In what cases do you need a Special Power of Attorney?

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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

 

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AT A GLANCE:

A Special Power of Attorney is necessary in the following cases:

 1) To make such payments as are not usually considered as acts of administration;

2) To effect novations which put an end to obligations already in existence at the time the agency was constituted;

3) To compromise, to submit questions to arbitration, to renounce the right to appeal from a judgment, to waive objections to the venue of an action or to abandon a prescription already acquired;

4) To waive any obligation gratuitously;

5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration;

6) To make gifts, except customary ones for charity or those made to employees in the business managed by the agent;

7) To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under administration;

8) To lease any real property to another person for more than one year;

9) To bind the principal to render some service without compensation;

10) To bind the principal in a contract of partnership;

11) To obligate the principal as a guarantor or surety;

12) To create or convey real rights over immovable property;

13) To accept or repudiate an inheritance;

14) To ratify or recognize obligations contracted before the agency;

15) Any other act of strict dominion.

(Article 1878 of the New Civil Code of the Philippines)

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Imagine you’re selling a parcel of land, but you can’t be present when the buyer signs the contract. How do you make sure everything goes smoothly? That’s where a Special Power of Attorney (SPA) steps in.

Basically, an SPA is like handing a trusted friend a power to act on your behalf. Whether you’re selling a property, borrowing money, or handling crucial transactions, this legal document ensures someone you choose has the authority to make decisions for you when you can’t be there in person.

 

Legal Foundation of Special Power of Attorney

Under the New Civil Code specifically on the Laws of Agency, “by the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter.” (Article 1868, New Civil Code of the Philippines)

Further, there are two types of agencies: (1) General Agency, and (2) Special Agency. The former comprises all the business of the principal. The latter comprises one or more specific transactions. (Article 1876, New Civil Code of the Philippines)

An agency couched in general terms comprises only acts of administration, even if the principal should state that he withholds no power or that the agent may execute such acts as he may consider appropriate, or even though the agency should authorize a general and unlimited management. (Article 1877, New Civil Code of the Philippines)

Acts of administration involve managing and handling routine affairs on behalf of the principal. An example of such acts is leasing a property for a period not exceeding a year. Additionally, the power to collect and receive payments on behalf of the principal is an ordinary act of administration covered by the general powers of an agent. (V-Gent, Inc. vs. Morning Star Travel and Tours, G.R. No. 186305, July 22, 2015). These are day-to-day tasks that are necessary for the smooth operation of the principal’s affairs, illustrating the practical applications of agency relationships in everyday situations.

However, if something needs more than the usual day-to-day handling, requiring specific and detailed instructions, that’s when you bring in the Special Power of Attorney.

So, the person in charge, known as the agent or Attorney-in-Fact, gets a Special Power of Attorney that lays out exactly what they’re allowed to do.

 

What are the instances/situations requiring a Special Power of Attorney?

According to Article 1878 of the New Civil Code, an SPA is necessary in the following cases:

 

1. To make such payments as are not usually considered as acts of administration;
2. To effect novations which put an end to obligations already in existence at the time the agency was constituted;
3. To compromise, to submit questions to arbitration, to renounce the right to appeal from a judgment, to waive objections to the venue of an action or to abandon a prescription already acquired;
4.  To waive any obligation gratuitously;
5. To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration;
6. To make gifts, except customary ones for charity or those made to employees in the business managed by the agent;
7. To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under administration;
8.  To lease any real property to another person for more than one year;
9. To bind the principal to render some service without compensation;
10.  To bind the principal in a contract of partnership;
11. To obligate the principal as a guarantor or surety;
12. To create or convey real rights over immovable property;
13. To accept or repudiate an inheritance;
14.  To ratify or recognize obligations contracted before the agency;
15.  Any other act of strict dominion.

In everyday situations, think about needing someone to handle certain tasks on your behalf. For example, if a friend owes you money and you want someone else to collect it for you, you’d need a Special Power of Attorney to make that happen.

Now, imagine you’re in a disagreement, and you want someone to help sort things out through negotiation or arbitration. To empower them to act on your behalf, you’d use an SPA. It’s also handy if you want to forgive a loan or give someone the authority to make decisions for you.

In property transactions, like buying or selling a house, where details can get complex, using an SPA is crucial. Similarly, for significant actions such as donating a large sum to charity or making financial decisions, the SPA authorizes someone to act on your behalf. When urgent financial matters arise, like borrowing or lending money, the SPA becomes necessary.

 Finally, let’s say you want someone to sign a lease for a property on your behalf for more than a year. That’s where the SPA is likewise needed. In summary, the SPA is like a formal permission slip for specific tasks, especially when it involves unusual payments or changes to agreements.

 

A Special Power of Agency must be accepted by the agent/Attorney-in-Fact

 The law says:

“ARTICLE 1870. Acceptance by the agent may also be express, or implied from his acts which carry out the agency, or from his silence or inaction according to the circumstances.”

Thus, upon accepting an agency, the agent becomes bound to carry out the agency and shall be held liable for the damages, which the principal may incur due to the agent’s non-performance. (International Exchange Bank vs. Spouses Jerome and Quinnie Briones, G.R. No. 205657, March 29, 2017)

In essence, a Special Power of Attorney is the go-to instrument when the nature of the task requires a heightened level of authorization beyond the routine acts of administration. Unlike acts of administration covered under a general agency, these specialized tasks demand a more explicit grant of authority, with the principal providing precise instructions or limitations in the SPA.

 

Read also: Essentials of Special Power of Attorney (SPA) to Sell Real Property

 

Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding taxation and taxpayer’s remedies, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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