LEGAZPI EXPEDITION

Arter King Charles I (Emperor Charles V) abdicated the Spanish throne in 1556, his son,
Philip I, became the King of Spain. Later, he wrote a letter to the Mexican Viceroy Luis de
Velasco, ordering him to prepare an expedition for the Philippines' conquest and
colonization. However, before the expedition was set, the Viceroy died. The instructions
were issued by the President and Auditors of the Royal Audiencia of Mexico.

The commander of the expedition was given to Miguel Lopez de Legazpi. He was
accompanied by Fr. Andres de Urdaneta (acting as the chief pilot), Captain Felipe de
Salcedo (Legazpi's grandson), Guido de Lavezaris (survivor of the Villalobos expedition),
Melchor de Legazpi (fleet accountant and Legazpi's son), and five Augustinian missionaries.

Instruction to Miguel Lopez de Legazpi from the Royal Audiencia of New Spain (Vol. Il)

EXCERPT:

The following were the main specific instructions of the King of Spain to Legazpi:

"The fleet, setting sail, shall proceed in search of and to discover the Western Islands
situated toward the Malucos, but you shall not in any way or manner enter the islands of the
said Malucos, but you shall enter other islands contiguous to the, for instance, the Filipinas,
and others outside the said treaty, and within this majesty's demarcation, and which are also
reported to contain spice. They are to labor for the evangelization of the natives, to ascertain
the products of the islands, and to discover the return route to New Spain…. When you have
arrived at the said Filipinas Islands, and other islands contiguous to them and the Malucos,
without, however, you shall try to discover entering the latter, and examine their ports, and to
ascertain and learn the settlements minutely therein and their wealth; the nature and mode
of life of the natives; the trade and barter among them, and with the nations; the value and
price of spices among them….. Urdaneta must return with the ship or ships sent back to
discover the return route, because of his experience."

Here were the other significant events that happened during the expedition, beginning from
their

arrival in the Philippines in 1565 until they were able to establish a settlement in Maynila in
1571:

●​ February 13, 1565: Anchored near the island of Cebu. Unable to land at the island
due to Cebuano hostilities
●​ February 22, 1565: Sailed to Samar and was welcomed by Chief Urrao and made a
blood compact
●​ March 9, 1565: Landed at Limasawa and the Chief Bankaw hospitably received
them.
●​ March 1565: Made a blood compact after befriended the native kings, Sikatuna and
Sigala
●​ April 27, 1565: The expedition sailed to Cebu, and Chief Tupas defied the Spaniards.
The attacks of Legazpi's force defeated Cebuanos
 ○​ As the first established Spanish settlement, Cebu named "Villa del Santisimo
Nombre de Jesus (City of the Most Holy Name of Jesus) after an image of
Sto. Niño was found in one of the native houses.
●​ June 4, 1565: Legazpi and Rajah Tupas concluded a treaty with the condition that
Chief Tupas and the other datus recognize Spanish sovereignty and friendship
○​ Augustinian missionaries began the spreading of Christianity to the natives
of Cebu
●​ 1569: Due to Cebu's scarcity of food provisions, the Spaniards transferred to Panay,
where the people peacefully welcomed them. They established a second settlement
on the bank of the Panay River.
●​ 1570: Having heard of Luzon's riches, Legazpi dispatched Martin de Goiti to explore
the northern region. Landing in Batangas with a force of 120 Spaniards and 600
Visayans from Cebu and Panay island’s, de Goiti explored the area.
●​ May 8, 1570: They arrived in Manila Bay. The natives welcomed them. Goiti's
soldiers camped there for a few weeks while allying with the Muslim leader Raja
Soliman, a vassal under Brunei's Sultan. He refused to submit to the Spanish
vassalage and defended his area from the Spaniaras.
●​ May 24, 1570: Goiti and his men captured Maynilad and Soliman, and his warriors
retreated In the same year, more reinforcements from Spain arrived in the Philippines
●​ May 1571: Legazpi followed Goiti and Salcedo to Maynilad. He formed a peace pact
with the natives and the local rulers Rajah Suleiman and Lakan Dula
●​ June 3, 1571: Although both local rulers befriended Legazpi, some Filipinos in
Central Luzon defied the Spaniards. Bambalito, a Pampango warlord, rallied the
warriors from different towns to resist Spanish invaders' resistance. Their war boats
sailed down the Channel of Bankusay, off the north shore of Manila Bay, ang
engaged de Goiti's forces in a naval battle. However, Bambalito was killed, and their
plan failed
●​ June 24, 1571: Legazpi established a settlement. He proclaimed Maynilad as the
island's capital and the Spanish government seat in the East indies​
Years later, King Philip II, by his Royal Decree of June 1, 1574, named Manila as
Insigne y Siempre Leal Ciudad (Distinguished and Ever Loyal City).

