In India, the caste system is very inconvenient. You have to die and get reincarnated before you can either move up or move down the caste. There's hope if you believe in reincarnation, but what if you don't? In the Spanish times here in the Philippines, it wasn't as rigid as it was in India, and your children can inherit a different class when you marry a foreigner. Although being reincarnated to a different class should work fine too.
With a working caste system, it is just normal that discrimination exists. This system defined the lifestyle of many individuals in the Philippines, as well as opportunities in education, occupation and marriage. For a few hundred years in the Spanish territories, this has been the case. Note that the use of "Filipino" here refers to natives of the Philippines. The following are the classes and their differences:
Peninsulares. They are the highest class in the Philippines, entrusted with the offices of high rank. Peninsulares are pure blooded Spaniards born from Spain and sent to Spanish colonies to govern. Often times, they are awarded with great favors and large quantities of land.
During the Spanish times, the Governor General of the Philippines as well as other powerful offices are held by peninsulares. The most well known to us most probably is Miguel Lopez de Legazpi who colonized a huge part of the Philippines. Another quite prominent figure is Ramon Blanco y Erenas, or the Governor General during the time of Rizal and the Katipunan. He was too nice to Filipinos and was accused of being too conciliatory, which led to his removal from power.
After Rizal's death, which he objected to, he presented his ceremonial sword and sash of office to the hero's family. Whether it be apology or paying tribute to Jose Rizal, it is uncommon for a peninsulare to do such.
Insulares. They are a rank below the peninsulares. The insulares or criollos are of European descent but born in the colonies of Spain. A son or daughter of a Spanish couple is an insulare. Eventually, they may have been inter-marrying with Filipinos or other races here in the country, thus producing the mestizos.
Traditionally, insulares enjoy various goverment and church positions but as economics and power shifted, they changed to capitalist driven entrepreneurs owning large parcels of lands. A notable insulare goes by the name of Luís Rodríguez Varela, also known as El Conde Filipino. He was a true European noble, but championed the rights of the Filipinos. Unfortunately, he was exiled from the Philippines after accusations of starting rebellion.
Mestizo de Espanol. They are offsprings of Spanish people interbreeding with Filipinos. Mestizo is a term given to individuals inheriting foreign ancestry. They may or may not have European or other racial features despite popular belief. Originally, the term was used in Latin America but was later adopted here in the country to children of racial inter-marriage.
The mestizos fare better than the natives due to the fact that their ancestry provides leverage and connections, which becomes a big advantage in a feudal and colonial society. They may have better relations with the local governors or with the church as they are favored more compared to the common man. Parents of mestizos may have been an alcalde or another important position in the goverment or perhaps an insulare wishing to expand power and territory. In the case of expanding territory, this has been a major motive for most of the arranged marriages that came about during the era.
A prominent mestizo de espanol is Padre Pedro Pelaez, a priest and advocate of the secularization movement in the Philippines. He became Vicar Capitular de Manila after the Archbishop of Manila died, and took over matters of the Archdiocese.
Secularization was a big deal during his time as Missionary priests (Dominicans, Jesuits, Augustinians, etc.) protested to being supervised by Bishops in running parishes, stating they're not under a Bishop's jurisdiction. True enough, because Missionary priests spread Christianity. So the Church started training secular priests to manage parishes for the Bishops. Padre Pelaez sided with the seculars which earned him the disdain of many powerful priests. Unfortunately, he died in an earthquake that struck Manila and destroyed the Manila Cathedral in 1863.
Mestizo de Sangley. Not all mestizos are indexed or are coming from Europeans. A person of Filipino or any racial descent marrying a Chinese, the result is children that will be called mestizo de sangley.
Early Chinese settlers in the Philippines were artisans and petty traders but their children with Filipinos were granted special rights and privileges under the Spanish Crown. Eventually, the mestizo de sangley were allowed to lease lands from friar estates and earned from it. Later on, they came to own many lands by benefiting from pacto de retro which states if a farmer can't pay the money they borrowed, the land is kept by the money lender. A huge number of farmers lost their lands this way and the money lenders' lands kept growing and growing. People nowadays call this "investment."
Tornatras. I don't want to talk about them much, simply because almost every popular hero of the Philippines is one. Tornatras is an old Spanish term for a person of mixed ancestry from Spanish, Filipino and Chinese. Basically, almost every Filipino today can put a claim to this.
Most of the Ilustrados or the educated ones belong to this class. They are idealists, artists and free thinkers. Many are born of wealthy landowners, but there are some like Apolinario Mabini who was from a family of farmers. Because of their ideas and efforts, Nationalism and the desire for more freedom has been awakened within every Filipino.
The rest are almost not so distinguished but still need to be mentioned. Indio is pure Austronesian origin (think of it as pure Filipino to save me from explaining what "Austronesian" is) and Negrito is of pure Aeta origin.
Really, its not a caste system. Its more of classification for valid reasons, but yeah, any grouping or classification brought about brings discrimination. And we, the modern Pinoys, had inherited that thinking of having a foreign ancestry is something to brag about. Get real. Almost everyone here has a bit of foreign in our blood.