Why a Donation Taking Effect Upon Death is Invalid

Why a Donation Taking Effect Upon Death is Invalid Under Philippine Law

In the Philippines, a donation is a voluntary act where one party, the donor, gives property or rights to another party, the donee, without expecting anything in return. While the concept seems straightforward, the law imposes strict rules to ensure the donation’s validity. One key rule is that a donation that takes effect only upon the donor’s death is not valid as a donation. Let’s explore why this principle exists and its implications under Philippine law.

Understanding Donations Under Philippine Law

Donations in the Philippines are governed primarily by the Civil Code of the Philippines (Articles 725-773). For a donation to be valid, the following elements must generally be present:

1. Donative Intent: The donor must voluntarily and intentionally transfer ownership to the donee.

2. Acceptance: The donee must accept the donation either personally or through a representative.

3. Delivery: There must be delivery of the property, particularly for movable items, or execution of a public document for immovable property.

A donation becomes effective during the donor’s lifetime and is considered a living transfer of ownership. The donor must relinquish control and ownership immediately or upon a specific condition.

Donations Upon Death Are Treated as Wills

If a donation is intended to take effect only upon the donor’s death, it is no longer a donation but instead resembles a testamentary disposition, which is governed by the rules on wills and succession.

The Civil Code explicitly states that for a donation to be valid, the donor must deliver ownership while still alive. Article 728 of the Civil Code provides:

"Donations which are to take effect inter vivos shall be governed by the rules established in the preceding Chapter. Those which are to take effect mortis causa shall be governed by the rules established in the Title on Succession."

In simpler terms, donations that are intended to take effect mortis causa (upon death) are not donations but are considered part of the donor’s last will and testament. For such dispositions to be valid, they must comply with the formalities required for a valid will under Philippine law, such as being executed in writing, signed by the testator, and witnessed by at least three competent witnesses.

Rationale Behind the Rule

The distinction between donations inter vivos (effective during the donor’s lifetime) and donations mortis causa exists to safeguard the integrity of property transfers. The following are some key reasons for this legal requirement:

1. Preventing Fraud or Coercion: By requiring strict formalities for testamentary dispositions, the law ensures that a donor’s final wishes are genuine and not the result of undue influence or fraud.

2. Preserving the Donor’s Rights: Until the donor’s death, they retain full ownership and control over their property. Allowing ownership transfers only through wills ensures the donor has ample time to modify or revoke their decision.

3. Protecting Legal Heirs: Testamentary dispositions are subject to the rules on legitimes, which guarantee the rights of compulsory heirs (e.g., children, spouse, and parents) to receive a portion of the estate. Donations made mortis causa must adhere to these rules to avoid depriving heirs of their rightful inheritance.

What Happens if a Donation Upon Death is Executed Without a Will?

If a donor attempts to execute a donation that takes effect upon their death without adhering to the formalities of a will, the donation is considered void. The property subject to the invalid donation becomes part of the donor’s estate and will be distributed according to the rules of intestate or testamentary succession.

Practical Implications

For individuals planning to transfer property or assets to loved ones, understanding this legal distinction is crucial. Here are some practical tips:

• Use a Deed of Donation: If you want to transfer ownership while you’re alive, execute a valid deed of donation with the required formalities.

• Draft a Will: For property transfers intended to take effect upon death, consult a lawyer to draft a legally compliant will.

• Consider Estate Planning: Explore other tools like trusts or insurance policies to streamline the transfer of assets to beneficiaries.

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Conclusion

The principle that donations taking effect upon death are invalid ensures fairness and compliance with the rules of succession. By recognizing this distinction, donors can make more informed decisions about how to distribute their property, and donees can avoid legal complications. Whether you intend to make a donation inter vivos or a mortis causa disposition, consulting a legal professional can help ensure your intentions are properly documented and legally binding.

Source: ZRE

Philippines ranks 30th most charitable country in the world

Around the world, a record 4.3 billion people helped someone they didn’t know, volunteered time or donated money to a good cause in the preceding month according to the Charities Aid Foundation’s World Giving Index 2024.

The world’s most generous country is Indonesia for the seventh year in a row, where 90% of Indonesians donated money to charity and 65% volunteered their time. Kenya is the second most generous country, rising from third last year. Singapore has risen 19 places to third, increasing its overall index score from 49% to 61% year on year. The positive results for Singapore follow recent Government initiatives to bolster philanthropy and volunteering.