SPANISH COLONIAL SYSTEM IN THE PHILIPPINES

Spain was the first European country to rise as a great colonizing power in modern times. At
the zenith of her glory and grandeur during the 16 century, her Siglo de Oro (Golden
Century) established many colonies in Africa and in the New World (Latin America) and
Asia. These were the first global colonial empire in history, making King Philip | the first
monarch to justly boast that the sun never set on his realm. To rule their colonies, Spain
created and compiled their enacted colonial laws into a convenient code called Recopilacion
de los Leyes de los Reynos de las Indias (Laws of the Indies). This is composed of
numerous decrees issued over the centuries to regulate their colonial territories' social,
political, and economic life.

Patterns of Colonization

The colonization of the Philippines by Spain could not have been achieved without the help
of native allies. Also, historians always attributed the success of Spanish colonization to the
missionaries' Zealand the superiority of Spanish arms. Despite their minimal numbers, the
Spaniards managed to achieve the colonization of most of the Philippines.

The colonizers did not entirely develop their own initiated pacification method in the islands
but to comply with the Royal Ordinance on Pacification issued in 1573. The colonizers
gathered information about the natives' culture, their languages, and divisions of the natives
in the provinces and the leader they obeyed. The Spaniards were to seek friendship with
these native leaders through trade and barter.

Also, colonization's success was primarily due to the Spanish explorers practice befriending
the ocal chieftains. Reflecting a medieval tradition by offering friendship and protection is
given by the Spaniards to recognize the Spanish monarch's power by the natives. The
Spaniards were willing to do native practices to achieve the native leaders goodwill through
sandugo or blood compact to seal the friendship. Though the native pact symbolizes
brotherhood and equality, the Spaniards never actually believed in its importance as long as
it secured the Spanish aim of conquest. Moreover, to ensure the loyalty of the datu class, the
Spaniards exempted them and their descendants from payment of taxes, the conduct of polo
or community labor, and other colonial impositions. Some of them received appointments as
local officials and other titles.

Later, the Spaniards used the divide and rule method by using one group against another in
quelling revolts throughout its rule. Aside from titles and exemptions from tribute, another
incentive was the attraction of booty. The prospect of booty is reflected in the repartimiento
system. The term came from the Spanish repartir - to allot. It was the system of assigning
quotas of exploitable goods, services, and persons. Under this system, it allows the
Spaniards to seize the wealth and food of the natives.

Since the country was divided into thousands of scattered barangays, it became necessary
to

gather the population in places where colonial and religious officials could conveniently
administer them The process called reduccion was responsible for forming the nucleus of
many towns and pueblos. The barangays were placed "under the bells" (bajo las campanas,
where the natives were placed within tolling distance of the parish church bells. The natives
were brought into the reducciones either by force or by persuasion and were converted to
Christianity. The colonizers called the baptized natives Indios and separated them from the
infieles or the unpacified natives (De Viana 2011, 78-82).

Political Changes: Centralized Government

In organizing the central government, the Spanish authorities saw that they would be guided
by their experience in Mexico and South America. The Spanish colonizers organized a
highly centralized form of government. It meant that the central or national government was
so powerful that almost everything had to be done with its knowledge and consent. From
1565 to 1821, Spain governed the Philippines indirectly through the Viceroy of New Spain
(Nueva Espana in Mexico). As a crown colony, the Philippines is governed by the Council of
Indies (Consejo de las Indias). The King is the supreme lawmaker and administrator of all
and colonies and was guided by the Recopilacion de los Leyes de las Indias. In 1863, the
Council of Indies was replaced by the Ministry of Overseas Colonies (Ministerio de
Ultramar).

The governor-general who carried the rank of Captain-General headed the executive branch
of the central government. Combining the Captain-General's powers as President of
Audiencia, Vice-Royal Patron, and Commander-in-Chief of the Armed Forces, he was a truly
powerful official. This power was best shown in the right of cumplase bestowed upon him by
the King. The cumplase was the governor's right to suspend or veto the operation of a Royal
decree or order relative to the Philippines if, in his opinion. the said decree would not be
beneficial to the country's administration.

