ANTECEDENTES Y PLANTEAMIENTO DEL PROBLEMA

1. It must comply with the formalities of donation.

- If the amount of personal property is P5,000 or less, the donation may be made orally.

- If the amount of personal property is more than P5,000 the acceptance shall be in writing.

- Donation of real property must be made in a public instrument irrespective of the amount

2. Acceptance by the donee of the donation.

- Acceptance must be made during the lifetime of the donor.

- If the amount of personal property is P5,000 or less, acceptance may be made orally.

- If the amount of personal property is more than P5,000, the acceptance shall be in writing.

- In the case of donation of real property, acceptance must be made in the same deed of donation or in a separate public instrument.

3. Capacity of the donor and the donee:

a. Those made between persons who were guilty of adultery or concubinage at the time of the donation.

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

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

Incapacitated donees are: [P, R-P, G, D, NPL]

a. The priest who heard the confession of the donor during his illness, or the minister of the gospel who extended spiritual aid to him during the same period.

b. The relatives of such priest or minister of the gospel within the 4th _{degree, the}

church, order, chapter, community, organization or institution to which such priest or minister belongs.

c. A guardian with respect to donation made by a ward in his favor before the final accounts of the guardianship have been approved, even if donor should die after the approval thereof; nevertheless, any donation made by ward in favor of the guardian when the latter is his ascendant, brother and sister, or spouse, shall be valid.

d. Any physician, surgeon, nurse, health officers or druggist who took care of the donor during his last illness.

e. Individuals, association & corporations not permitted by the law to receive donations.

*The following are also incapable of receiving donations by reason of unworthiness:

[P (AC, ID, AV), C-AL, A-6 yrs., H-KVD, A or C, F-D, F]

a. Parents who have abandoned their children or induced their daughters to lead a corrupt or immoral life, or attempted against their virtue.

b. Any person who has been convicted of an attempt against the life of the donor, his or her spouse, descendants or ascendants.

c. Any person who has accused the donor of a crime for which the law prescribes imprisonment for 6 years or more, if the accusation has been found groundless. d. Any heir full of age who, having knowledge of the violent death of the donor,

should fail to report it to an officer of the law within a month unless the authorities have already taken action, this prohibition shall not apply to cases wherein, according to law, there is no obligation to make an accusation.

e. Any person convicted of adultery or concubinage with the spouse of the donor. f. Any person who by fraud, violation, intimidation, or undue influence should

cause the donor to make a donation or to change one already made.

g. Any person who by the same means prevents another from making a donation, or from revoking one already made, or who supplants, conceals, or alters the latter’s donation.

h. Any person who falsifies or forges a supposed donation of the decedent.

Under Art. 87 of the F.C., husband and wife are prohibited from making donation to each other.

4. Intention to donate the property of the donee (or DONATIVE INTENT).

Exception: Transfer of insufficient consideration in the case of a contract of sale.

Example:

If the FMV of the property is P100,000 and P50,000 was the consideration given. The difference of P50,000 is considered a donation.

* The amount received by a disinherited heir is subject to donor’s tax because he has no right to such property and the same was gratuitously given, so there is no donative intent.

Note: If there is no valid donation, the recipient is subject to income tax because of the provision “from whatever source derived.”

Classification of donor subject to donor’s tax:

1. Resident donor (RD) - this includes citizen of the Phils. or a resident alien. 2. Non-resident alien (NRD) – he must be a non-resident alien.

RD – Real properties, personal tangible properties, and personal intangible properties

of resident donor are subject to donor’s tax wherever situated.

NRD – Real properties and personal tangible properties of a non-resident donor are

subject to donor’s tax only if they are located in the Phils… Personal intangible properties of NRD are subject to donor’s tax only if they acquire tax situs in the Phils…

Personal Intangible properties that are deemed situated or acquire situs in the Phils. are: GROSS GIFTS [F, SOB (DC, FC-85%, FC-SP), SR, P]

1. Franchise which is exercised in the Phils.

2. Shares of stock, obligation or bonds issued by domestic corp. or sociedad anonima.

3. Shares of stock, obligations or bonds issued by foreign corporation, 85% of the business of which is conducted in the Phils.

4. Shares, obligations, bonds issued by a foreign corp. which acquires business situs in the Phils.

Such shares, obligations or bonds acquires business situs in the Phils. if they are used by such foreign corp. in furtherance

5. Shares or rights in any partnership, business or industry established in the Phils. 6. Real, Intangible and Intangible Personal property or Mixed

Even if the personal intangible properties of the NRD acquired tax situs in the Phils. it may still be exempt from donor’s tax by applying the rule on reciprocity.

Rule on Reciprocity – If the foreign country of that NRD does not impose, or

allows exemption on the donor’s tax on the properties of citizens of the Phils. who died in that foreign country.

Sec. 104 is applicable to both estate tax and donor’s tax.