The CAF World Giving Index is one of the biggest surveys on giving ever produced, interviewing millions of people around the world since 2009. This year’s Index includes data from 142 countries with people asked three questions: have they helped a stranger, given money or volunteered for a good cause during the past month.

The CAF World Giving Index 2024 also finds:

The top 10 countries includes only two of the world's largest economies (Indonesia and the United States), while one of the poorest countries in the world – The Gambia – is ranked in the fourth place.

Morocco saw the world’s largest year-on-year increase in donating money, with interviews taking place in the wake of the devastating earthquakes that hit the centre of the country in September 2023. Just two per cent of people donated money to charity in 2022, but this rose to 18% last year, and volunteering rates doubled from 8% to 16%.

Greece is the biggest riser this year, having consistently increased its ranking since 2013. It has a particularly high score for helping a stranger – significantly above the European average and particularly high among young people.

Over the last decade Ukraine, Indonesia, Chad, Russia, and China are the most improved, each having recorded an increase of 25 points or more.

The Philippines climbed 68 notches to 30th out of 142 countries. The country’s score improved by 13 points year on year to 47 points out of 100, the second-largest improvement after Greece.

The Philippines’ score was even better than the global score of 40. The WGI ranks and scores a country by examining three aspects of giving behavior: helping a stranger, donating money, and volunteering time.

wgi_2024_report.pdf

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Source: Business World

Donation between spouses under a void marriage

What is the consequence of a donation of a piece of land made by a husband to his grandson without the consent of his wife? Is it void or valid? Would it matter if, subsequently, the marriage of the husband and the wife was nullified by a court on the ground of psychological incapacity?

These are the lingering questions answered by the Supreme Court (SC) in its 24 March 2021 decision entitled Nicxon L. Perez Jr. v. Avegail Perez-Senerpida (G.R. 233365).

In this case, spouses Eliodoro and Adelita were the registered owners of a parcel of land in Olongapo City. The spouse had two children Avegail and Adonis. Prior to his marriage with Adelita, Eliodoro was married and had several children, one of whom was Nicxon Perez Sr., who sired Nicxon Jr..

In 2004, Eliodoro donated their land to his grandson, Nicxon Jr., without the conformity of Adelita. In February 2005, Eliodoro filed against Adelita a petition for declaration of nullity of marriage on the ground of psychological incapacity. The trial court granted the petition and the judgment became final and executory in July 2005. Eliodoro died in 2008 and, a year later, an extrajudicial settlement among the heirs was executed. In 2010, Avegail brought an action of annulment of donation of the land donated by Eliodoro to Nicxon Jr. on the ground that it was prejudicial to her interest because it affected her future inheritance or legitime.

The pressing question now before the SC is whether the donation made by Eliodoro to Nicxon Jr., without the consent of Adelita, is void.

Had Eliodoro’s and Adelita’s marriage not only been nullified on the ground of psychological incapacity (Article 36 of the Family Code or FC), the question could easily be answered by a yes. Article 98 of the FC expressly states that “neither spouse may donate any community property without the consent of the other.” However, since the spouses’ marriage was declared void under Article 36 of the FC, their property regime is not governed by Article 98 but by Article 147, which covers the exclusive cohabitation of a man and woman as husband and wife without the benefit of marriage or under a void marriage.

In the present case, the SC noted that under Article 147, “there is unfortunately no direct prohibition on donation of any property acquired during the cohabitation by one party without the consent of the other.” What Article 147 explicitly and directly proscribes is the donation of a party’s share (and not necessarily the entire property) in the property acquired during cohabitation without the consent of the other party, viz.:

Neither party can encumber or dispose by acts inter vivos of his or her share in the property acquired during cohabitation and owned in common, without the consent of the other, until after the termination of their cohabitation. (Emphasis supplied)

Notwithstanding, the SC still ruled that the donation made by Eliodoro of the entire property acquired during their cohabitation sans the consent of Adelita is void. Verily, the SC stated: “(i)f a disposition of a party’s share in the property under special co-ownership created by virtue of Article 147 without the consent of the other party is proscribed by law, then, and with more reason, should the disposition of the entire property under such special co-ownership by a party without the other party’s consent be considered void as well.”

The reason for this prohibition, the SC noted, is that if the parties are allowed to dispose of their shares in said properties like in an ordinary co-ownership, then it will destroy their relationship.

Quoting the eminent civilist, Dr. Arturo Tolentino, the SC held that the law “would like to encourage the parties to legalize their union some day and is just smoothing out the way until their relationship ripens into a valid union.”

Source: Divina Law