Short answer. Both are still treated as donations under the law. One is given on account of the recipient's merits or services rendered to the giver, as long as those services are not a debt owed; the other imposes on the recipient a burden worth less than the thing given.
What the law says
When a person gives to another a thing or right on account of the latter's merits or of the services rendered by him to the donor, provided they do not constitute a demandable debt, or when the gift imposes upon the donee a burden which is less than the value of the thing given, there is also a donation.
Civil Code, Article 726 — Remuneratory And Modal Donations. Read the full provision →
A gift for merit or past service
The law recognizes a donation given on account of the latter's merits or of the services rendered by him to the donor. This covers a gift meant to reward or recognize what the recipient has done, their qualities, conduct, or past assistance to the giver. The key condition is that those merits or services must not already amount to a demandable debt; if the giver actually owed payment for the services, handing over that payment would not be a donation at all, since it would just be settling what was already owed.
A gift that comes with a burden
The same provision also covers a gift that imposes upon the donee a burden which is less than the value of the thing given. Here the recipient is asked to do or give something in return, but that obligation is worth less than what they received. Because the burden does not match the full value of the gift, the law still treats the excess as a donation rather than as an exchange.
Why the law still calls both a donation
In both situations, something of value passes to the recipient without full payment or an equivalent burden in return, which is the essence of a donation, an act of liberality. The article groups them together under the phrase there is also a donation, showing that a gift does not have to be entirely unconditional or entirely unearned to qualify. What matters is that the giver received nothing, or received something worth less than what was given, in exchange.
Why the distinction can matter
Whether a particular gift was given for merit or service, or came with an attached burden, affects how that specific transfer should be understood and documented. A gift tied to services rendered needs those services described so it is clear no demandable debt was actually being paid off, while a gift with a burden needs the value of that burden identified so it is clear it falls short of the value of what was given. Precise documentation at the time of the gift makes either category easier to establish later.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Daalco Development Coration vs. Palmas Del Mar Homeowners Association (PDM-HOA), Represented By Gil Fernandez, President, G.R. No. 264652, November 4, 2024 — read the decision on LawPhil →
- National Power Corporation vs. Delta P, Inc, G.R. No. 221709, October 16, 2019 — read the decision on LawPhil →
- Republic of the Philippines, represented by the Department of Public Works and Highways (DPWH) vs. Sps. Francisco R. Llamas and Carmelita C. Llamas, G.R. No. 194190, January 25, 2017 — read the decision on LawPhil →