What are the grammatical phrases in this sentence?

Solution 1:

As John Lawler states in the comments:

Soul and spirit are in apposition. Capable of compassion ... is a verbal phrase. Of compassion and ... is a prepositional phrase modifying capable.

capable of compassion is a predicate adjective, and therefore the head of a verb phrase. As a predicate adjective, it requires an auxiliary be, which has been deleted here by Whiz-Deletion, producing the reduced VP. It works just the same as looking for compression or a man for all seasons; they can all be produced by reducing a relative clause. It might be that "verbal phrase" means something different to some people from Verb Phrase, but further deponent sayeth not. This is what I mean by "Verb Phrase". - John Lawler