A Special Power of Attorney (SPA) is a written authority by which a principal empowers an attorney-in-fact (agent) to do specific, clearly defined acts on the principal’s behalf. In the Philippine setting, an SPA is the most common instrument used when the owner (or a company’s authorized signatory) cannot personally appear to sign documents and complete the many steps involved in a business transfer of ownership—whether that transfer is done through an asset sale, a transfer of shares, a transfer of partnership interests, or a transfer of a sole proprietorship’s business and trade name.

This article focuses on what “business transfer of ownership” means legally and practically, when an SPA is required (or strongly advisable), how to draft it so it will be accepted by counterparties and government offices, and the common compliance steps and pitfalls in Philippine transactions.

1) The legal nature of an SPA

Agency and authority

An SPA is grounded in agency under the Civil Code: the agent acts in representation of the principal, and within the scope of the authority granted.

Two rules matter most in business transfers:

Acts requiring a special power must be expressly authorized. The Civil Code enumerates acts that generally require a special power of attorney (e.g., selling or encumbering property, entering into certain contracts, making compromises, etc.). In practice, many high-value or high-risk acts in business transfers are treated as requiring specific authority.
For transfers of real property (immovables), authority must be in writing. If the transaction includes real property (common in business sales involving land, buildings, condominium units, or long-term rights), the agent’s authority must be written—and the deeds must typically be notarized to be registrable.

SPA vs. General Power of Attorney (GPA)

A GPA grants broad, general authority to manage affairs.
An SPA grants authority for defined transactions (e.g., “to sell and transfer the business assets of X,” “to sign the deed of sale for shares,” “to receive purchase price,” “to process BIR/SEC/LGU documents,” etc.).

For business transfers, counterparties, banks, and government offices often prefer or require an SPA even if a GPA exists, because the transaction is specific and frequently involves property transfers, tax filings, and acceptance of payment.

2) What counts as “business transfer of ownership” in the Philippines

There is no single one-size-fits-all “business ownership transfer” document. The legal structure depends on what type of business you’re transferring:

A) Sole proprietorship (DTI-registered business name)

A sole proprietorship is not a separate juridical person from the owner. “Transferring ownership” is usually done through one or more of these:

Sale/assignment of assets (equipment, inventory, contracts, IP, goodwill)
Assignment of lease (if applicable)
Transfer/assignment of trade name or business name arrangements (often involves closure/cancellation by the old owner and new registration by the buyer, depending on the arrangement)
Regulatory and tax closures/registrations with agencies

Because of this, an SPA in a sole proprietorship transfer often focuses on asset sale documents and regulatory/tax processing, rather than “transferring the business” as an entity.

B) Partnership

Ownership is held through partnership interests and governed by the partnership agreement and Civil Code rules. Transfers commonly involve:

Assignment of a partner’s interest (often subject to consent)
Amendment to partnership documents
Notifications/registrations where required

C) Corporation

A corporation is a separate juridical entity. “Ownership transfer” may mean either:

Share sale (transfer of shares) – ownership changes hands, but the corporation remains the same entity; or
Asset sale (sale of all or substantially all corporate assets) – the corporation sells the business assets to a buyer.

Each has different approval and documentation requirements.

3) When an SPA is required or strongly advisable in business transfers

Even when not strictly “required” by law in every scenario, an SPA is often functionally required because institutions will not accept signatures from someone other than the owner/authorized signatory without clear authority.

Common situations where an SPA is needed

The owner is abroad, ill, unavailable, or cannot personally appear for notarization/filing.
The seller wants a representative to sign:
- deed of sale/assignment documents,
- closing certificates,
- tax forms,
- applications with government offices,
- bank paperwork for receiving/escrowing funds.
The transfer includes real property, where registries require notarized, written authority.
The representative must receive the purchase price, issue receipts, or acknowledge full payment.
The representative must settle taxes, obtain clearances, and process registration.

A practical “acceptance” rule

Even if you believe an act could be done under general authority, counterparties often insist the SPA explicitly states authority to:

sell/assign,
sign and notarize the necessary instruments,
receive and acknowledge payment,
represent before named government agencies.

