This is an appeal from a judgment of the Court of First Instance of the city of Manila, Hon. A. S. Crossfield presiding, dismissing plaintiffs'  complaint  on  the merits after trial.  

The judgment in this case must be set aside and the cause returned to the trial court in order that persons necessary to a complete determination of the action may be made parties.

The action is brought on the following instrument:

"By virtue hereof, we will pay, jointly and severally, in Manila, twelve months from the date hereof, to the order of Da.  Cornelia Laochanco the sum of twenty-two  hundred pesos in current money, value received in cash from her for commercial operations.

"Manila,  9th June, 1897.

(Signed)   "TEODORO LIMJUCO.
     "CATALINA  GONZALO."       

The action is brought by Faustino Lichauco for himself and as representative of Eugenia Lichauco, Clara Lichauco, Jttlita  Lichauco, Luisa Lichauco,, Crisanto Lichauco, Zacarias  Lichauco, Galo Lichauco and  Timotea Lichauco.   The complaint alleges that  the  plaintiff, Faustino Lichauco, together with his  brothers and sisters, above-named, are the only heirs at law of Cornelia Laochanco, who died intestate, owning the promissory note which is the basis of this action, and that the said heirs  are the owners of said note by virtue of such heirship.

There being no question of fact raised as to the ownership of said note, we will assume it to have come into the hands of said heirs by due process of administration.   (Quison vs. Salud, 12 Phil.  Rep., 109.)

Section  114 of  the  Code  of Civil Procedure  reads as follows:

"Parties to actions. - Every action must be prosecuted in the name  of the real party in interest.  But in the case of an assignment of a right of action, an action by the assignee shall be without prejudice to any set-off or other defense existing at the time of or before notice of the assignment; but this last provision shall not apply to a negotiable promissory note,  or a draft or a  bill of  exchange, transferred in good faith and upon good consideration before maturity. And an executor or administrator or  legal representative of a deceased person, or a trustee of an express trust, or a person expressly authorized by law so  to do, or  a  lawfully appointed  guardian of a  person of unsound mind, or of a minor, may  sue  or be sued without  joining with  him the person  for whose benefit the action is prosecuted or defended.

"Otherwise than as provided in  this section, all persons having an interest in the  subject of  the action and in obtaining the relief demanded shall be joined as plaintiffs.

"Any  person  should be made a defendant  who, has or claims an interest in  the controversy or the subject matter thereof adverse to the plaintiff, or who is a necessary party to a complete determination or settlement of the questions involved therein.

"If any  person having  an interest in the  subject of the action, and in obtaining the relief  demanded, refuses to, join as plaintiff with those having a like interest,  he may be made a defendant, the fact of  his interest and  refusal to join being  stated in the complaint."   

Section 122 of  the same code provides:

"Necessary parties. - The court may  determine any controversy between parties before it, if it can be done without prejudice to  the  rights of others,  or by preserving their rights for future action; but when a complete determination of the controversy can not be had without the presence of other parties,, the court must order them to be brought in, and to that end may order amended or supplemental pleadings, or a cross complaint, to be filed  and summons therein to be  duly  issued and served."

In the case of Rallonza vs. Evangelista (15 Phil.  Rep., 531),  the court said:

"This  is a suit for the recovery  of land.  It  is  said textually in the complaint, among other things, 'that both the plaintiffs  and the  defendants  are  so numerous that it is impossible for them to appear at  the trial; that the said Pablo Rallonza and Teodoro Evangelista are sufficient to represent the interests of the rest of the plaintiffs and defendants, respectively.'  And in accordance therewith the trial was continued in the name of the said Rallonza and Evangelista only, though  they  both  represented, as it appears, all the other interested parties, who were very numerous, both plaintiffs and  defendants, according to the statement contained in  the complaint.

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"In view of the premises established in the judgment, and which accord with the weight of the evidence and the allegation made in  the complaint that the parties interested in the lands in litigation, both as plaintiffs  and as  defendants, are very numerous, it is evident that the suit was improperly prosecuted and decided in the name of all the aforesaid interested parties to whom reference is made, under the supposition that the latter  were represented therein by Pablo Rallonza and  Teodoro  Evangelista,  respectively, the only ones  who personally appeared  in their  own right  and in representation of the former at  the trial."