The Audiencia and lower courts exercised the judicial powers of the government It was
established in 1583 to administer justice to the aggrieved people in the colony and was the
highest court insofar as civil and criminal cases. In the absence of the Governor-General, the
Audiencia exercised political and administrative powers, it also audited the finances of the
government.

administrative duty. The first encomendero was Governor-General Legazpi and later gave
lands to those who had helped in the Philippines' conquest. The size of the encomienda was
determined by the number of people living in it and the value of the land on which the natives
lived. At first, an encomienda could be held for three generations,

but it was later reduced to two generations. However, instead of

doing the duties of the encomenderos to teach the natives about Christian doctrine and
protect them, they abused their authority and maltreated the Philippines.

There were three kinds of encomienda: Royal, which belonged to the King;

Ecclesiastical, which

belonged to the Church; and Private, which belonged to a private individual.

Encomiendas Assigned by Legaspi (Vol. XXXIV, 304-310); Memorial of Bishop Domingo de

Salazar on the

Abuses Committed by Spaniards (Vol.5).

ENCOMIENDAS ASSIGNED BY MIGUEL LOPEZ DE LEGAZPI

EXCERPT:

In the testimony given by the notary Fernando Riquel in the city of Manila, June 2, 1576, and
which was taken from the government records, appears an attested relation of the
encomiendas which were distributed among the original Spanish conquistadors of Filipinas.
From this document especially noteworthy from the viewpoints of history, geography, and
politics, it appears that the islands at the time of Sande's arrival, had been divided into
encomiendas in the following manner. In Cebu, Legazpi assigned to his Majesty the port and
the village as far as Canipata (January 16, 1571). In the rest of the island he apportioned
(January 25, 1571) 3,000 Indians to Jerónimo de Momón: 2,000 to Cristóbal Sánchez; and
1,000 to Francisco Carreno. In Panay, he assigned to his Majesty (January 16, 1571) the
river and settlement of Panay from the coast to Catillán. On October 31, he apportioned
about 4,000 Indians of Sogut (the mouth of the Araut River) and Malpa, with their tingies
(mountains) and hills to the chief-constable Gabriel de Ribera: about 6,000 Indians on the
Araut River near the coast from the villages of Dayt, Payán, Pinabao, Tongo, Pandán,
Nonoc, Dumangal, Cararao, Balig, Bantao, Mata, Harin, Daripe, and the villages of the
tributary that flows into the Bumey River between Polocán and Bulney with their tingues and
hills, to Captain Luis de la Haya; to Lope Rodriguez and Diego Lopez de Valdepeñas, 2,000
Indians apiece, in the villages of Cali and Sibucao up the river (at the entrance of the Araut
River) past the village of Daripe and as far as Sicapurut. On November 2, he assigned 4.000
Indians of the Pua River between Bago and Marianao, and the branch of Barbarán, with their
tingües and hills, to the soldiers Baltasar Rodriguez and Alonso Sánchez: 2,000 Indians
apiece on the tributary of the Sibalinte between Amindan and Banga to the soldiers
Francisco de Ribera and Diego Garcia; the Indians of Maluhud and its creeks to the soldier
Alvaro de Angulo; 2,000 Indians of the bay of Moguin, namely, the Indians of the creek of
Batán, Aguisan, Initantarón, Capulanbaril, Dinao, Moguin, and Manuc, with their tingües and
hills, to the soldier Gonzalo Riquel; and 2,000 on the tributary of the Mayo to the soldier
Francisco Rey. On November 3, 2,000 Indians on the river of Daclan, and the villages of
Amacatan and Tagaun, with their tingües and hills, to Antonio Flores; the Indians of the
villages of Cuimba: Caranga, Argahao, Marabagui, and Bugau, with their tingies and hills to
Hernando de Monroy; the Indians of the river of Arui, and the natives of Barugo, Uyungin,
Cuyuran, Naorguán, Bangot, Tibao, Lonio, Cabáyan, Lalac, and Tabangan, with their tingues
and hills to Rodrigo de Vargas; the Indians of Tibaguán and Baguinguin, with their tingues
hills to Esteban Rodriguez; and the Indians of the river of Xaro and those of the villages of
Calataca, Pasanhan, Cabuga, Alenguen, Samble and Sunamburi, with their tingües and
hills, to Francisco Durán. On April S, 1572, the natives of Xaro and the others whom
Francisco Durán had held to Luis Pérez. On April 15, the Indians of Dulingan, Antique,
Bunital, and Aslúman to Diego Ximénez. On June 1, the Indians of the villages of Otón with
its tingües and hills to Miguel de Loarca. In Cibabao and Paita, on January 25, 1571,
Legazpi assigned the 2,000 first Indians to Bartolomé Cindila; 2,000 to Juan de Aguera;
2,000 to Diego de Quintanilla; I,SCX) to Diego Godinez; 1,500 to Damián Gonzalez; 1,500
10 Antonio Ginovs; and the same number each to Juan Méndez, Francisco de Torres,
Andrea de Luca, de la Xari, and Juan Pérez; 2,000 on the river of Panae Of the said infande
to dugustin Duerto. On above to islands in order to avoid disputes among February 14
Leeazpi united the encomiendas of the encomenderos, giving the Indians of Limanca,
Vavan, and Samal to Arousin Duerto and Bartolomé Andrea: those of Paita to Wuan Griego:
those of Cacuavinato Tan Méndez: those of Buri to Felipe de la Xara; those of Tunaoyiran to
Juan Pérez; those of Paranas to Andres de Luca, those of Caliga to Juan Gutierrez; and
those of Bondo to Miguel Godinez and Antonio Ginovés. -

