Good day, Ma’am Marissa Babilonia.

I am Vinabie Puno and I will be presenting to you my

teaching demonstration as part of the requirement in our course, principles & METHODS OF
TEACHING ACCTNG.
Now, allow me to start my presentation.
Good morning, guys! Let us start our discussion with a prayer. In the name of the father and of
the son and of the holy spirit amen. Glory be to the Father, and to the Son, and to the Holy
Spirit. As it was in the beginning, is now, and ever shall be, world without end. Amen.
Good morning, class. Thank you for being here today. Today will be a fruitful discussion as well
continue our discussion on donor’s tax. But before anything else, let us talk about donation.
When we talk of donation, we commonly think of it a gift, but there is more to this concept.
Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in
favor of another who accepts it. In a donation, there should be an agreement between two
parties, the donor and the done, and this agreement is essential like in any other contract. Now
donation inter vivos is one of the two kinds of donations, alongside with donation mortis causa
which we have already discussed last time. So let us recall the difference between these two.
Donation mortis causa is a kind of donation that takes effect after the death of the donor,
whereas donation inter vivos is the one that will take effect during the lifetime of the donor and
the done. Today’s discussion will be focusing more on the latter, which donation inter vivos.
By the end of this class, everyone is expected to know and have a grasp of the concept of
donation inter vivos by understanding its essential requisites, Donated movable & IMMOVABLE
property, Donation for election campaign, Exemptions from donor's tax, and the computation of Donor's
tax.

Now, the essential requisites of donation intervivos includes: Capacity of the donor, Donative intent,
Delivery of the donated property, and Acceptance by the donee. These requisites are important, these
four are equally important because in the absence of any of these requisites there will be no point at all
since the absence of one will result to an invalid donation. A valid donation requires that all of these
requisites are presnt. Let us learn more about these requisites by discussing it one by one. Let’s start
with the capacity of the donor.

According to Art. 737 of the Civil Code “The donor's capacity shall be determined as of the time of the
making of the donation.”

When we talk of the donor’s capacity, we are generally referring to the capability of the person
to enter or to sign a contract. Remember that the deed of donation is one example of a contract. Our
law requires an age requirement for a person to validly sign a contract, the person should be at least 18
years of age. At the time the deed of donation is signed, it should be at the time when the donor is
atleast 18 years old already. For example, a minor who is only 5-10 years old clearly does not have the
capacity to validly enter a contract. Meaning, minor is not allowed to enter a contract.

Next requisite is the donative intent

 In other words, this is the intention to donate. In the case of ACRA vs CIR, the supreme court
emphasized that donative intent is a creature of the mind. Meaning, it is the conscious desire to make a
gift or donation. It is intuitive. donative intent is presumed present when one gives a part of ones
patrimony to another without consideration. If somebody gives property without asking for anything in
return, in whatever form, like a money, there is donative intent or there is a clear intention to donate.
It’s that simple. In the same case, Supreme Court added that donative intent is not negated by the
presence of other intentions, motives or purposes. In other words, even if there is hidden intention as
long as at the time the property is given and the donor did not ask for any payment then donative intent
is present.

The other requisite is the delivery of the donated property. Remember that donation is an example of
real contract, and a real contract requires delivery of the property. It could either be actual or
constructive delivery. If a person donates a property to another person, the intention is to let the donee
or the receiver to enjoy the property, so how can the donee make the most out of the property donated
and enjoy the most of it if the property donated is not delivered. Think of it, the donation will not make
any sense if the receiving end does not have the donation, di ba? This is why delivery is important
because its absence will make the donation invalid.

Last in the list of the requisites isr the acceptance by the donee. In obligation and contract, it is stated
that no one is forced to accept liberality from other person. So if somebody wants to donate something
to you, and you do not want to accept such donation then that donor could never forced you to accept
that donation even if he or she resort to file a case against you. Remember that no one can force
anybody to receive a donation.

This is why Article 745, Civil Code prescribes that  “The donee must accept the donation personally, or
through an authorized person with a special power for the purpose, or with a general and sufficient
power; otherwise, the donation shall be void.” If acceptance does not happened in the process, then the
donation is void.

Now a donation maybe in the form of a movable property. Technically, this donation may involve
personal property. Under [Article 748, Civil Code], “The donation of a movable may be made orally or in
writing.

