PAYMENT FOR HONOR

Meaning of payment for honor

PAYMENT FOR HONOR

- payment made by a person, whether a party to the bill or not, after it has been protested for non-
payment, for the benefit of any party liable thereon or for the benefit of the person for whose account it
was drawn.

- another term for payment for honor is "Payment Supra Protest".

Who may make payment for honor?

-Under Section 171, payment for honor may be made by a party to the bill or by a stranger.

-Thus, it may be made by the drawee after he has refused to accept the bill.

Purpose and Function of Payment for Honor.

-Payment for honor may be availed of when the holder, knowing that the bill has already been
dishonored for non-payment, does not want to indorse the bill and thereby incur the liabilities of an
indorser specified under Section 66 or of one negotiating by mere delivery under Section 65.

Section 172. Payment for honor; how made.

The payment for honor supra protest, in order to operate as such and not as a mere voluntary payment,
must be attested by a notarial act of honor which may be appended to the protest or form an extension
to it.

Section 173. Declaration Before Payment for Honor.

The notarial act of honor must be founded on a declaration made by the payer for honor or by his agent
in that behalf declaring his intention to pay the bill for honor and for whose honor he pays.

REQUISITES OF VALID PAYMENT FOR HONOR

1. The bill has been dishonored by non-payment.

2. It has been protested for non-payment.

3. Payment supra protest is made by any person.

4. The payment is attested by a notarial act of honor which must be appended to the protest.

5. The notarial act must be based on the declaration made by the payer for honor or his agent of his
intention to pay bill for honor and for whose honor he pays.
Section 174. Preference of parties offering to pay for honor.

Where two or more persons offer to pay a bill for the honor of different parties, the person whose
payment will discharge most parties to the bill is to be given preference.

EFFECTS WHERE BILL IS PAID FOR HONOR

1. All parties subsequent to the party for whose honor it is paid are discharged.

2. The payer for honor is subrogated for, and succeeds to, both the rights and duties of the holder as
regards the party whose honor he pays and all parties liable to the latter.

Section 176. Where the holder refuses to receive payment supra protest.

Where the holder of the bill refuses to receive payment supra protest, he loses his right of recourse
against any party who would have been discharged by such payment.

Section 177. Rights of payer for honor.

The payer for honor, on paying to the holder the amount of the bill and the notarial expenses incidental
to its dishonor, is entitled to receive both the bill itself and the protest.

PAYMENT FOR HONOR AND ACCEPTANCE FOR HONOR DISTINGUISHED.

Payment for honor is distinguished from acceptance from honor as follows:

1. In the former, the protest must be for non-payment, while in the latter, for non-acceptance or for
better security.

2. In the former, the bill is overdue, while in the latter, it must not be overdue.

3. In the former, the consent of the holder is not required nor can the holder refuse, while in the latter,
the consent of the holder is required.

4. In the former, the acceptor is secondarily liable, while in the latter, the acceptor is primarily liable.

5. In the former, a notarial act of honor is necessary, while in the latter, it is not necessary.

6. In the former, there can be only one payer for honor, while in the latter, there may be several
acceptors for honor.

7. The effects of payment for honor are those provided for in Sections 175 and 177, while the effects of
acceptance for honor are those provided for in Sections 164 and 165.
STUDY GUIDE

I. Definition

Define or give the meaning of payment for honor.

Payment for honor

- payment made by a person, whether a party to the bill or not, after it has been protested for non-
payment, for the benefit of any party liable thereon or for the benefit of the person for whose account it
was drawn.

- another term for payment for honor is "Payment Supra Protest".

II. Discussions

1. Give at least four (4) differences between payment for honor and acceptance for honor.

1. In the former, the protest must be for non-payment, while in the latter, for non-acceptance or for
better security.

2. In the former, the bill is overdue, while in the latter, it must not be overdue.

3. In the former, the consent of the holder is not required nor can the holder refuse, while in the latter,
the consent of the holder is required.

4. In the former, the acceptor is secondarily liable, while in the latter, the acceptor is primarily liable.

5. In the former, a notarial act of honor is necessary, while in the latter, it is not necessary.

6. In the former, there can be only one payer for honor, while in the latter, there may be several
acceptors for honor.

7. The effects of payment for honor are those provided for in Sections 175 and 177, while the effects of
acceptance for honor are those provided for in Sections 164 and 165.

2. Give requisites in order that payment for honor may be valid.

Section 172. Payment for honor; how made.

The payment for honor supra protest, in order to operate as such and not as a mere voluntary payment,
must be attested by a notarial act of honor which may be appended to the protest or form an extension
to it.
Section 173. Declaration Before Payment for Honor.

The notarial act of honor must be founded on a declaration made by the payer for honor or by his agent
in that behalf declaring his intention to pay the bill for honor and for whose honor he pays.

III. Problems

Explain or state briefly the rule or reasons for your answer.

1. a. Give the effects if the payment by H is for the honor of A.

Where a bill has been paid for honor, all parties subsequent to the party for whose honor it is paid are
discharged, but the payer for honor is subrogated for, and succeeds to, both the rights and duties of the
holder as regards the party for whose honor he pays and all parties liable to the latter.

b. Give the effect if D refuses to receive payment.

Where the holder of the bill refuses to receive payment supra protest, he loses his right of recourse
against any party who would have been discharged by such payment.

2. Same problem. P also offers to pay supra protest but for the honor of Y. Has Z the right to object if D
prefers A?

Where two or more persons offer to pay a bill for the honor of different parties, the person whose
payment will discharge most parties to the bill is to be given preference.