For brevity we omit the encomiendas assigned by Lavezaris and Doctor Sande, which are
also named in this document. This document shows 143 encomenderos whose names are
expressed in it.

●​ Polo y Servicios The Spanish officials ordered the natives, 16 to 60 year-old males
to work in constructing churches, roads, bridges and ships, and hauling and cutting
timber industries for forty days
However, some conditions were set for forced labor, which included the following:

a. The Filipinos to be drafted for work must be paid for their work.

b. The Filipino laborers should not be made to work in distant places to return to their
families.

c. Drafting of the laborers should not coincide with the planting and harvesting season.

d. Physically incapable men should not be overworked.

e. Forced labor should be resorted to only in cases of absolute necessity

f. The number of laborers drafted should be diminished as soon as laborers from other
countries (probably the Chinese) had volunteered to work.

In practice, these provisions were disregarded. Filipinos were not paid their wages. They
were separated from their families by sending them to far-flung provinces. They were not
given food, but instead, they had to provide their food. Moreover, they were overworked, and
as a result, thousands of Filipino laborers died.

For a Filipino laborer to be exempted from forced labor, he had to pay a fee called falla. The
fee was unreasonably high, and the laborers could not afford to pay it.

* "Decree Regulating Services of Filipinos"

EXCERPT:

DECREE REGULATING SERVICES OF FILIPINOS

We order that, in the Filipinas Islands, no Indians be distributed in repartimiento, in any

number, for private or public meant Of gain; since for the cutting of wood, navigation of
caracoas, and other works of this sort, in which our royal treasury is interested, and for the
public convenience, the Chinese and Japanese found on any desired occasion in the city of
Manila must be (as they are) hired; and, as is understood, there will be a sufficient number of
workmen among them, who will engage in these services for the just price Of their toil. From
them shall be employed those who wish to hire themselves out, in order to avoid the
concourse of Indians [at Manila). In case that the repartimiento cannot be entirely avoided,
as will be provided, and if the Chinese and Japanese are either unwilling or unable to satisfy
the actual need of those public works, the governor and captain-general shall take measures
with the Indians so that they may aid in the works freely and voluntarily, making use of the
means that seem advisable to him to effect it. But, granted that there be a lack of voluntary
workers, we permit that some Indians be forced to work in these occupations, under the
following conditions, but in no other manner.

That this repartimiento shall be made only for necessary and unavoidable affairs; for in so
odious a matter, the greater benefit to our royal treasury, or the greater convenience of the
community, cannot suffice; and all that which is not necessary for their preservation, weighs
leu than the liberty of the Indians.
That the Indians in the repartimiento shall be lessened in number as the voluntary workers
shall be introduced, whether the latter be Indians or those of Other nations.

That they shall not be taken from distant districts, and from climates notably different from
that of their own villages. The choice of all shall proceed without any partiality, and so that
both the hardship of distances, the burden of the occupations, and compensation for the
other circumstances in which there will be more or less grievance, shall be shared and
distributed equally, So that all may share the greater and less toilsome services, so that the
benefit and alleviation shown to some may not be changed into injury toward others.