Provided, remember that there are requisites in these options. So, provided that for an oral donation
there is a simultaneous delivery of the thing or of the document representing the right donated. For
example, you want to give your uhm favorite shoes to your bestfriend, so at the time you verbally
expressed your intention you have to give that property simultaneously. Otherwise, there is no donation

Now a donation of a movable property that is signified in writing are those property that have a value
exceeding 5 thousand pesos. So if the value of the property exceeds 5 thousand pesos then the donation
and its acceptance shall be made in writing. Otherwise, donation shall be void. This written document
could be used as evidence to the donation that existed.

Now a donation may also be in the form an immovable property or real property. donation of an
immovable may be valid if it is made in a public document, specifying therein the property donated and
the value of the charges which the donee must satisfy. In order to make a private instrument into a
public one, have it notarized. Again, in the public document proving the donation, there should be an
information about the property donated and the charges that the recipient must satisfy. This is
according to [Article 749, Civil Code]. Acceptance must be indicated in the same deed of donation or it
could be in a separate document. But if the acceptance is made in a separate document, the donor must
be notified, and it shall be noted in both instruments, the first deed of donation and the instrument of
acceptance.

Now let us go to Donation for Election Campaign. Now there are lot of laws that expressly exempts
certain donations from being taxed. One example of which is the Omnibus Election Code, [Sec. 13, R.A.
7166]. And it states that any contribution in cash or in kind to any candidate or political party or
coalition of parties for campaign purposes, duly reported to the Commission shall not be subject to the
payment of any gift tax.

Apart from this, there are also other form of donations that are exempted from donor’s tax.

Donation for public use. This donation could only be non-taxable if the requisites shown on the screen
are fulfilled and present. Remember that Donation to GOCC or Government Owned and Controlled
Corporation is dubject to donor’s tax. Even if it is created by the government it is can still be taxed
because it is profit-oriented

Now if it is a donation in favor of an educational and/or charitable, religious, cultural or social welfare
corporation, institution, accredited nongovernment organization, trust or philanthropic organization
or research institution or organization, it will also be non-taxable. However, the following requisites
must be present as well. First requisite is that not more than thirty percent (30%) of said gifts shall be
used for administration purposes. Example of administrative purposes includes wages for people
working in an office. It must be incorporated as non-stock entity. Must no be paying dividends. Must
be governed by trustees who receiove no compensation. And devote all its income to the
accomplishment and promotion of the purposes enumerated in its Articles of Incorporation.

There are other Tax exempts donations including Those which are exempt by express provision of law;

2. Sale of capital asset for insufficient consideration;

3. General renunciation of share in inheritance;

4. Revocable donation;

7. Void transfer;

8. Quasi-transfer;

9. Those which are covered by reciprocity rule.

Now, in computing donor’s tax due we will follow the rate provided in the TRAIN law which is
6%, the same with estate tax. But the tax base will be different from that of estate tax because
it will be total net gifts in excess of 250,000 pesos. This deduction of 250,000 pesos is
automatic.
If you’ll look closely on the BIR Form no. 1800 or the Donor’s Tax Return Form, if you will find
on the page two item 37 the deduction or the exempt gift of 250,000. So every year, the donor
is allowed to deduct 250,000 on his or her donation, that is why if somebody will ask for an
advice for a donation of 500,000. We can advise them to divide that amount into two and
donate the first 250,000 in the current year and then donate the remaining 250,000 on the
succeeding year. This is a way to avoid tax, or what we call as tax avoidance, and this is
completely lawful and legal.
To conlude today’s lesson, let us remember that The donor’s tax shall not apply unless and until
there is a completed gift. Ito yung diniscuss kanina.
The transfer of property by gift is perfected from the moment the donor knows of the
acceptance by the donee; This important because it is an indication that the donation
happened during the lifetime of the donor, hence it is a donation inter vivos. Kasi obviously,
hindi mo na ppwedeng ipaalam yung acceptance nung donation kapag patay na yung donor, if
the donor is dead before the acceptance then it will be a donation mortis causa.
And lastly, It is completed by the delivery.
And the same with estate taxation, “The law in force at the time of the completion of the
donation shall govern the imposition of donor’s tax.” And note that The reasons for imposing
donor’s taxation is to recoup the possible loss of tax revenue and to prevent estate or income
evasion.
(See RR 12-2018)
That’s it. That concludes my discussion about Donation Inter Vivos. Thank you for your time.
Thank you for listening. Have a good day, everyone!