Donor’s Tax
unborn children may be accepted by
 Also called Gift tax
 Imposed on the gratuitous transfer of
real or personal, tangible or intangible
property
 Imposed whether the transfer is in trust
or otherwise
Purpose
1. To prevent avoidance of the estate tax
2. To compensate for the loss or decrease
of income taxes when large estates are
split
Requisites
1. Transfer is gratuitous or without
consideration. The transfer is made out
of pure generosity of the donor
(donative intent)
2. Both the donor and done are living at
the time of the transfer (inter vivos)
3. There must be a completed gift
Contract of donation
When perfected
- At the moment the donor knows of the
acceptance of the gift by the done (Art.
734, Civil Code)
Who can be donors?
- All persons who may contract and
dispose of theor property may make a
donation
Who can be donees?
- All those who are not specially
disqualified by law may accept
donations
- Minors and other who cannot enter in
to a contract may become donees, but
acceptance shall be done through their
parents or legal representatives (Art.
741)
- Donations made to conceived and
those persons who would legally
represents them if they were already
born. (Art. 742)
What donations shall be void
1. Between spouses, whether direct or
indirect, during the marriage, except
moderate gifts which the spouses may
give each other on the occasion of any
family rejoicing (Art. 87
Note: indirect donations to a spouse are void,
and include the following donations of a
spouse:
a. Stepchild
b. Common child
c. Parents of the other spouse
d. Others spouse adopted child when, at
the time of the donation the only
surviving relatives of the adopted, and
the surviving spouse of the adopted
e. Common adopted child who has no
other surviving heirs (Art. 190, Family
Code)
2. Between persons living together as
husband and wife without a valid
marriage (Art. 87, Family Code)
3. Between persons guilty of concubinage
or adultery at the time of donation
4. Between persons found guilty of the
same criminal offense, in consideration
thereof
5. Those made to a public officer or
his/her spouse, descendants and
ascendants, by reason of his or her
office.
6. Donation made by persons to those
who cannot inherit from them:
a. donations to the priest who heard
the confession of the donor during
his last illness, or the minister, who
 extended spiritual aid to him during
the same period
b. Donations to the relatives of such
priest or minister
c. Donations to the church, order,
chapter, community, organization,
or institution to which such priest or
minister in (a) belongs
d. Those who made a guardian with
respect to donations made by a
ward before the final accounts of
the guardianship have been
approved, except when the
guardian is the ward’s ascendants,
descendants, brother or sister.
e. Any physician, surgeon, nurse,
health officer, of druggist who took
care of the donor during his last
illness
Donation of Movable
1. Donations may be oral or in writing
a. If orally made, it requires the
simultaneous delivery of the
thing or the document
representing the right donated
b. If in writing it does not require
simultaneous delivery of the
thing donated
2. Acceptance may be oral, in writing, or
tacit
a. If value of the movable does
not exceed P5 000, the
donation may be oral or in
writing, and the acceptance
may be oral, in writing or tacit
b. If the value of the movable
exceeds P5 000, the donation
and the acceptance must be in
writing, otherwise the donation
is void. Without such writing,
the donation would be void,
even if there is simultaneous
delivery.
Donation of immovables
- Donation must be in writing and in a
public instrument (notarized)
- Acceptance may be made in the same
deed of donation or in a separate public
instrument. The acceptance must be
done during the lifetime of the donor,
and the latter must be notified of the
acceptance.
Other transactions subject to donor’s tax
1. Transfer for insufficient consideration
(Sec. 100, NIRC)
REQUISITES:
A. The property transferred is real or
personal property, except real property
classified as a capital asset referred to
in Section 24 (D) of the tax code
B. The transfer is for less than a full price
C. The transfer is inter vivos
Purpose:
- To prevent escape from the income tax
by accepting a lower price for the
property.
Tax Consequences:
Gift (subject to the Income (subject to
donor’s tax) the income tax)
FMV of the property Price (consideration)
transferred received
Less: Price Less: Cost
(consideration)
received
In transfer for the insufficient consideration in
the sale of domestic shares of stock:
FMV of share of stock, sold, bartered or
exchanged shall be as follows:
1. If the shares are listed, but are sold,
bartered, or exchanged outside the
local stock exchange, the FMV shall be:
a. The closing price on the day the
shares are sold, bartered or
exchanged; or
b. The closing price on the day nearest
to the date of sale, barter or
exchange if there is no slaes
transaction of the shares in the
local stock exchange on the day it
was sold, bartered or exchanged.
2. If the shares are not listed in the local
stock exchange, the FMV shall be
determined using the adjusted net asset
value method.