That the governor assign the number of hours that they shall work each day, taking into
consideration the lack of strength and weak physical constitutions. That they be given in full
the wages that they eam for their work. And they shall be paid personally each dav, or at the
end of the week, as they may choose.

That the repartimientos be made at a time that does not embarrass or hinder the sowing and
harvesting of land products, or the other occasions and periods upon which the Indians have
to attend lo the profit and management of their property; for our intention is that they be not
deprived of it, and that they may be able to attend to everything. Therefore, we order the
governor that, at the beginning of the vear, he shall take note of the building and other
matters of our service in which the Indians have to be employed; for if the time is chosen, it
may be arranged in such a way that the Indians may receive no considerable injury to their
property or persons.

That, granting the poor arrangement and plan of the caracoas, and that when remanded to
them many Indians generally perish, because of sailing a deck, and exposed to the
inclemencies: of storms, we order that these craft be improved and built in such a manner
that the Indians may manage the oars without risk of health and life.

In all the above, and in all that may touch their preservation and increase. We order the
governor to proceed with the care and vigilance that we expect, and that he punish signally
and rigorously the ill-treatment received by the Indians from their caciques or from the
Spaniards - especially should the latter be our officials, upon whom the penalties must be
more rigorously executed. We request and charge both the secular prelates and the
provincials of the orders to exercise the same attention in the punishment of offenses of this
nature, committed by the ministers of instruction and other ecclesiastical persons. And we
order that any omission Of the governors, justices, and officials entrusted, in whole or in part,
with the observance and fulfilment of this law be made a matter of their residencia.

[Law passed in the reign of Felipe IlI and dated Aranjuez. May 26,1609.J

●​ Tributo

The Filipinos were compelled to pay a tribute, in cash or in-kind, in full or on an installment
basis, to the Spanish colonial government. The tribute was a form of recognition of their
loyalty to the King of Spain

In 1570 when it was introduced, the amount was eight reales (one real = 12.5 centavos).
Those who paid
were persons above 16 years old up to 60 years old. In 1589, the tribute was raised, of
which a small portion was given to the church. This was called the Sanctorum.

Because of the opposition to the tribute and the abuse committed with its collection, the King
abolished it in 1884, and the cedula personal was introduced. This is the present equivalent
of the Residence Certificate Class "A."

Order issued by the Governor for Collection of the Tributes (Vd. VIIl; Opinion of Fray Martin
de Rada on Tributes Coming from Indians" (Vol. III).

EXCERPT:

ORDER ISSUED BY THE GOVERNOR FOR COLLECTION OF THE TRIBUTES

I, Gomez Perez Dasmariñas, governor and captain-general of these Islas Philipinas for the
king

our lord : ..

Accordingly, by this present I do order and command that in the collection of tributes, not
only in the encomiendas of the king but in all others, the following rules and conditions shall
be observed:

First: In the encomiendas of his Majesty as well as in those of private persons, where they
have Christian instruction and the administration Of secular justice for the maintenance of
low and order, the entire tribute levied may be collected from the nates; and the
encomendero is bound, with that part of the tribute which falls to him. to aid in the support of
the minister of ministers of religion who belong to his encomienda. The said tribute shall be
collected in its entirety in the aforesaid encomiendas where justice and religious instruction
exist, and equally from all the Indians therein, whether believers or unbelievers. I also order
all encomenderos who are or shall be appointed in the encomiendas, to provide with the
utmost punctuality and promptness, each in his own encornienda, that part of the tribute
which is due from them for the maintenance of religious teaching, churches, and all Other
purposes of religion, under penalty of being deprived of their encomiendas; and the
collectors, under the penalties hereinafter written, which will be most vigorously executed.

Item: In those encomiendas where justice is administered, but where, through lack of
ministers, there is no religious instruction, the tribute shall be collected, reserving that part
which would be due 1o the minister, if they had one— namely, a fourth part of the tax, a little
more or less, which part shall be left and freely surrendered to the Indians.

Item: In those encomiendas which, on account Of their remoteness,

have neither justice nor religious instruction, no tribute shall be collected until such time as
God shall order the affairs of these islands; and his Majesty, informed of their condition, shall
make other provisions, in order that he may be better served.

