One of the most common questions asked to us is the process of applying for a loan when you are abroad. Many lenders require the OFW-borrower to be in the Philippines because of the documents that needs to be filled. Nonetheless, they understand that time is not on your side and there is a possibility that you have to go back in the middle of the application process or even before the funds are released.
What can you do? The lenders will ask you to sign a Special Power of Attorney or SPA.
Special Power of Attorney, simplified
By definition, SPA is a type of legal document that allows you to appoint and authorize a person or an organization to handle your affairs when you are unavailable, unable to do so, or in your case, while you are abroad. The person you will assign will be called attorney-in-fact or agent and he or she will transact on your behalf.
Who can be your attorney-in-fact?
The answer is anyone, as long as you can trust him or her. He or she can be your spouse, any one of your parents, child above 18 years old, or a trusted friend or relative. There is no limitation as to who you can appoint, but make sure that person is honest and trustworthy since they are representing you.
Does the SPA have to be notarized?
The general rule is no, the Special Power of Attorney need not be notarized to be valid; however, this rule applies ONLY when you executed the SPA in the Philippines.
What if you are abroad? Then the document must not only be notarized but also be consularized. This means the Philippine Embassy or Consul in the country where you are assigned duly certified and authenticated the SPA you executed. Otherwise, the SPA will not be binding and the lender will not allow anyone to process your loan application in the absence of this document.
For SPA to be consularized, you must comply with the following requirements:
- Holder of Philippine passport, with the first and last page photocopied.
- Presentation of any Philippine government ID in the absence of passport (please confirm this with the Philippine Embassy since some may require both passport and ID).
- Personal appearance.
- Two witnesses of legal age, who must accompany you in the Embassy to personally witness the execution of the SPA. Take note that the witnesses must also present proof of identification showing that they are of legal age.
- Payment of notarial fee, which will vary per country.
Even if you assigned someone to transact on your behalf in connection with the loan, take note that the powers and duties are still limited. Your attorney-in-fact may receive the loan proceeds and sign documents on your behalf but s/he cannot sell any of your assets.