Are Bitcoins proper consideration in a contract of sale?

Definition of a contract of sale

By the contract of sale one of the contracting parties obligates himself to transfer
the ownership and to deliver a determinate thing, and the other to pay therefor a
price certain in money or its equivalent.
A contract of sale may be absolute or conditional. 1
Sale, by its very nature, is a consensual contract because it is perfected by mere
consent. The essential elements of a contract of sale are the following:
a) Consent or meeting of the minds, that is, consent to transfer ownership in
exchange for the price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.2
Being consensual in nature, therefore gives right to the parties to stipulate in their
contract what would govern such contract. Bitcoins per is not a currency of the
Philippines, however, it has a monetary value which can be encashed which is
similar of that of the check. This however is subject to the wills of the contracting
parties to agree what would be the equivalent value of the bitcoins.
Given these facts, if the parties would agree, giving their consent to the same, such
contract to sale is now perfected.
Is Virtual Currencies a proper consideration for a contract of Lease or any
other contract requiring monetary consideration?

The contract of lease may be of things, or of work and service. 3

There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established. 4
In the concurrence of the above stated requisites, results to a valid and effective
contract to lease. In the Philippines, the law is silent when it comes to the thing to
be delivered or service to be rendered in a contract to lease. Thus, parties may
stipulate through their contract what would govern their agreement and has the
1 NEW CIVIL CODE, Article 1458.

2 Reyes v. Tuparan (2011), G.R. NO. 188064

3 NEW CIVIL CODE, Article 1642.

4 NEW CIVIL CODE, Art. 1318.

force and effect of a law. The agreement or contract between the parties is the
formal expression of the parties' rights, duties and obligations. It is the best
evidence of the intention of the parties. Thus, when the terms of an agreement
have been reduced to writing, it is considered as containing all the terms agreed
upon and there can be no evidence of such terms other than the contents of the
written agreement between the parties and their successors in interest. Time and
again, we have stressed the rule that a contract is the law between the parties, and
courts have no choice but to enforce such contract so long as it is not contrary to
law, morals, good customs or public policy. Otherwise, courts would be interfering
with the freedom of contract of the parties. Simply put, courts cannot stipulate for
the parties or amend the latter's agreement, for to do so would be to alter the real
intention of the contracting parties when the contrary function of courts is to give
force and effect to the intention of the parties 5. In relation with bitcoin usage, the
law is silent about it. Thus, it neither prohibits nor acknowledges such. As a result, if
both parties would stipulate into their contract and consent to the use of such
instrument in their contract, there is nothing left about to the court but to respect
the validity of such contract agreement of the parties, unless it is shown to be
volative of public morals, public customs, law and other regulations.
If it is an International, what law would govern?
Bitcoins are known of its anonymous character because there is no specific country
that issues or a bank that backup the same with gold or reserved minerals. The
same reason why bitcoins are used international without worrying about the
deflation or inflation or money exchange in the international market.
The fact that there is no definite country or is not recognized by the World Bank as
one currency, up until now, there can be no definite answer for this reason.
However, in case where the United Nations, such where the Philippines is a
signatory of it and other countries in the world, would acknowledge the bitcoin as
one currency or an instrument of payment, being a signatory of such international
treaty or agreement would lead the acceptance of such in the country.
Should they be eventually recognized as legal tender?
SECTION 52. Legal Tender Power. All notes and coins issued by the Bangko
Sentral shall be fully guaranteed by the Government of the Republic of the
Philippines and shall be legal tender in the Philippines for all debts, both public and
private: Provided, however, That, unless otherwise fixed by the Monetary Board,
coins shall be legal tender in amounts not exceeding Fifty pesos (P50.00) for
denominations of Twenty-five centavos and above, and in amounts not exceeding
Twenty pesos (P20.00) for denominations of Ten centavos or less. (RA 7653)
Basing it from the above the definition, bitcoins are being issued by the BSP, hence
it cannot be a legal tender. Up until such time that the Philippines or the BSP will
recognize such as a legal tender.

5 Norton Resource and development Corporation v. All Asia Corporation

Will the use of these produce the effect of payment? If yes, when and
under what circumstances will they produce the effect.
Payment as defined in article 1232 of the Civil Code provides that it is a means not
only the delivery of money but also the performance in any manner, of an
obligation.
Historically, the term payment has three different acceptation. In its broadest sense,
it consists in the fulfillment of the obligation either by voluntary or voluntary
obligation, including its extinguishment by any means or mode of whatsoever, in its
limited sense, it consists in the normal and voluntary fulfillment of obligation by the
realization of the purposes for which it was constituted; in its more limited sense, it
consists in the fulfillment of the obligation by the delivery of the sum of money. The
civil code has adopted the second. Hence, payment as it is understand in the civil
code, means not only the delivery of the money but also the performance, in any
manner, of an obligation.
To produce the effects of payment, the use of legal tender must strictly complied
with. In the Philippines, legal tender presupposes the use of cash. Hence, in one the
cases decided by the Supreme Court, it was held that managers check cannot be
considered as a legal tender of payment, however, the same can have the effects of
payment once it will be in cashed which will the used in the extinguishment of the
obligation. Using such analogous situation, bitcoin is, it is face is not considered a
legal tender but may have the effect of payment when it is in cashed or is
converted monetarily which the proceeds thereof will be used to extinguish the
obligation.

Does the BSP need to issue additional regulations aside from circular no.
944? Does congress need to come up with a law to regulate these?
Yes. The BSP needs to issue additional regulations aside from that issued addressing
or regulating the encashment of the bitcoins in the country. The congress needs to
come up regulating the use of such in the country. Such would include the
protection of the users against fraud which is prevalent in the online transaction
nowadays.
Governments have begun to flex their muscle. The U.S. Department of Homeland
Security recently temporarily cut off Mt. Gox's account with its U.S.-based payment
processor Dwolla for non-compliance with currency-exchange regulations. The U.S.
Treasury Department's Financial Crimes Enforcement Network (FinCEN) recently
issued guidance to digital currencies on compliance with the Bank Secrecy Act 6.

Bitcoin exchanges have strong incentives to cooperate with regulators in efforts

such as these. One reason is purely existential a closure such as that of Liberty
Reserve is a future that no exchange desires to emulate. It is also quite possible

6 Tyler Moore, international journal of critical infrastructure protection, 147-149 (2013).

that exchanges will compete by providing better protection of customer accounts.
Mt. Gox has suffered multiple security breaches, but in every case, it repaid
consumers and absorbed the loss. However, it is not clear that such behavior would
persist in the aftermath of a massive breach. Another reason Bitcoin and other
digital currency exchanges will likely work with regulators and law enforcement is
that taking a stand against crime may well drive criminals to use more lax
currencies. The pessimistic corollary is that, even if Bitcoin and other digital
currencies do not become criminal havens, less responsible currencies will happily
provide sanctuary, just like eGold, WebMoney and Liberty Reserve did in the past.

While regulators can exert influence on the more responsible currencies, they will
doubtless play a never-ending game of whack-a-mole with the dodgier currency
operators. The bottom line is that digital currencies are a disruptive technology.
They can lower online payment fees and even offer cryptographic guarantees about
the money supply. But the risks they introduce from abuse by criminals to
widespread customer fraud are substantial. Technologists, policymakers and
consumers must work together to overcome the many risks and tame what is most
definitely another Wild West.7

7 Tyler Moore, international journal of critical infrastructure protection, 147-149 (2013).