Item: The same is decreed for those encomiendas which are disaffected or have never been
pacified. No collection shall be made in this case except from those encomiendas which,
having once been pacified, and having rendered obedience to his Majesty, shall without any
just cause rise in rebellion. From those encomiendas may be taken such part of the tribute
as can conveniently be collected, for their preservation and by way of recognition; and
whatever small portion his Majesty may order, and what the lord bishop cites, may be
collected.

And since, according to the above, no tribute is to be levied where there is no justice,
occasion is offered for many parts of these islands which, on account of their great distance,
are beyond its reach— to become turbulent and rebellious as soon as they realize that they
are released from tribute which is now collected from them. Most pernicious consequences
[would follow (?) - illegible in MS.] and many Other districts would be disloyal and rebellious;
and it would be necessary, when they should have sufficient religious instruction, to go back
and win them and [illegible in MS.] anew. Assiduous efforts shall be made to provide, as
quickly as possible, justice in the aforesaid encomiendas. Where it is now lacking, charge
the encomenderos to inform me of such districts and territories, with their topography and
location; also Of the number of those who pay tributes, so that I may appoint accordingly, in
each encomienda, an alcalde-mayor, or a deputy, or others, if necessary, who may be
suitable persons for such offices. They will have salaries sufficiently large to enable them to
administer justice to the natives, protecting and defending them against anyone who would
injure them, and maintaining such intercourse and friendship with them as will incline them to
receive religious instruction when they shall have it. Thus in all the encomiendas which have
this justice and preparation, as Soon as it is known what benefits are conferred upon the
natives by those ministers of justice, in influencing and governing them, as above stated,
authority will be given to the encomenderos to collect the three-fourths of the tribute, as I
have Said. But in the meantime, none of it shall be imposed Or levied; and as soon as
justice is established. efforts shall also be made, until religious ministers shall come, to
employ a layman or laymen of virtuous life and example, in order to in- struct the natives, to
the best of their ability, in the things of our holy faith; and such persons shall receive some
benefice, in accordance with the royal right of presentation.

The encomenderos shall fulfil and observe all the aforesaid orders, under penalty of being
deprived of their encomiendas. In encomiendas belonging to his Majesty, and in those of
other and private persons when the encomenderos shall —by order, or through any other
lawful impediment be prevented from matino the collections personally in case these
collectors shont teresad ust bounds they chall he Gred Ave hundred pesos for his Majesty's
treasury, and half the expenses of any war thes caused. In addition, they shall make
good-any losses caused by them to the said Indians and shall pay all costs. The aforesaid
persons are likewise ordered to make the collections with all possible gentleness and equity,
observing the Other instructions of his Majesty conceming the manner of collecting tribute .
The Indians shall pay in kind or in such articles as they prefer to give. I also order that an
authorized copy of this my decree be furnished to each and every one of the encomenderos
or collectors who shall engage in the aforesaid collections. This decree I order and
command to be observed, fulfilled, and executed, under the penalties above stated, for the
present and until such time as his Majesty, when well informed of the present state of affairs
in this land, which has been mentioned above, shall make suitable provisions ira these and
all other matters, according to his pleasure. Upon the first occasion that offers itself there
shall be sent on my part and that Of the encomenderos Of this commonwealth, to his
Majesty, a detailed and careful account Of what is here decreed and ordered, as well as
what the lord bishop suggests and advises; so that his Majesty, having examined both sides
of this question, may make such provisions and so direct our course that God and his
Majesty may be best served, and all may have the same subject. Done in Manila, on the
twenty-eighth of February in the year 1591.

Aside from tribute, Filipinos also paid other taxes, namely:

Diezmos prediales: A tax which is consisted of one-tenth of the produce of the land Donativo
de Zamboanga: A tax explicitly used for the conquest of Jolo

Vinta: A tax paid by the people of some provinces along the western coast of Luzon for the
defense from Muslim raids.

●​ Manila-Acapulco Galleon Trade

Early Spanish officials encouraged trade between Manila and other East countries because
it was lucrative to make them wealthy quickly. Ships from Japan, Siam, China, India,
Cambodia, India, Malacca, and Indonesia are anchored in Manila to unload and trade their
valuable cargo. These, in turn, were shipped by the Spanish traders to Acapulco, Mexico,
where they commanded high prices. Later, commercial restrictions were placed on the trade.
These restrictions consisted of 250,000 pesos worth of goods sent to Mexico and 500,000
pesos worth of goods sent from Mexico to Manila. This trade across the Pacific is called
Galleon Trade.

