things donated.

Illustration: A donated a house and lot to B with a reservation that the furniture in the house may be alienated by A within 6 months.

Art. 756

The ownership of property may also be donated to one person and the usufruct to another or others, provided all the donees are living at the time of the donation.

Naked Ownership: nothing more than a full ownership over a property without its usufruct.

Usufruct: full ownership of a property without naked ownership, or the right to enjoy the property of another with the obligation to preserve its form and substance.

Full Ownership: the concurrence of naked ownership and usufruct over a property.

Split Donation: the donor may donate the naked ownership of a property to one person and the usufruct to another. The first donee being the owner and the second having only the right to enjoy the fruits and use of the property.

Condition: all donees must be living at the time of the donation, which is at the time the donor is notified of the acceptance. If the donees are no longer living at the time of the said notification, the donation shall not take effect.

Art. 757

Reversion may be validly established in favor of only the donor for any case and circumstances, but not in favor of other persons unless they are all living at the time of the donation.

Any reversion stipulated by the donor in favor of a third person in violation of what is provided in the preceding paragraph shall be void, but shall not nullify the donation.

Reversion: the property donated may be restored or returned to:

1. The donor or his estate; and

2. In favour of other persons who must be living at the time of the donation.

Illustration: A donated a property to B subject to the condition that after 5 years, the property donated shall revert to the donor.

Art. 758

When the donation imposes upon the donee the obligation to pay the debts of the donor, if the clause does not contain any declaration to the contrary, the former is understood to be liable to pay only the debts which appear to have been previously contracted. In no case shall the donee be responsible for the debts exceeding the value of the property donated, unless a contrary intention clearly appears.

Art. 759

There being no stipulation regarding the payment of debts, the donee shall be responsible therefor only when the donation has been made in fraud of creditors.

The donation is always presumed to be in fraud of creditors, when at the time thereof the donor did not reserve sufficient property to pay his debts prior to the donation.

Revocation and Reduction of Donations

Art. 760

Every donation inter vivos, made by a person having no children or descendants, legitimate or legitimated by subsequent marriage, or illegitimate, may be revoked or reduced as provided in the next article, by the happening of any of these events:

(1) If the donor, after the donation, should have legitimate or legitimated or illegitimate children, even though they be posthumous;

(2) If the child of the donor, whom the latter believed to be dead when he made the donation, should turn out to be living;

(3) If the donor subsequently adopt a minor child.

Art. 761

In the cases referred to in the preceding article, the donation shall be revoked or reduced insofar as it exceeds the portion that may be freely disposed of by will, taking into account the whole estate of the donor at the time of the birth, appearance or adoption of a child.

Applicability: applies only to donations inter vivos.

Disposable Free Portion: the remainder of the free portion after the legitimes has been exhausted.

Effect: the enumeration in Art. 760 do not automatically revoke or reduce the donation. If the donation happens to exceed the disposable free portion, it will be reduced up to the extent of the excess. If the donation is greater than the free portion, it will be revoked because there is nothing left to the free portion to cover it.

Art. 762

Upon the revocation or reduction of the donation by the birth, appearance or adoption of a child, the property affected shall be returned or its value if the donee has sold the same.

If the property is mortgaged, the donor may redeem the mortgage, by paying the amount guaranteed, with a right to recover the same from the donee.

When the property cannot be returned, it shall be estimated at what it was worth at the time of the donation.

Obligations of Donee upon Revocation / Reduction:

1. Return the thing or the object of the revocation;

2. The value of the property at the time of the perfection of the donation shall be paid to the donor when the property has already been alienated or cannot be recovered anymore; and

3. Reimburse the donor if the latter paid the mortgage obligations.

Art. 763

The action for revocation or reduction on the grounds set forth in article 760 shall prescribe after four years from the birth of the first child, or from his legitimation, recognition or adoption, or from the judicial declaration of filiation, or from the time information was received regarding the existence of the child believed dead.

This action cannot be renounced, and is transmitted, upon the death of the donor, to his legitimate and illegitimate children and descendants.

Prescriptive Period: the action must be filed within 4 years.

As to Birth of child counted from the birth of the child. If there are two or more children, from the birth of the first child. The right of action is not revived by the subsequent birth of another child.

As to legitimation counted from the date of the marriage of the parents.

As to recognition of an illegitimate child from the date of recognition of the child.

As to adoption from the date of the filing of the original petition for adoption.

