Chapter Fifth: Effects of Payment (Imputation of Payment - Payment with Subrogation)
Article 307
Article 307 - When several debts are owed by the same debtor to the same creditor, the debtor has the right to declare, at the time of payment, which debt they intend to settle. In the absence of such a declaration, the choice belongs to the creditor on condition that it is exercised immediately in the receipt itself and unless opposed by the debtor.
Article 308
The debtor's decision is subject to certain restrictions: unless agreed with the creditor, he may not apply the operation to the principal upon partial payment until he has first settled the interest, nor claim to extinguish an unexpired debt in preference to a due debt.
Article 309
Article 309 - In the absence of express imputation by one or both parties, payment shall be allocated to the payable debt, preferring those that are not yet due; and if there are multiple payable debts, to that which the debtor had the most interest in extinguishing; failing that, to the most burdensome one; finally, in the absence of any other factor for assessment, to the various debts, proportionally to their amount.
Article 310
Art. 310 - Payment extinguishes the debt absolutely, definitively, and as regards all interested parties. However, it only displaces it if accompanied by subrogation, which assumes that the debt is paid, either fully or partially, by a person who should not bear the burden of it definitively and who finds themselves substituted for the disinterested creditor in order to exercise a claim against the principal debtor or co-obligors.
Article 311
Article 311 - Subrogation takes place either by law or by the will of the creditor or that of the debtor.
Article 312
Article 312 - Subrogation is lawful in the following cases: 1 - To the benefit of the one who, being a creditor by chirograph, hypothec or pledge, discharges another creditor who was more preferred to him. However, subrogation shall have effect only after registration at the land registry for rights subject thereto. 2 - To the benefit of the one who, jointly with others (solidarity, indivisibility) or on behalf of others (guarantee, third-party holder of a hypothecated property), was obligated to pay or had an interest in paying the debt; 3 - To the benefit of the heir who has paid off the creditors of the estate from his own assets.
Article 313
Article 313 – The creditor who receives payment from a third party may always subrogate that party in their rights. The subrogation must then be explicitly consented to and, at the latest, upon payment. The subrogatory receipt only serves as proof of its date vis-à-vis third parties regarding subrogation, on the day when this date became certain.
Article 314
Article 314 - Subrogation is validly consented by the debtor who borrows a sum of money to discharge themselves, and who, in order to provide guarantees to their lender, enters them into all the rights of the former uninterested creditor. In such cases, it is necessary: 1 - That the loan agreement and the receipt have a certain date; 2 - That the loan agreement state that the sum was borrowed for the purpose of making payment, and that the receipt specify that said payment was made with the borrowed funds; 3 - That the lender be explicitly subrogated into the rights of the former uninterested creditor. The consent of this creditor is not required for the validity of the operation.
Article 315
Article 315 - Legal or conventional substitution puts the substituted party in the rights of the disinterested creditor, but does not give them the quality and situation of a assignee. It cannot act as guarantor against the disinterested creditor. It is only subrogated to the rights of that person up to the extent and to the extent of the sums it has itself disbursed. If it was jointly liable with others, it can only act against each of its co-obligors for its share and portion. Furthermore, the substituted party has at their disposal the personal action resulting from their intervention as mandatary or business manager.
Article 316
Article 316 - In the event of partial payment, the subrogated creditor concurs with the original creditor to exercise their respective rights proportionally to what is owed to each of them; they are paid out of the debtor's assets at the rate of one pound per franc.
Article 317
Art. 317 - Payment by cheque remains subject to the provisions of Law No. 7 of April 1330 (1914) which remains in force. (Currently, payment by cheque is subject to the provisions of Legislative Decree No. 304/42 (Land Trade Code): See Article 409 et seq.)