Only privileged persons, such as high-ranking officials of the State, the Church, and the
galleons’ crews, were allowed to trade. The galleon trade was so restrictive that the
Spaniards' prosperity in Manila depended solely on the voyage's success to and from
Mexico. In some cases, the galleons were captured by the English buccaneers. Others,
however, sank on the southern coast of Luzon near Samar. In the 19th century, the
monopolistic galleon trade declined, which resulted in the opening of other ports within the
Philippine islands for international trading.

In the conduct of Manila-Acapulco Galleon trade, Situado (Mexican Subsidy) is being

brought back to the Philippines. The Philippines, as a colony, became a burden to Spain. To
prevent the government from becoming bankrupt, the Viceroyalty of Mexico sent to the
Philippines an annual subsidy called the situado. This subsidy was enough to save the
colonial government in the Philippines. However, the money received was not spent for the
improvement of the conditions of the colony. A large portion of the subsidy went to the
pockets of Spanish officials, employees, and priests in the form of salaries. The Mexican
subsidy was finally stopped when Mexico became independent in 1821.

Because of these privileges commercial relations between the Philippines and Europe were
promoted, consequently increasing its revenues. The company's encouragement of the
cultivation of indigo, sugarcane, pepper, and other spices led to increased agricultural
production. Yet, the Company failed and was abolished in 1834 due to the following causes:

●​ the Spanish merchants in the Philippines, who were accustomed to the galleon trade,
did not cooperate wholeheartedly with the Company,
 ●​ it was not able to establish direct commercial contact with Japan, China, and India,
so it had to buy commodities from these countries through Manila merchants,
resulting in paying higher prices;
●​ it was not well-managed because its officials spent their time in activities that were
not connected with the promotion of the Company; and
●​ Instead of the Company's vessels, foreign vessels brought Manila such items like
groceries, wines, canned goods, and other European products.

The Opening to World Trade

With the acceptance of the liberal laissez-faire economic doctrine in the 19th century, Spain
relaxed its restrictive mercantilistic policy. After the Royal Company was abolished in 1834,
Manila was opened to world trade. One of the immediate effects of Manila's opening to world
trade was establishing foreign commercial firms in Manila and opening foreign consulates.
By 1856, there were 13 foreign commercial firms in Manila - two American, seven British,
two Swiss, one German, and one French.

The Rise of Banks

The Philippines' earliest banking institution was Obras Plas, a charitable organization under
the different religious orders supervision. Their funds were donated by wealthy pious
persons who died and bequeathed part of their wealth to the organization for pious works.
The Obras Pias gave loans to businessmen at various rates of interest.

The first government bank in the Philippines was the Banco Español-Filipino, established by
the Royal Decree of Queen Isabel in 1851. The bank was authorized to issue banknotes.
This bank is now the Bank of the Philippine Islands.

Improvement of Transportation and Communication

Another factor contributing to the economic progress in the 19th century was the
improvement of transportation and communication. Spain built many roads and bridges,
especially during the decade 1830-1840. To aid sea navigation, lighthouses were built. The
first lighthouse (farola) was built in the mouth of the Pasig River in 1846.

The first steamships arrived in Manila Bay in 1848. The first railroad (the Manila-Dagupan
Railway) was established in 1891. In Manila, a tramcar service (tranvia) was opened to the
public in 1893. Two years later, the first electric light system appeared in Manila.

New means of communication were introduced. In 1854. a monthly mail service between
Manila and Hong Kong was established. The first Philippine stamp was established in 1854.
In 1873. a steamship line between Manila and Spain was also established, The first
telecrash line was opened in 1873. The first telegraph appeared in Manila in 1890.

●​ Sociedad Economica de los Amigos del Pais (Economic Society of Friends of

the Country)
Governor-General Jose Basco y Vargas founded the Sociedad Economica de los Amigos
del Pais in 1781 to effectively implement economic policy in the colony. According to the
King's decree, this gave him the right to establish a society "of selected persons who are
capable enough to produce useful ideas." The society was divided into sections: factories
and manufacturies; industry and popular education; natural history; domestic and foreign
commerce; and agriculture and rural economy.