The court then took up section 118 of the Code of Civil Procedure, which  provides  that where parties are  very numerous an action may be brought by one on behalf of all, and after discussing the  provisions of that section, said (pp. 533-534):

"Whatever be the real meaning of those provisions, under the different aspects in which they may be considered, we hold it to be certain and unquestionable that they ought not to and can not apply to actions instituted, as in the present case,  for the recovery of  property.   This class  of actions should always be promoted by the interested parties themselves and in the name of all and each one of them, in order that, as stated in  section 114 of  the aforementioned code of procedure, there may be a determination  or complete settlement of the  questions  in litigation. He  who considers himself entitled to  a certain property can not be ignorant as to who are his co-owners, if he has any; and, knowing them, he can not neglect to make them parties to the suit under the pretext that they are numerous.  This sole circumstance does not make their, summons and appearance impossible when they  are  personally known.  In such a case, the reason or motive inspiring the provisions of section 118 would be lacking.  The representation made by Pablo Rallonza, as plaintiff, and by Teodoro Evangelista,  as  defendant, can not bind their respective co-owners, as regards the results of the trial, inasmuch as it is altogether illegal. The trial, considered from this point of view, was essentially null and  void from  the beginning.

"The judgment appealed from is set aside,  and it  is ordered that a new trial be held wherein those interested in the lands in question shall be made parties either as plaintiffs or as defendants.  *  *  *"

In the  case of Araneta vs. Montelibano (14 Phil. Rep., 117), the court said  (pp. 124-126):

"A serious objection exists as to parties against the form' of the present action.  The plaintiff alleges in his complaint that Aniceto  Montelibano died  on the 20th  of December, 1898, intestate, leaving four minor children, called Bibiana, Maria,  Rosario, and Raymundo. In  the present action,, however, the plaintiff made defendants Braulio Montelibano,  as tutor of said minor children, Rosario,  Raymundo,  and Bibiana.  The record  does not  show why Maria was not made a party defendant.  Until the contrary is shown, each of these heirs has an  equal  interest  in the property in question.

"It would seem clear that  the present action could not be concluded without having all of the heirs in court.

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"For  the reason, therefore, that all of the  heirs of the said Aniceto  Montelibano were not made parties in  the present action, the judgment of the lower court  is hereby revoked and the  cause is hereby remanded  to the  lower court, with permission on the part of the plaintiff to amend his complaint."

(See also Sanidad vs. Cabotaje, 5 Phil. Rep., 204; Garcia  de Lara vs. Gonzalez de Lara, 2 Phil. Rep., 294.)

We can see little difference in principle between the cases above cited and the one at bar.  The reasoning in those cases applies equally to this case.   It would be idle for this court to decide the  present case upon the merits.   Its decision would be futile and ineffective.  Any one of the heirs might, the  day following the decision of this court,  institute an action against the  defendants upon the same promissory note and prosecute his  action to final judgment, both on trial and on  appeal.  If in  that final judgment  he  were denied a right to recover, another one of the heirs might, the next day, institute another action for exactly the  same purposes; and so on until the defendants had been brought into court upon the same cause of action as many times as there were  heirs who had an  interest in the subject matter of the litigation.   It is  the uniform policy of the law to reduce litigation as far as possible.  To this end it requires that every person who has an interest in the subject matter in litigation shall be made a party to the action, that all rights may  be adjudicated at  the same time.

The judgment must, therefore, be set aside, as aforesaid. We  believe,  however, that, for  the information of the parties interested in the subject matter of this action and to the  end  that  unnecessary litigation may be avoided, the opinion of the court should be  given upon the facts presented in this case.  Knowing what our opinion is upon these facts it is probable  that  the  heirs  will  not care to  pursue the litigation further unless, which is somewhat unlikely, they are able to present hew facts.  We, therefore, proceed to a consideration of the case upon the merits as  presented by the record.

The defendants hope  to succeed upon each one of  two grounds, asserting  (1) that the action has prescribed,  and (2) that .the said cause of action has been the subject matter of a prior final adjudication  between the same parties.