If it’s not spelled out, it’s commonly rejected.

4) Core drafting principles for an SPA used in a business transfer

1) Specificity wins

Vague phrases like “to transact business” are a frequent cause of rejection. Use transaction-specific language:

Identify the business (name, registration numbers).
Identify the assets or shares to be transferred.
Identify the buyer (if known) or allow sale “to any qualified buyer,” depending on intent.
Identify the price/terms or authorize negotiation within limits.

2) Enumerate powers in a closing-friendly way

Business transfers are document-heavy. The SPA should cover not only the main deed, but also all the supporting acts needed to complete closing.

3) Align the SPA with the actual deal structure

An SPA for a share sale will look different from an SPA for an asset sale:

Share sale: authority to execute a deed of sale of shares, endorse stock certificates, sign corporate transfer documents, cause recording in the stock and transfer book, pay share transfer taxes/fees, etc.
Asset sale: authority to execute deeds of sale/assignment for equipment, inventory, contracts, IP, and (if included) real property; authority to comply with the Bulk Sales Law process when applicable; authority to secure tax clearances and close registrations.

4) Add “incidental and necessary acts”

A well-drafted SPA includes a catch-all clause for acts reasonably necessary to carry out the enumerated powers—without replacing the need for specificity in the major acts.

5) SPA content checklist (Philippine practice)

Below is a robust checklist of provisions commonly included in SPAs for business transfers.

A) Parties and identifiers

Full name, citizenship, civil status, and address of the principal
Government ID details (often required in notarization practice)
Full name and address of the attorney-in-fact
Relationship (optional)

B) Background / recitals (recommended)

The principal owns the business or shares/assets.
The principal desires to transfer ownership and appoints the agent to handle the transaction.

C) The grant of powers (typical clauses)

Depending on the deal, include powers such as:

1) Authority to negotiate and finalize the transfer

Negotiate terms and conditions, sign term sheets/letters of intent, sign closing documents.

2) Authority to execute the principal transfer instrument

Asset sale: Deed of Absolute Sale / Deed of Sale and Assignment / Deed of Assignment of assets, goodwill, IP, receivables (if included).
Share sale: Deed of Sale of Shares; authority to endorse and deliver stock certificates (if certificated); sign transfer instruments.

3) Authority involving real property (if included)

Sell/transfer/assign rights over land/building/condo; sign deeds; sign tax declarations-related paperwork; appear before registry and assessor.

4) Authority to sign ancillary documents

Acknowledgments, sworn statements, inventories, schedules of assets, closing certificates, secretary’s certificates (if applicable), affidavits, undertakings.

5) Authority to deal with banks and escrow

Open/close escrow or settlement accounts, receive wire transfers, issue receipts, acknowledge payment, sign bank documents.

6) Authority to pay and process taxes and clearances

Sign tax returns/applications; pay taxes, fees, penalties where authorized; secure certificates/clearances.

7) Authority to represent before government offices For business transfers, common agencies include:

Bureau of Internal Revenue (tax clearance, registration updates/closures, eCAR where relevant)
Securities and Exchange Commission (corporate filings, amendments, records)
Department of Trade and Industry (business name matters for sole proprietors, where applicable)
Local government units (business permits, mayor’s permit renewals/closures, zoning/fire clearances depending on locality)

8) Authority to hire professionals

Engage lawyers, accountants, brokers, appraisers; sign engagement letters; pay professional fees (if authorized).

9) Authority to compromise and settle

Settle claims arising from the transaction, sign releases, compromise agreements (this should be explicit if intended).

D) Limits and safeguards (highly recommended)

Price floor/ceiling, or require written instructions for price changes
Prohibit self-dealing (agent cannot sell to themselves or relatives without written consent)
Require dual signatures for certain acts (if desired)
Time period of validity (e.g., valid until a date or until closing)
Requirement to provide periodic updates or deliver documents to principal

E) Ratification clause

Principal confirms they will honor lawful acts done within authority.