Under the auspices of the Society, economic subjects were discussed by government
officials, traders, and merchants; pamphlets on the cultivation of indigo, coffee, sugar, cacao,
hemp, and other plants were published and widely distributed; agricultural implements from
the United States were

imported to improve agriculture and thus increase production, and advanced agricultural
methods were also introduced. As a result of these activities, in 1784, the Society was able
to export indigo to Europe for the first time in Philippine history. It also founded the Academy
of Drawing in 1824 and granted

scholarships to those interested in the art of dyeing. In 1861, the Society founded an
agricultural school in Manila for training farmers in advanced agricultural methods.

●​ The Government Monopolies

Governor Basco was also remembered for establishing government monopolies. The most
important of which was the tobacco monopoly. Seeing the advantages of a monopoly of this
agricultural crop, he recommended the King for its establishment In 1780, a royal decree
was issued, but it was after two years that being established in the colony. The following
were the provisions of the decree:

• Tobacco cultivation was prohibited except for the provinces selected to grow it (llocos,
Nueva Ecija, the Cagayan Valley, and Marinduque).

• Contraband sale of tobacco was forbidden.

The government had the exclusive right to purchase all tobacco products, inspect and
classify the

tobacco plant, and prepare and manufacture cigars and cigarettes.

• The government had the right to prohibit the exportation or importation of tobacco by any
agency not connected with the government.

Its bad results offset the advantages of the monopoly. For example, the Spanish officials in
charge of inspection and classification of tobacco committed abuses like seizing tobacco
farmers' lands who failed to produce tobacco's required quota. In other cases, the tobacco
farmers were not paid the tobacco crop's value; instead, they received nothing but
promissory notes saying that they would receive the amount due to them. This amount was
not paid because of the dishonesty of Spanish officials and employees. What was worse
was that tobacco farmers themselves could not smoke the tobacco they produced. They
could not afford to buy cigars manufactured by the government because of its high price.
Because of the anomalies, the King ordered its abolition in 1881.
Other monopolies established were those on local wine or liquor, gunpowder, playing cards,
cockfights, and buyo or anise. While it was confirmed that these monopolies gave the
government a high income, at the same time, they were a burden to the Filipinos.

●​ Real Compania de Filipinas (The Royal Company of the Philippines)

Governor Basco's administration was also highlighted by the establishment of the Real
Compania de Filipinas in 1785. The company aimed to promote progress to the Philippines
by improving the foreign trade of the colony with Spain and developing the Philippines
natural resources by encouraging industry, manufacturing, and agriculture. To implement this
program, the King granted the company many privileges. For instance, it was given the
monopoly of trade between Spain and the Philippines. Products that the Philippines exported
to Europe were exempted from tariff duties. Moreover, the company's hips were allowed to
visit oriental ports. The prohibition that Manila merchants could not trade with China and
India was lifted

PHILIPPINE SOCIETY DURING SPANISH RULE

With colonization, the natives of the Philippines came to be called Indios. Philippine society
was divided according to racial lines. Spaniards themselves were divided into Peninsulares
(Spaniards born in the Iberian Peninsula) or Insulares (Spanish parents born in the
Philippines). These people were called "Filipinos Insulares" or simply "Filipinos." Spaniards
born in other colonies like the Americas were called Criollos or Creoles.

The racial divisions became a means of self-identity as Peninsulares banded against the
creoles and the Insulares. When Spain's colonies in America fought for independence in the
19th century, the Philippines' creoles were viewed with suspicion and outright hostility. This
attitude was also shown to the insulares, and even mestizos suspected them of separatism.

The Indios or natives were divided into the pacified ones or infieles. The pacified Indios live
at the pueblos while the latter live in the mountains or unconquered areas.

At the bottom of the society were the Sangleys (Chinese immigrants). They were heavily
[Link] were also classified as Christians or non-Christians. The Christian Chinese were
allowed to remain, while the non-Christian ones had to leave once the trading season was
over. Despite the discrimination, the Chinese community was part of the workforce of
colonial society. They performed jobs like metallurgy, masons, artisans, bakers, and other
skills that the Indios had insufficient knowledge.

Interbreeding with the Indios, Chinese, Creoles, and Spaniards resulted in the mestizos.
Many mestizos accumulated some capital and engaged in business. A number entered the
government to become minor government officials. Others entered the priesthood. With a
combination of racial progeny, improved economic status, and better education, the mestizos
would later form the basis of the middle class of the 19th century. They would fight for
national identity (De Viana 2011, 86-87).