Donation Law Overview

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Questions and Answers

What is a donation defined as?

A sales transaction between two parties

A mandatory payment to the government

An act of liberality involving the transfer of property (correct)

A loan given by one person to another

Which of the following is NOT an essential requisite of donation?

Intention to donate

Acceptance by the donee

Written agreement (correct)

Capacity of the donor

What type of donation is made directly from the donor to the donee?

Trust donation

Direct donation (correct)

Contingent donation

Indirect donation

Which of the following is a requirement for a revocable indirect donation?

It must not be completed Signup and view all the answers

Which type of donor is taxable only on donations made in the Philippines?

Non-resident alien Signup and view all the answers

What document is generally required for the donation of real property?

Public instrument Signup and view all the answers

Which of the following types of personal property does NOT require a public instrument if the amount exceeds 5,000?

Intangible personal property Signup and view all the answers

Which of the following best describes taxable donations for resident citizens?

Taxable on global donations, regardless of location Signup and view all the answers

What type of tax is a donor's tax considered?

Revenue or fiscal tax Signup and view all the answers

Which of the following is NOT considered exempt under the donor's tax?

Donations to private individuals Signup and view all the answers

What is one of the rationales for imposing a donor's tax?

To control tax evasion of estate tax Signup and view all the answers

Which of the following organizations is a recognized exempt donee under special laws?

Development Academy of the Philippines Signup and view all the answers

Which of the following types of tax is NOT classified under donor's tax?

Income tax Signup and view all the answers

What is the exemption status of donations involving real property classified as capital assets?

They are never exempt Signup and view all the answers

Why might a donor reserve powers in a donation?

To maintain control over the property after donation Signup and view all the answers

Which of the following is a feature of donations subject to donor's tax?

They involve transfers without regard to property type Signup and view all the answers

What must donations for election campaigns be reported to for exemption from donor’s tax?

Commission on Elections Signup and view all the answers

What is the status of transfers involving real property classified as capital assets regarding donor’s tax?

Exempt from donor’s tax Signup and view all the answers

What type of renunciation occurs when an heir renounces their share in an estate in favor of no particular coheir?

General Renunciation Signup and view all the answers

What type of donation involves the transfer of ownership depending on a future event?

Reserved Donation Signup and view all the answers

Which situation causes a general renunciation of inheritance to be considered taxable?

Renunciation by a surviving spouse Signup and view all the answers

If a donation is made to a political party during elections, what principle does this support?

Political freedom Signup and view all the answers

What is the tax implication for the difference between fair value and selling price for properties not classified as capital assets?

Subject to donor’s tax Signup and view all the answers

What distinguishes a specific renunciation from a general renunciation?

General renunciation cannot favor particular coheirs Signup and view all the answers

What is a requirement for a donation to be exempt to an accredited non-profit institution?

Not more than 30% of the gift can be used for administrative purposes. Signup and view all the answers

Which type of donation is NOT subject to donor's tax?

Void donations Signup and view all the answers

Which agency accredits charitable and social welfare organizations?

Department of Social Welfare and Development Signup and view all the answers

Donations of property situated in a foreign country by non-resident alien donors are subject to what tax?

None, they are exempt from donor's tax Signup and view all the answers

Which of the following is NOT a criterion for a donation to be exempt to an accredited non-profit institution?

The donee entity's board of trustees earns compensation. Signup and view all the answers

Which type of gifts are exempt from donor's tax when made to national government entities?

Gifts for public use by government entities Signup and view all the answers

What does 'quasi-transfers' refer to in the context of gifts?

Transfers of property that will never result in ownership transfer. Signup and view all the answers

For a donation to be exempt, which of the following must be true regarding the use of the gift by the donee entity?

Not more than 30% can be used for administrative purposes. Signup and view all the answers

Study Notes

Donation

Defined as a gratuitous transfer of property from a living donor to a donee.
Requires the donor's capacity, intent to donate, a donative act or delivery, and acceptance by the donee.
Formal requirements depend on the property type and value. Real property requires a public instrument; tangible personal property exceeding ₱5,000 needs a written instrument; while those below ₱5,000 can be oral. Intangible personal property requires a public instrument.

Types of Donations

Direct Donation: The donor gives directly to the donee.
Indirect Donation: Property transferred through a trust. Irrevocable indirect donations are taxable, while revocable ones are not.

Types of Donors and Taxability

Resident Citizens/Aliens: Taxable on global donations.
Non-Resident Aliens: Taxable on Philippine donations, except intangible personal property (subject to reciprocity).

Taxable Donations Summary

Donor Type	Real Property	Tangible Personal Property	Intangible Personal Property
Resident/Citizen (Within/Abroad)	Yes	Yes	Yes
Non-Resident Alien (No Reciprocity) - Within	Yes	Yes	Yes
Non-Resident Alien (No Reciprocity) - Abroad	No	No	No
Non-Resident Alien (Reciprocity) - Within	Yes	Yes	No
Non-Resident Alien (Reciprocity) - Abroad	No	No	No

Donor's Tax

A tax on gratuitous property transfers between living persons.
Nature: Privilege, proportional, annual, ad valorem, national, and revenue tax.
Rationale: Controls tax evasion of estate and income taxes; recoups future income tax revenue loss.

Exempt Gifts

Donations to specific exempt donees (listed below).
Donations for election campaigns (must be reported to the Commission on Elections).
Transfers for insufficient consideration involving real property classified as capital assets (already subject to capital gains tax).
General renunciation of inheritance (under specific conditions).
Donations with reserved powers (conditional or revocable).
Donations to the government for public use.
Donations to accredited non-profit institutions (meeting specific requirements: less than 30% for administration, non-stock, no dividends, unpaid trustees, income devoted to stated purposes).
Quasi-transfers (no ownership transfer).
Void donations.
Foreign donations by non-resident alien donors.
Donations of property exempt under reciprocity.

Exempt Donees (Partial List)

Aquaculture Department of SEAFDEC
Aurora Pacific Economic Zone and Freeport Authority
Development Academy of the Philippines
Girl Scouts of the Philippines
Integrated Bar of the Philippines
International Rice Research Institute
National Commission for Culture and the Arts
National Social Action Council
National Water Quality Management Fund
People’s Television Network, Inc.
People’s Survival Fund
Philippine-American Cultural Foundation
Philippine Normal University
Philippine Investor Commission
Philippine Red Cross
Ramon Magsaysay Award Foundation
Rural Farm School
Task Force on Human Settlements
Tubbataha Reefs Natural Park
University of the Philippines

Accrediting Agencies for Non-Profit Donations

Department of Social Welfare and Development (charitable and social welfare)
Department of Science and Technology (research and scientific activities)
Philippine Sports Commission (sports development)
National Council for Culture and the Arts (cultural activities)
Commission on Higher Education (educational activities)

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Description

Explore the intricacies of donation law, including the definition of a donation, types of donations, and the tax implications associated with different donor types. This quiz will help you understand the requirements for making a valid donation and the associated legalities.