F) Signatures and notarization block

Philippine notarial acknowledgment, with competent evidence of identity.

6) Notarization and execution requirements (Philippine context)

Why notarization matters

Most closing documents in business transfers are either:

required by law or regulation to be notarized, or
demanded by counterparties/banks/agencies as proof of authenticity and authority.

An SPA used for a transfer is typically notarized so it is treated as a public document and is widely accepted.

Personal appearance and identification

Under Philippine notarial practice, the principal must generally:

personally appear before the notary (or follow applicable rules when executed abroad),
present competent evidence of identity.

If the principal signs abroad

Common approaches include:

Signing before a Philippine consular officer (consular notarization), or
Executing the SPA under the foreign jurisdiction’s notarization and using apostille authentication (where applicable), then using it in the Philippines.

Practical point: counterparties may have internal preferences, and some registries are stricter. If the SPA will be used for property registration or major filings, the safest approach is often the method most consistently accepted by the relevant office handling the transaction.

7) Matching the SPA to the transaction type: what your SPA must cover

A) Share sale (corporate ownership transfer)

If “business ownership transfer” is done by selling shares, the SPA usually needs to authorize the agent to:

Sign the Deed of Sale of Shares
Endorse stock certificates (if applicable) and execute transfer instruments
Cause the corporation to record the transfer in the Stock and Transfer Book
Sign corporate documents needed for transfer processing (e.g., requests, acknowledgments)
Represent before tax authorities for the payment/filing of taxes associated with the transfer
Receive the purchase price and issue receipts/acknowledgment of full payment
Sign waivers/releases as part of closing

Important corporate-law distinction: A shareholder selling shares acts in their personal capacity as owner of the shares. Corporate approvals are typically not required for a simple share sale unless there are:

restrictions in the articles/bylaws,
a shareholders’ agreement,
rights of first refusal,
nationality restrictions for regulated industries.

B) Asset sale (selling the business assets)

If the transfer is via asset sale, the SPA should authorize the agent to:

Identify and sign schedules of assets being sold
Execute deeds of sale/assignment for:
- equipment, inventory, furniture, fixtures
- contracts (subject to consent clauses)
- intellectual property and goodwill (if included)
- receivables (if included)
Comply with Bulk Sales Law requirements when the transaction constitutes a bulk sale (commonly relevant when a merchant sells all or substantially all inventory/fixtures outside the ordinary course)
Obtain tax clearances, pay transfer taxes/fees, and process registrations
Transfer permits and registrations where legally transferable, and process closures/new registrations where they are not

C) Sole proprietorship “transfer”

Because the sole proprietorship is tied to the person, the SPA typically emphasizes:

selling/assigning the assets and goodwill
closing the seller’s registrations and assisting in the buyer’s registrations
handling lease assignment, supplier/customer notices, and inventory turnover

8) Taxes and government clearances: what SPAs commonly need to authorize

Business transfers often stall because the SPA doesn’t authorize tax processing. Many principals want the agent to “just sign the deed,” but closing usually requires tax steps.

Typical authorizations include:

Signing and filing tax forms/applications related to the transfer
Paying taxes and securing certificates/clearances
Receiving certificates and documents on the principal’s behalf

Examples of tax/clearance categories (high level)

Asset sale may trigger income tax consequences, VAT/percentage tax issues, documentary stamp taxes on certain instruments, and local transfer taxes if real property is involved.
Share sale may trigger capital gains tax (for shares not traded on an exchange) or stock transaction tax (if traded through an exchange), plus documentary stamp tax treatment depending on the instrument and context.

Because tax characterization depends on facts (nature of assets, VAT status, holding periods, residency, treaty issues, etc.), SPAs often draft authority broadly enough to allow the agent to work with accountants and process what’s required.

9) Bulk Sales Law: why it matters in business transfers

The Bulk Sales Law is frequently relevant when a business that sells goods (merchandise) disposes of all or substantially all of its inventory/fixtures outside the ordinary course.

