Disclaimer: The following discussion is provided for general informational and educational purposes only and does not constitute legal advice. Laws, regulations, and legal interpretations can change, and the application of law depends on the specific facts of each case. For specific legal advice, consult a qualified Philippine attorney.

When Is a Special or General Power of Attorney Valid in the Philippines?

A Power of Attorney (POA) is a legal instrument by which one person (the principal) authorizes another (the agent or attorney-in-fact) to perform certain acts on the principal’s behalf. In the Philippines, the law governing Powers of Attorney is primarily found in the Civil Code of the Philippines (particularly Articles 1868–1932). Below is a comprehensive overview of what you need to know about the validity of Special and General Powers of Attorney, including the legal framework, formal requirements, limitations, and revocation.

1. Definitions and Distinctions

1.1 Power of Attorney

A Power of Attorney is a document that grants authority to the agent to legally act on behalf of the principal. The scope of the agent’s authority depends on whether the POA is special or general.

1.2 Special Power of Attorney (SPA)

A Special Power of Attorney (SPA) expressly confers authority to the agent to do a specific act or set of acts. Under Article 1878 of the Civil Code, certain acts require a Special Power of Attorney to be valid, such as:

To sell or mortgage real property.
To make a gift (donation).
To enter into a compromise.
To create or revoke a trust.
To waive an obligation owed to the principal.
To enter into any contract that must be in a public or private instrument.

Essentially, an SPA delineates clearly the particular transaction(s) or task(s) that the agent is empowered to undertake.

1.3 General Power of Attorney (GPA)

A General Power of Attorney (GPA) confers broader, more general authority. Typically, it authorizes the agent to do all acts of administration on behalf of the principal. However, it does not extend to acts of strict dominion or ownership, such as selling real property, unless such authority is expressly stated or falls under a specific provision that the principal clarifies in writing.

2. Legal Framework in the Philippines

The key provisions on agency and power of attorney are found in Articles 1868 to 1932 of the Civil Code. Additionally, notarial practice is governed by the 2004 Rules on Notarial Practice and relevant Supreme Court circulars.

2.1 Articles 1877–1878: Scope of Authority

Article 1877: The power of attorney must be interpreted strictly. Any doubt about the scope of authority should be resolved against the agent.
Article 1878: Lists specific acts (e.g., selling property, borrowing money, making a gift) requiring an SPA.

2.2 Articles 1879–1881: Formal Requirements

While the Civil Code does not always require notarization for all powers of attorney, certain acts—especially those involving real property or transactions requiring a public instrument—must be in a notarized public document.
Notarization is important because it provides authenticity, makes the document self-authenticating, and is often required by government offices, banks, and courts before recognizing the agent’s authority.

2.3 Articles 1884–1887: Agent’s Duties and Principal’s Liability

The agent must act within the scope of authority granted. The principal is bound by acts of the agent done within the scope of the POA.
If the agent exceeds the authority, the principal is not bound unless the principal ratifies the act afterward.

3. Formal Requirements for Validity

3.1 Capacity of the Principal

The principal must be of legal age and possess the mental capacity to execute a POA. If the principal lacks capacity (e.g., due to insanity or legal disqualification), the POA is invalid.

3.2 Clear Identification of Parties

The POA must identify:

The Principal – the person granting authority.
The Agent – the person receiving authority.

3.3 The Grant of Authority

The document must specify whether the power granted is general or special, detailing:

Exact acts the agent is authorized to do.
Limitations or conditions on those acts, if any.

3.4 Proper Execution and (When Needed) Notarization

The principal must sign the POA or affix a thumbmark in the presence of a notary public (if notarization is required).
For an SPA involving real property transactions or any act that needs a public instrument, the POA must be notarized before a duly commissioned notary public.
In certain cases—such as if the principal is abroad—consularization or apostille (depending on the country) may be required to authenticate the POA for use in the Philippines.

4. When Is a Special Power of Attorney Required?

Certain transactions require a Special Power of Attorney under Philippine law. The most common are:

Sale, Mortgage, Lease, or Encumbrance of Real Property
A general power of attorney is insufficient to sell or mortgage property unless it specifically includes the authority to do so. An SPA is generally required.
Making a Gift (Donation)
Donations require clear evidence of the principal’s intent. An SPA is needed.
Entering into a Compromise or Settlement
Compromising or settling claims, especially in legal proceedings, must be backed by an SPA.
Creating or Revoking a Trust
Forming or revoking a trust arrangement typically requires an SPA.
Other Acts Requiring Specific Authority
The law or private contracts may require a principal to execute an SPA for other specialized transactions.

