Before the coming of Spanish colonizers, the people of the Philippine archipelago had already attained a semicommunal and semislave social system in many parts and also a feudal system in certain parts, especially in Mindanao and Sulu, where such a feudal faith as Islam had already taken roots.
The barangay was the typical community in the whole archipelago. It was the basic political and economic unit independent of similar others. Each embraced a few hundreds of people and a small territory. Each was headed by a chieftain called the rajah or datu.
The social structure comprised a petty nobility, the ruling class which had started to accumulate land that it owned privately or administered in the name of the clan or community.
- Maharlika (Datu in Visayas): an intermediate class of freemen called the Maharlika who had enough land for their livelihood or who rendered special service to the rulers and who did not have to work in the fields.
- Timawa: the ruled classes that included the timawa, the serfs who shared the crops with the petty nobility.
- Alipin (Olipun in Visayas): and also the slaves and semislaves who worked without having any definite share in the harvest. There were two kinds of slaves then: those who had their own quarters, the aliping namamahay (aliping mamahay in Visayas), and those who lived in their master's house, the aliping sagigilid (aliping hayohay in Visayas). One acquired the status of a serf or a slave by inheritance, failure to pay debts and tribute, commission of crimes and captivity in wars between barangays.
The Islamic sultanates of Sulu and mainland Mindanao represented a higher stage of political and economic development than the barangay. These had a feudal form of social organization. Each of them encompassed more people and wider territory than the barangay. The sultan reigned supreme over several datus and was conscious of his privilege to rule as a matter of hereditary "divine right."
Though they presented themselves mainly as administrators of communal lands, apart from being direct owners of certain lands, the sultans, datus and the nobility exacted land rent in the form of religious tribute and lived off the toiling masses. They constituted a landlord class attended by a retinue of religious teachers, scribes and leading warriors.
The sultanates emerged in the two centuries precedent to the coming of Spanish colonialists. They were built up among the so-called third wave of Malay migrants whose rulers either tried to convert to Islam, bought out, enslaved or drove away the original non-Muslim inhabitants of the areas that they chose to settle in. Serfs and slaves alike were used to till the fields and to make more clearings from the forest.
Throughout the archipelago, the scope of barangays could be enlarged either through the expansion of agriculture by the toil of the slaves or serfs, through conquests in war and through interbarangay marriages of the nobility. The confederations of barangays was usually the result of a peace pact, a barter agreement or an alliance to fight common internal and external enemies.
As evident from the forms of social organization already attained, the precolonial inhabitants of the Philippine archipelago had an internal basis for further social development. In either barangay or sultanate, there was a certain mode of production which was bound to develop further until it would wear out and be replaced with a new one. There were definite classes whose struggle was bound to bring about social development. As a matter of fact, the class struggle within the barangay was already getting extended into interbarangay wars. The barangay was akin to the Greek city-state in many respects and the sultanate to the feudal commonwealth of other countries.
The people had developed extensive agricultural fields. In the plains or in the mountains, the people had developed irrigation systems. The Ifugao rice terraces were the product of the engineering genius of the people; a marvel of 12,000 miles if strung end-to-end. There were livestock-raising, fishing and brewing of beverages. Also there were mining, the manufacture of metal implements, weapons and ornaments, lumbering, shipbuilding and weaving. The handicrafts were developing fast. Gunpowder had also come into use in warfare. As far north as Manila, when the Spaniards came, there was already a Muslim community which had cannons in its weaponry.
The ruling classes made use of arms to maintain the social system, to assert their independence from other barangays or to repel foreign invaders. Their jurisprudence would still be borne out today by the so-called Code of Kalantiyaw and the Muslim laws. These were touchstones of their culture. There was a written literature which included epics, ballads, riddles and verse-sayings; various forms and instruments of music and dances; and art works that included well-designed bells, drums, gongs, shields, weapons, tools, utensils, boats, combs, smoking pipes, lime tubes and baskets. The people sculpted images from wood, bone, ivory, horn or metals. In areas where anito worship and polytheism prevailed, the images of flora and fauna were imitated, and in the areas where the Muslim faith prevailed, geometric and arabesque designs were made. Morga's Sucesos de las Islas Filipinas, a record of what the Spanish conquistadores came upon, would later be used by Dr. Jose Rizal as testimony to the achievement of the indios in precolonial times.
There was interisland commerce ranging from Luzon to Mindanao and vice-versa. There were extensive trade relations with neighboring countries like China, Indochina, North Borneo, Indonesia, Malaya, Japan and Thailand. Traders from as far as India and the Middle East vied for commerce with the precolonial inhabitants of the archipelago. As early as the 9th century, Sulu was an important trading emporium where trading ships from Cambodia, China and Indonesia converged. Arab traders brought goods from Sulu to the Chinese mainland through the port of Canton. In the 14th century, a large fleet of 60 vessels from China anchored at Manila Bay, Mindoro and Sulu. Previous to this, Chinese trading junks had been intermittently sailing into various points of the Philippine shoreline. The barter system was employed or gold and metal gongs were used as medium of exchange.