As to appearance of a child believed to be dead from the date an information was received as to the existence or survival of the child believed to be dead.

Concurrence of Two or More Causes: the earliest among them shall be the starting point in the reckoning of the period of prescription of the action.

Transmissibility: if the donor dies within the four-year period, the right to revoke or reduce is inherited by his heirs.

Art. 764

The donation shall be revoked at the instance of the donor, when the donee fails to comply with any of the conditions which the former imposed upon the latter.

In this case, the property donated shall be returned to the donor, the alienations made by the donee and the mortgages imposed thereon by him being void, with the limitations established, with regard to third persons, by the Mortgage Law and the Land Registration Laws.

This action shall prescribe after four years from the noncompliance with the condition, may be transmitted to the heirs of the donor, and may be exercised against the donee's heirs.

Donations with Burdens and Charges: A donor may execute a donation subject to a condition, the non-fulfilment of which authorizes the donor to go to court and seek its revocation.

Conditions covered: All conditions including resolutory except for suspensive conditions.

Court Action: court action is necessary if the donee refuses to return the property, or pay its value to the donor or to the latters heirs or assigns. However, if the donee voluntarily surrenders the same, or its value, there is no need for a court action.

Art. 760

Art. 764

Applies to both revocation and reduction

Applies only to revocation

Grounds: birth of child, appearance of child believed to be dead, subsequent adoption of a minor

Ground: failure to comply with the condition or conditions imposed by the donor

Mortgages executed by the donee are valid

Alienation or mortgages by the donee are void, unless, the grantee is an innocent 3rd person

The right of action cannot be renounced

Right of action can be waived or renounced

Similarities of Art. 760 and 764

1. Revocation, donee shall return the property if it is still in his possession;

2. If not, must pay the value thereof; and

3. Right of action to revoke is transmissible.

Art. 765

The donation may also be revoked at the instance of the donor, by reason of ingratitude in the following cases:

(1) If the donee should commit some offense against the person, the honor or the property of the donor, or of his wife or children under his parental authority;

(2) If the donee imputes to the donor any criminal offense, or any act involving moral turpitude, even though he should prove it, unless the crime or the act has been committed against the donee himself, his wife or children under his authority;

(3) If he unduly refuses him support when the donee is legally or morally bound to give support to the donor.

Coverage: Exceptions to revocation by reason of on gratitude of the donee:

1. Mortis causa donations;

2. Onerous donations;

Acts of Ingratitude as Grounds for Revocation:

1. Commission of an offense;

2. Imputation of a criminal offense, or act involving moral turpitude;

3. Unjustified refusal to provide support to the donor

Art. 766

Although the donation is revoked on account of ingratitude, nevertheless, the alienations and mortgages effected before the notation of the complaint for revocation in the Registry of Property shall subsist.Later ones shall be void.

Art. 767

In the case referred to in the first paragraph of the preceding article, the donor shall have a right to demand from the donee the value of property alienated which he cannot recover from third persons, or the sum for which the same has been mortgaged.

The value of said property shall be fixed as of the time of the donation.

Alienations and Mortgages Effected Before the Notation of Complaint if the donation was judicially revoked, alienations and mortgages executed by the donee before the registration with the Registry of Deeds lis pendens will be valid. However, later alienations and mortgages shall be void.

Remedy of Donor: If the property is already transferred, the remedy is to recover the value of the property determined as of the time of the donation.

Art. 768

When the donation is revoked for any of the causes stated in Article 760, or by reason of ingratitude, or when it is reduced because it is inofficious, the donee shall not return the fruits except from the filing of the complaint.

If the revocation is based upon noncompliance with any of the conditions imposed in the donation, the donee shall return not only the property but also the fruits thereof which he may have received after having failed to fulfill the condition.

Things to Return After Revocation

1. Both property and fruits if due to non-compliance of the condition. The fruits referred to are those acquired after the failure to comply;

2. Only the fruits accruing from the filing of the action shall be returned if the ground for revocation is any of the following:

a. Causes stated in Art. 670;

b. Ingratitude (Art. 765); and

c. Inofficiousness of donation (Art. 711).

Rule on Money or Cash Donation the same rule will be followed, except that the fruits will be legal interest at the rate of 6% of the amount donated. Both the amount and interest shall be paid back to the donor in case of non-compliance with the condition.

Art. 769

The action granted to the donor by reason of ingratitude cannot be renounced in advance. This action prescribes within one year, to be counted from the time the donor had knowledge of the fact and it was possible for him to bring the action.

