They lived in a small scattered settlements under the patriarchal rule of independent chieftains called datus. They formed distinct kinship groups. One such group was called barangay, a name derived from the sailboats which brought the early Malays to the Philippines. The barangays varied in size from 30 to 100 households. Although the followers of several chieftains were allowed to live together in a single village or town, they remained distinct and their chieftains always acted as equals for common purposes of war or peace.
In the beginning, a datu passed on the leadership to his descendants but as the family grew into clans and tribes, and as wars broke out over farms and fishing rights, the choice of a chief may have depended on their prowess and cunning rather than their hereditary rights. Thus it was possible for a man of lowly birth to ascend in status, acquire fame, assume the title of datu, and gather around him a following of kinsmen and strangers who acknowledged him as their chief. It was also possible for a chief's son or brother to become a slave even of his own brother.
The Spaniards later found that the barangay society had much common with the European fuedal society of the Middle Ages. In fact, Fray de Plasencia O.F.M.(whose real name was Portocarrero), a missionary for many years among the Tagalogs, described the social structure of the Tagalog barangay in the language of Spanish feudalism: "Besides the chiefs, who may be considered as composing the nobility, there were three other states: gentlemen, commoners, and slaves.
The gentlemen were free men, and were called maharlicas...
The commoners are called aliping namamahay. They are householders who serve a lord...
The slaves are those called aliping saguiguilir who serve their lord in his house or farm...
The maharlikas did not pay any tax or tribute to the datu but were bound to perform him services. They followed him to war; they manned the oars when he set out to sea; if he had a house to build, they helped him. The aliping namamahay served their "lord" with half the yield of their farm and rowed for him when he set out to sea They owned houses of their own; they acquired property which their children could inherit and they were free to dispose of their chattels and lands. The aliping saguiguilir (hispanized form of sagigilid, as also dato for datu, maharlica for maharlika) were allowed some share of the harvest to be motivated to work better. Members of this class can be sold. However, rarely did this happen to a slave who was born and reared in the lord's house. It was those captured in war or born and raised as field hands who were easily sold.
The dependents were of three kinds among the Visayans: the tumatabon, the tumarampuk, and the ayuey. The first worked for his master when summoned to do so; the second worked one day out of every four days; the third worked three days out of every four days.
There were furthermore, gradations of levels among the dependents: The full dependent was the son or daughter of dependent parents; the half-dependent was the son or daughter of parents, one of whom was a full-dependent and the other a freeman; the quarter-dependent was the son or daughter of parents, one of whom was half-dependent and the other, a freeman.
Depending on the local community's decision, each child of a free man and a dependent woman was either half-fre and half-dependent, with his descendants considered progressively one-fourth, one-eight or ine-sixteenth dependents, etc. or were divided with half of them free and the other half dependent. Part-time dependents enjoyed the privilege of buying freedom at a set price. However, they easily sank into that class by simply borrowing at a usurious interest rate.
Debt slavery was a feature of the barangay society net to Europeans but common among Malays everywhere. When a debtor incurred a debt with a high rate of interest which totaled more than all he owned, he and his children and descendants automatically became slaves. Slavery was often due to "the desire for gain and the practice of usury." However, Father de la Costa cited the following observation of conquistador Miguel De Loarca, who hinted that the custom which degenerated into oppression must have had quite a reasonable beginning:
If one lends another rice and a year passes without the debt being paid, since rice is something that is planted, if it not repaid in the first year of sowing, double the amount of the loan must be paid in the second year, and four times in the third, and so on at this rate. This alone is their way of taking interest. Some indeed, give a different account of it, but they have not well understood the matter.
Moralist of Medieval Europe believed that money was barren and therefore, it was wrong to take an interest on a money loan. But in the subsistence economy of early Filipinos, money was not known. What was borrowed and lent was rice, which was not barren. As a seed, it was a factor of production which can yield more than double its original quantity. Therefore, it must have seemed reasonable at that time for one who borrowed rice to repay at least twice what one borrowed, and to allow the interest of the loan to accumulate during the passing of each planting season that one failed to pay it back.