Short answer. It depends on whether the donee still has it. Article 762 says that when a donation is revoked or reduced because a child is born, appears, or is adopted, the property affected must be returned - or its value if the donee has sold it. So a donee who sold the property gives back its value, not the thing itself.
What the law says
the property affected shall be returned or its value if the donee has sold the same
Civil Code, Article 762 — Returning the Property. Read the full provision →
What the law says
When the property cannot be returned, it shall be estimated at what it was worth at the time of the donation.
Civil Code, Article 762 — Returning the Property. Read the full provision →
Return the thing, or its value
Article 762 sets out what a donee owes once a donation is undone by the birth, appearance, or adoption of a child. The rule is stated in the alternative: the property affected shall be returned or its value if the donee has sold the same. The starting point is the property itself — if the donee still holds it, that is what goes back. Only where the donee has already parted with it does the obligation convert into one to pay value. The donee cannot elect to keep the property and simply pay money instead; the thing is returned whenever return remains possible.
When the property has been sold
If the donee sold the property before the revocation, he obviously cannot hand back what he no longer owns, so the article makes him liable for value rather than for the specific thing. It also fixes how that value is measured: When the property cannot be returned, it shall be estimated at what it was worth at the time of the donation. The reference point is the value at the date of the donation — not at the later sale, and not at the moment of revocation. This protects the donor from being short-changed if the property lost value, while preventing a windfall to the donor if it rose.
Property the donee mortgaged
The article also handles security taken over the donated property. Where the donee mortgaged it, the donor is not left to fight the lender alone: the donor may redeem the mortgage by paying the amount it guaranteed, and then recover that amount from the donee. In effect the donor can clear the encumbrance to get the property back unburdened, while the donee ultimately bears the cost of the debt he created against it. This keeps the burden where it belongs — on the donee who dealt with the property — rather than on the donor whose gift is being unwound by law.
What the rule does not do
This provision governs only the mechanics of returning property once a donation has already been revoked or reduced on the ground of a child; it does not itself decide whether that ground exists. Nor does it strip protection from a buyer who purchased in good faith — the donee's answer to the donor is to pay value, not to chase the property out of a third person's hands. And it does not make the donee liable for more than the property's worth at the time of the donation, together with, where applicable, the reckoning for a mortgage he placed upon it.