Note: The advance renunciation of action to revoke donation on ground of ingratitude is void. However, if the act of ingratitude has already been done, the right to revoke may now be renounced. What cannot be waived refers to future acts of ingratitude.

Art. 770

This action shall not be transmitted to the heirs of the donor, if the latter did not institute the same, although he could have done so, and even if he should die before the expiration of one year.

Neither can this action be brought against the heir of the donee, unless upon the latter's death the complaint has been filed.

Transmissibility: the right to file action cannot be transmitted to the heirs if the donor if the donor did not file the action against the done. This is because the act of ingratitude of the donee is personal to the donor.

Art. 771

Donations which in accordance with the provisions of Article 752, are inofficious, bearing in mind the estimated net value of the donor's property at the time of his death, shall be reduced with regard to the excess; but this reduction shall not prevent the donations from taking effect during the life of the donor, nor shall it bar the donee from appropriating the fruits.

For the reduction of donations the provisions of this Chapter and of Articles 911 and 912 of this Code shall govern.

Net Estate: the remainder of the assets after all the obligations of the donor had been settled plusthe value of the donations made which must be collated, unless otherwise provided in the will.

Inofficious Donation: a donation where the amount impairs the legitime of the compulsory heirs.

Determination of Inofficiousness: the inofficiousness of a donation can only be determined after the donors death. Consequently, the done is entitled to the fruits of the property donated during the lifetime of the donor.

Reduction of Donations

Art. 911

After the legitime has been determined in accordance with the three preceding articles, the reduction shall be made as follows:

(1) Donations shall be respected as long as the legitime can be covered, reducing or annulling, if necessary, the devises or legacies made in the will;

(2) The reduction of the devises or legacies shall be pro rata, without any distinction whatever.

If the testator has directed that a certain devise or legacy be paid in preference to others, it shall not suffer any reduction until the latter have been applied in full to the payment of the legitime.

(3) If the devise or legacy consists of a usufruct or life annuity, whose value may be considered greater than that of the disposable portion, the compulsory heirs may choose between complying with the testamentary provision and delivering to the devisee or legatee the part of the inheritance of which the testator could freely dispose.

Art. 912.

If the devise subject to reduction should consist of real property, which cannot be conveniently divided, it shall go to the devisee if the reduction does not absorb one-half of its value; and in a contrary case, to the compulsory heirs; but the former and the latter shall reimburse each other in cash for what respectively belongs to them.

The devisee who is entitled to a legitime may retain the entire property, provided its value does not exceed that of the disposable portion and of the share pertaining to him as legitime.

Art. 772

Only those who at the time of the donor's death have a right to the legitime and their heirs and successors in interest may ask for the reduction or inofficious donations.

Those referred to in the preceding paragraph cannot renounce their right during the lifetime of the donor, either by express declaration, or by consenting to the donation.

The donees, devisees and legatees, who are not entitled to the legitime and the creditors of the deceased can neither ask for the reduction nor avail themselves thereof.

Remedies of creditors: during the lifetime of the donor, the creditors can sue for the annulment of inofficious donations made in fraud of creditors (Art. 1387). Or they can go against the estate of the deceased and not against the donees.

Art. 773

If, there being two or more donations, the disposable portion is not sufficient to cover all of them, those of the more recent date shall be suppressed or reduced with regard to the excess.

Insufficiency of Disposable Free Portion: the later donations must be dropped first.

Exception: Wedding gifts. (Art. 1070)

Art. 1070. Wedding gifts by parents and ascendants consisting of jewelry, clothing, and outfit, shall not be reduced as inofficious except insofar as they may exceed one-tenth of the sum which is disposable by will.

Grounds for Suppression of Donations:

1. Totally inofficious of excessive donations;

2. Failure to comply with conditions;

3. Ingratitude of donee; and

4. Donation is in fraud of creditors

Grounds for Reduction of Donations:

1. Donor did not leave sufficient property for his own support and that of his family;

2. Birth of donors child after donation;

3. Child of the donor who was believed to be dead turns out to be alive;

4. Adoption of a minor child;

5. Inofficiousness of the donation; and

6. Donation was made in fraud of creditors.

Prescriptive Period: An action to annul a donation prescribes in 4 years from date of the discovery of the fraud.

Referrences:

1. Property by Pineda, 1999 ed.

2. UST Golden Notes

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Civil Law Review 1

Donation (Arts. 743-773)

Iola Vianka M. Pion