We do not find it necessary to discuss or decide the second question presented by the appellees, inasmuch as the cause must be resolved in their favor upon the ground first stated.

That the instrument in question upon  which this action is brought is a commercial instrument is indubitably established by this court in the case of El Banco Espanol-Filipino vs. Tan-Tongco  (13 .Phil.  Rep.,  628).   In  that  case the promissory note  read as follows:

"Three months from this date I hereby promise to pay, in Manila, to the order of  D. Geronimo  Jose, the sum of three thousand six hundred pesos, Mexican currency, value received in cash for commercial transactions."

In deciding that case the  court said:

"Mercantile promissory notes. - Neither the literal reading of article 532 of the Code of  Commerce,  nor the principles governing  the mercantile law now in  force, require that a promissory note, payable to order,  be made between merchants, in order that said note  may be a mercantile one, as is required by said article 532 in connection with drafts.

"Id. - The law does not require that promissory notes, in order that they may be  indorsed and  that the indorsement may be valid, the same as that of a bill of exchange, must be made between merchants,  especially if  the  said notes arise from  a mercantile loan, in which case it is only required that one of the contractors be a merchant, according to article 311 (Code of Commerce).

"Id. - A promissory note arising from a mercantile loan, according to its literal reading and the principles of the Code" of Commerce, where the same is drawn to order, is perpetually negotiable,  transferable,  and strictly mercantile, no other expression being necessary for the purpose of showing that it  arises from a commercial transaction within  the meaning of article 532."

Section 38 of the Code of Civil Procedure reads as follows:

"To what this chapter does not apply. - This chapter shall not apply to actions already commenced, or to cases wherein the right of action has already accrued; but the statutes in force when  the action or right of action  accrued shall be applicable to such cases according to the subject of the action and without regard to the form; nor shall this chapter apply in the case of a continuing and subsisting trust/ nor to an action by the vendee of real property in possession thereof to obtain the conveyance of it:  Provided, nevertheless, That all rights of action which have already accrued, except those  named in the last preceding  paragraph, must  be vindicated by the commencement of an action or proceeding to enforce the  same within ten  years  after this Act comes into effect."

This court has held in numerous cases  that the prescription of a cause of action arising before  the Code of Civil Procedure waa operative  is governed  by  the laws in force at the time the cause of action arose.   (Falacio vs. Sudario, 7 Phil, Rep., 275; Tubucon vs. Dalisay, 7 Phil. Rep.,  183; Magallanes vs. Caneta, 7 Phil. Rep., 161; Villaruz vs. Azarraga, 15 Phil. Rep., 108.)  In the latter case we said (p. Ill):

"It has been held by this court that the rule of prescription to be applied where  the  right of action arose before the present code went into effect is that stated in  the Civil Code or in the laws in force prior to the Civil Code.  (Araneta vs. Garrido, 6 Phil. Rep., 137.)"

It is evident, therefore, that  whether  or not the action in the case at bar has prescribed depends  not upon the provisions of the Code of Civil Procedure  but upon the laws in force prior to the time said code  became effective; and inasmuch as the instrument forming the  basis of the present cause of action is a commercial instrument, it is  governed by the provisions of the Commercial Code and not by those of the Civil Code.

Article 950 of the Commercial  Code  reads as follows:

"Actions arising from drafts shall extinguish three years after they have fallen due, should they have been protested or not.

"A similar rule shall be applied to drafts and promissory notes of commerce, to checks, stubs, and other instruments of draft or exchange, and to the dividends, coupons, and the amounts of the amortization of obligations issued in accordance with this code."

The instrument in question being dated the 9th of June, 1897, and payable twelve months after date, it would fall due on the 9th day of June, 1898.  As a result the right to bring an action upon it prescribed on the 9th day of June, 1901.  This action was commenced on the 1st day  of December,  1908.

To avoid the results which  would inevitably follow from these facts,  the plaintiff alleges that the defendant has always recognized the debt in question as alive and in force and that he particularly did so in the year 1907 under the following circumstances:  In that year the plaintiff in this case began an action against the defendant in this case for the recovery of the amount due upon the same promissory note which is  the  basis of the present action.  During the progress of that action in  court, and, as it appears from the record of that action introduced in evidence in  this case, immediately after said action had been  commenced,  the defendant by a writing offered to secure the debt in question by turning over to the plaintiff in that action, also plaintiff' in this, certain lands belonging to him, with the right to repurchase within four years.

