Prenda System in a Philippine Agricultural Community


Author: Antonia Cecilia Y. Sandoval

Abstract

Prenda is a local credit system which involves temporary transfer of ownership of any property intended to secure the performance of some act, such as the payment of money or the like by the grantor or mortgagee, and which becomes void if the act is not performed agreeably on the terms prescribed by both parties. Interviews and nonparticipant observation conducted among 90 respondents of barangay Talisay, Hilongos, Leyte comprising 46 mortgagors and 44 mortgagees together with 10 key informants revealed 8 different forms of prenda. Traditional rules still bound the prenda system as shown in the practice of fixing no definite maturity date and no written form of agreement. Mortgagors were expected to take possession of mortgaged lands and supply the necessary farm labor, in addition to their responsibility of paying taxes for the mortgaged properties. The schooling of children was identified as the main reason behind the prenda practice with the wife’s decision dominating the idea of engaging in prenda. Generally, the relationship between mortgagor and mortgagee was perceived as good. Most noteworthy among the changes that had taken place with the prenda system was the existence of prendasa kusog. It is a nonmaterial mortgage wherein one’s labor in terms of one’s capacity to produce is being mortgaged to somebody, payable in terms of the products that one can get or raise from his labor. A great bulk of the prenda money was spent on day-to-day expenditures, schooling of children, agricultural production, land purchases and capital for business. Prenda was the most preferred source of capital or credit. Prenda system and the bank were similar only in their function of financial assistance, with the bank perceived to be more disadvantages than the prenda system.

Keywords : Prenda. Credit system. Children’s education. Priority expenditure.

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