SPA vs. GPA: Choosing the Right Power of Attorney

If you have important matters to attend to but cannot participate directly, you might consider executing a Power of Attorney to delegate the responsibilities you would handle if you were physically present. By doing this, you can authorize someone, known as the “attorney-in-fact,” to act on your behalf according to the provisions outlined in the notarized document.

Before entering into a Power of Attorney, it’s essential to distinguish between a Special Power of Attorney (SPA) and a General Power of Attorney (GPA). Below are some hypothetical examples to illustrate the differences.

Example 1:

Janela Paulita San Jose is a professional car racer based in New York City. On August 29, 2023, she inherited a 3,000-square-meter residential lot from her late grandfather, Dominguez San Jose. Unfortunately, during one of her races, her car was severely damaged and requires a significant amount of money for repairs. To cover these costs, she decided to sell her inherited property. However, due to her busy schedule and lifestyle in New York City, Janela cannot travel back to the Philippines to handle the sale in person. Therefore, she has authorized her brother, Jonel Paolo San Jose, to sell the property on her behalf.

In this scenario, Janela may establish a Special Power of Attorney (SPA) that is limited to specific actions, namely the sale of her inheritance by Jonel on her behalf. This SPA authorizes Jonel to carry out this particular transaction and will expire once the task is completed.

Example 2:

Milagrosa Milano is an 85-year-old business tycoon who owns over a hundred branches of Mapagpala Events and Logistics. Due to her advanced age, Milagrosa suffered a heart attack that left her bedridden. To manage her businesses, as well as her investments, finances, properties, and business transactions, she decided to grant her daughter, Helena Grasya Milano, a General Power of Attorney (GPA). This allows Helena to handle all financial and legal matters on Milagrosa's behalf, rather than executing multiple Special Powers of Attorney (SPAs) for different tasks.

In this scenario, Milagro executed a General Power of Attorney (GPA) that encompasses a wide range of financial and legal matters. This document grants the authority to manage general financial and legal affairs and remains valid until it is revoked or until the principal’s death or incapacity. The GPA may also cover areas such as managing business operations, handling bank accounts, and leasing or selling various properties.

Understanding the differences between a General Power of Attorney and a Special Power of Attorney (SPA) is crucial due to the varying levels of risk involved in delegating authority. An SPA is suitable for tasks that are specific and time-bound, while a GPA carries a higher level of risk. This is because a GPA grants broader control, which could be misused if entrusted to an inappropriate individual.