This act of  the  defendant is seized upon by the plaintiff as showing a recognition of the existence of the debt under article 1973 of the Civil Code, which provides that -

"Prescription of actions is interrupted by their institution before the courts, by extrajudicial claim of the creditor, and by any act of  acknowledgment of the debt by the debtor."

And under  article 944  of the Commercial Code,  which provides that -

"The  prescription shall be  interrupted  through suit or any judicial proceeding brought against the debtor, through the acknowledgment of the  obligations,  or  through the renewal of the instrument on which the right of the creditor is based."

There might possibly be  some legal  basis for the. contention of the plaintiff that the act of the defendant, above mentioned, during the pendency of the prior action, brought the case within the provisions of the above-named articles, if  it  did  not conclusively  appear in the record that such act of the defendant was  for the purpose  of settling and compromising  said action.   It clearly appearing that the said act was executed solely for the purpose of compromising a pending litigation, it is  not an admission that anything was due and can not be used as evidence against  the defendant.  Section 346 of the Code of Civil Procedure provides:

"Offer  of  compromise. - An offer of compromise is not an admission that  anything is due, and is not admissible in  evidence."

In the case of City of Manila vs. Del Rosario (5 Phil. Rep., 227), the court said (pp. 229-230):

"He stated that he signed the second document because the president of the municipal board,  Sr. Herrera, advised him to do so in order to avoid litigation with the city.  His testimony in this respect was not  contradicted.   We accordingly hold that the provisions of section 346 of the Code of Civil  Procedure are applicable to the case at bar in so far as they declare that an offer of compromise is not admissible in evidence."

While the evidence as to whether or  not the document tendered by  the defendant to the plaintiff as security for the payment of the  debt in question was a recognition  of the debt or an offer of compromise is somewhat  conflicting, we have no  hesitation in finding, upon  the facts, that it was an offer of compromise.  Testimony offered for the purpose of showing such a recognition of a debt that has been  quieted by the statute of  limitations  as  imports a new promise to pay, must be clear and explicit.   In the case of  Bell vs. Morrison (1 Peters, 351), Mr.  Justice Story fully discussed the subject, and after dealing with the importance of giving  the statute of limitations such support as to  make it "what it was intended to be, emphatically, a statute of repose.' and  "not  designed  merely to raise a presumption of payment of a just debt from lapse of time;" and, repeating passages from  the  opinions in Clementson vs, Williams (8 Cranch., 72) and Wetzell vs. Bussard (11 Wheat., 309), said (p. 362):

"We adhere to the doctrine thus  stated, and think it the only exposition of the statute which is consistent with its true object and import.  If the bar is sought to be removed by the proof of a new promise, that promise! as a new cause of action, ought to be proved in a clear and explicit manner, and be in its terms  unequivocal and  determinate; and  if any conditions are annexed, they ought to be shown to be performed.  

"If there be no express promise, but a promise is to be raised by implication of law from  the acknowledgment of the  party, such aknowledgment ought to contain an unqualified  and direct  admission of  a  previous, subsisting debt, which the party is liable and willing to pay.   If there be the accompanying circumstances, which  repel  the presumption of a promise or intention to pay; if the expressions be equivocal,  vague and indeterminate, leading to no certain conclusion, but at best to probable inferences, which may affect different minds in  different ways,  we  think  they ought not to  go to a jury as evidence of a new promise to revive the cause of action.  (Shepherd vs. Thompson, 122 U. S., 231, and cases there cited.)"

We find that it has not been proved by a fair preponderance of the evidence that the debt was revived.

The judgment appealed from is hereby set aside and the cause returned to the court whence it came, with directions, in case  the above-named heirs,  or any of them, desire to continue this litigation, to enter an order bringing in all interested heirs as parties plaintiff or defendant,  and  to require  the necessary proceedings to make that order effective.  No special finding as to costs.  So ordered,

Arellano, C. J., Mapa, Carson, and Trent, JJ., concur.