In Philippine law, a Special Power of Attorney (SPA) is a legal instrument whereby a person (the Principal) authorizes another (the Agent or Attorney-in-fact) to perform specific acts or transactions on their behalf.
A common question arises in complex transactions: Can an Agent "transfer" or "delegate" the authority granted to them by an SPA to someone else?
The short answer is: Yes, but only if the Principal explicitly allowed it.
1. The Principle of Personal Trust (Intuitu Personae)
Under the Civil Code of the Philippines, the relationship between a Principal and an Agent is based on trust and confidence. Because the Principal chose a specific person to act on their behalf, the general rule is that the Agent must perform the task personally.
2. The Power of Substitution
The legal mechanism for "transferring" or delegating authority under an SPA is known as Substitution. Article 1892 of the Civil Code governs this:
"The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be responsible for the acts of the substitute..."
When Substitution is Allowed:
- Expressly Granted: If the SPA contains a "Substitution Clause" (e.g., "with full power of substitution"), the Agent can legally appoint a sub-agent.
- Silent SPA: If the SPA is silent (neither allows nor prohibits it), the Agent may still appoint a substitute, but the Agent remains strictly liable for the substitute’s actions.
When Substitution is Prohibited:
- Expressly Prohibited: If the SPA states "without power of substitution," any attempt to transfer the authority is void. Any acts performed by a substitute in this scenario are considered unenforceable against the Principal.
3. Liability of the Agent in Transfers
Transferring authority does not necessarily absolve the original Agent of responsibility. The Civil Code establishes different tiers of liability:
| Scenario | Agent’s Liability for the Substitute’s Acts |
|---|---|
| Prohibited by Principal | The Agent is fully liable; the substitute's acts are void/unenforceable. |
| No Permission Given (Silent) | The Agent is fully liable for everything the substitute does. |
| Permission Given (General) | The Agent is liable only if they chose a substitute who is "notoriously incompetent or insolvent." |
| Substitute Designated by Principal | The Agent has no liability for the substitute’s actions. |
4. How the Transfer is Documented
If an Agent is authorized to delegate their power, they do not simply hand over the original SPA. Instead, they execute a Substituted Special Power of Attorney.
- This new document must reference the original SPA.
- It must be notarized to be legally binding against third parties (like banks or the Register of Deeds).
- The scope of authority given to the sub-agent cannot exceed the scope granted to the original Agent.
5. Practical Limitations in the Philippines
While the law allows for substitution, many Philippine institutions have strict internal policies:
- Banks and Government Agencies: Often refuse to recognize a Substituted SPA. They generally prefer a direct SPA from the Principal to the ultimate end-user.
- Real Estate Transactions: The Land Registration Authority (LRA) and the Bureau of Internal Revenue (BIR) are highly scrutinizing. A "chain" of SPAs can often lead to delays or rejections of title transfers.
6. Termination of Authority
It is important to note that the "transferred" power is derivative. If the original SPA is revoked by the Principal, or if the Principal dies, the authority of both the Agent and the Substitute is automatically extinguished.
Summary
While an SPA is technically "transferable" through a substitution clause, it is not a "negotiable instrument" that can be passed around freely. The validity of the transfer hinges entirely on the intent of the Principal as written in the original document. To ensure a smooth transaction, it is always best practice to include an express "Power of Substitution" in the original drafting if delegation is anticipated.
Would you like me to draft a sample "Power of Substitution" clause that can be included in an SPA?