In the mid-18th century (1750s), there were 5 principal social classes in the Philippines. These were the Peninsulares, the Insulares, the clase media or middle class, the Chinese and the indio. The Peninsulares, which included the Spanish friars, were the Spaniards born in Spain, ( the Iberian peninsula) and were the wealthiest and most politically powerful among the social classes.
The Insulares were the Spaniards born in the Philippines. The clase media consisted of three subclasses: the Spanish mestizos or mestizos de Español; the principalia; and the Chinese mestizos or mestizos de Sangley. The Chinese and the indio or natives made up the lower half of the social pyramid. The mestizos or half-breed, which initially referred only to those of Spanish-native descent, had an indio parent and a Spanish or Chinese parent. Usually, Spanish who married indios were in the lower strata of Spanish society. Mestizos, in general, constituted no more than 2% of the population but because of the even smaller population of creoles in the Philippines, they were able to take some control over commerce and industry and acquire (and dispense of) a disproportionate share of wealth.
Chinese mestizos who had a higher position in society compared to the pure Chinese, separated from the Chinese community and set up their gremios or guilds. They also competed with the Chinese in the business sector. A gremio is a self-governing organization. Each gremio had a cabecilla. The cabecillas elect the gobernadorcillo de chino who acted as the mediator between the Spanish and the Chinese. Initially, the Chinese mestizos had several advantages over the Chinese. Spain perceived the Chinese as foreigners and forbade them from changing their residence, a restriction was only removed in 1839 when Chinese were given the right to choose their occupation and residence but which still required those who traveled between Manila and the provinces to obta.