Why it matters:

The law is designed to protect creditors by requiring disclosures and procedures.
Buyers often require compliance to avoid later claims.

If your transaction could fall under this, your SPA should authorize the agent to:

execute the required affidavits/schedules,
notify creditors as required,
coordinate compliance steps as part of closing.

10) Risks, liabilities, and how to manage them in an SPA

A) Principal’s liability for authorized acts

Acts done within authority bind the principal. This is why specificity, limits, and safeguards matter.

B) Agent’s duties

An agent generally must act:

within authority,
with diligence and loyalty,
avoiding conflicts of interest.

C) Protecting the principal: recommended safeguards

Set clear price limits and require principal’s written approval for deviations.
Require the agent to use escrow arrangements or specified bank accounts.
Require the agent to deliver copies of signed documents promptly.
Add an expiration date or closing-condition termination.

D) Protecting the buyer/counterparty

Counterparties commonly ask for:

an SPA with clear powers,
valid notarization/authentication,
ID copies and specimen signatures,
proof that the SPA has not been revoked.

11) Revocation, termination, and “survival” issues

Revocation

A principal may generally revoke an agency, subject to contractual and legal constraints. However:

revocation may not defeat rights of third parties acting in good faith without notice in certain contexts,
revocation timing can create disputes if communicated late.

Good practice in transactions:

If revoking, give written notice to the agent and relevant counterparties immediately.
For important transfers, counterparties sometimes request a “no revocation” undertaking up to closing, or require the principal’s direct confirmation near signing.

Termination

Agency commonly terminates by:

completion of the specific act,
expiration date stated in the SPA,
death/incapacity (general rule in agency; special doctrines may apply in specific contexts).

For business transfers, it’s common to define termination as:

“upon full completion of the transfer and release of documents/funds,” or
“until [date], unless earlier completed.”

12) Practical drafting template structure (how SPAs are commonly organized)

A strong SPA for business transfer typically follows this structure:

Title: “SPECIAL POWER OF ATTORNEY”
Principal’s details
Appointment clause: appointing the attorney-in-fact
Recitals
Enumerated powers, grouped by function:
- negotiate and execute transfer documents
- receive and acknowledge payment
- represent before agencies
- pay taxes and secure clearances
- sign ancillary documents
Limitations and safeguards
Ratification clause
Effectivity/term
Signatures
Acknowledgment (notarial block)

13) Common reasons SPAs get rejected (and how to avoid them)

Too general: “to transact” without specifying sale/transfer/receive payment.
No authority to receive money: agent can sign deed but cannot accept payment or issue receipts.
No authority for tax processing: cannot file/pay/receive clearances.
Mismatch with document: SPA says “sell the business” but deed is a “Deed of Assignment,” or SPA authorizes asset sale but transaction is share sale.
Missing identifiers: business name, registration details, or property/share descriptions are absent.
Notarization/authentication issues: execution defects, missing ID details, no apostille/consularization where needed.
Nationality/industry restrictions ignored: transfer would breach foreign ownership limits or regulatory requirements; counterparties demand clearer compliance documentation.

14) Deal-closing checklist: what an SPA should enable in one document

For a typical Philippine business transfer closing, ensure the SPA authorizes the agent to:

Sign the main transfer instrument (asset sale/share sale)
Sign schedules/inventories/annexes
Sign acknowledgments of payment and deliver receipts
Hand over possession and execute turnover documents
Sign and submit tax forms/applications, pay taxes/fees
Obtain clearances/certificates and receive released documents
Represent before relevant agencies and local offices
Sign amendments/ancillary contracts (lease assignment, employment transition documents, IP assignment, non-compete/non-solicit where used)
Engage professionals for processing and compliance
Do all acts necessary to implement the transfer

15) Key takeaway

A Philippine SPA for business transfer of ownership is not merely a “signature substitute.” It is the legal authority that must match the transaction structure (shares vs. assets vs. sole proprietorship arrangements), anticipate the tax and regulatory steps, and be specific enough to be accepted by counterparties and government offices while containing limits that protect the principal.