5. Common Uses of a General Power of Attorney

A General Power of Attorney generally covers acts of administration such as:

Collecting and receiving payments, rents, or debts.
Managing day-to-day transactions of a business.
Hiring employees or entering into routine contracts for goods and services.
Handling bank transactions (unless a bank specifically requires an SPA for certain transactions).

However, for any major disposition or encumbrance of the principal’s property, an SPA or explicit authority is almost always required.

6. Durability and Effectivity

Unlike some jurisdictions, Philippine law does not explicitly recognize the term “durable power of attorney” in the same manner as in the United States. In the Philippines, agency is extinguished by:

Death, civil interdiction, insanity, or insolvency of the principal or of the agent.
Revocation of the POA by the principal.
Accomplishment of the purpose for which the POA was constituted.
Expiration of the period if the POA is for a limited time.

Therefore, once the principal becomes incapacitated (e.g., mentally incompetent after a stroke) or passes away, the general rule is that the authority of the agent under a POA ceases.

7. Grounds for Invalidity or Nullity

Even if a POA appears valid on its face, it may be void or voidable under certain circumstances:

Lack of Legal Capacity
If the principal was a minor, insane, or otherwise legally disqualified at the time of execution.
Fraud, Undue Influence, or Mistake
If the principal was deceived or coerced into signing the POA or did so under a fundamental mistake of fact.
Lack of Formal Requirements
For transactions that require notarization (e.g., sale of land), failure to notarize can invalidate the POA for that specific purpose.
Exceeding the Scope of Authority
If the agent acted beyond what the POA allows, the transaction is generally not binding on the principal unless ratified.

8. Revocation and Termination

8.1 Revocation by the Principal

The principal can revoke a POA at any time, provided the principal still has the capacity to do so.
Revocation should ideally be in writing and, if the POA was notarized, the revocation should also be notarized and communicated to the agent and relevant third parties.

8.2 Other Modes of Termination

Fulfillment of Purpose: Once the act authorized is completed.
Expiration of Period: If a definite term is specified.
Death or Incapacity: Death or supervening incapacity of the principal or agent generally ends the agency.

9. Best Practices for Ensuring Validity

Use Clear Language
Draft the POA in precise, unambiguous terms. Identify the parties clearly and state the extent of authority.
Notarize the POA
For any significant transaction—especially those involving property—have the POA notarized to ensure it will be recognized by courts, government agencies, and financial institutions.
Include Copies of Identification
Attach copies of valid IDs of both the principal and the agent to streamline verification processes.
Register with the Proper Agency, if Needed
Some transactions (e.g., involving land) may require registration with the Registry of Deeds.
Update and Reissue When Circumstances Change
If the principal’s condition or wishes change, or if the agent moves or changes name, it may be prudent to revoke the old POA and issue a new one.

10. Practical Scenarios

OFWs Authorizing Relatives: Overseas Filipino Workers often use SPAs to allow a relative to perform real estate transactions, open or manage bank accounts, or handle business matters in the Philippines. A duly notarized and consularized (or apostilled) SPA is usually required in these situations.
Business Transactions: Corporate entities often issue General Powers of Attorney to company officers for routine transactions (e.g., bank transactions, administrative filings), while requiring SPAs for more significant acts (e.g., selling corporate assets).
Estate Management: Heirs may need a Special Power of Attorney from co-heirs residing abroad to handle estate settlement matters in the Philippines.

Conclusion

A Special Power of Attorney (SPA) is required for specific, often major transactions (e.g., sale of real estate, making donations, compromising claims), while a General Power of Attorney (GPA) covers a broader range of administrative or routine acts. For both SPAs and GPAs, validity hinges on proper execution, including the capacity of the principal, compliance with formal requirements (especially notarization for certain acts), and the clear delineation of authority.

Before drafting or executing a Power of Attorney—whether special or general—it is advisable to consult a qualified attorney to ensure compliance with Philippine laws and regulations, to avoid questions on validity, and to protect the interests of all parties involved.

Disclaimer: This article provides a general overview of Philippine law on Powers of Attorney and should not be taken as a substitute for personalized legal counsel. If you are considering creating, executing, or relying on a Special or General Power of Attorney, seek professional legal advice.