Passi is considered to be one of the oldest Spanish settlements in Iloilo. It was organized as a pueblo (community settlement of natives) in 1766 with Don Martin Saligumba as its first gobernadorcillo. It was settled by three Malay brothers named Dig-on, Tokiab and Umawang long before the arrival of the Spaniards. Their first formal community was located on the site presently occupied by the Roman Catholic Church.

According to popular legend, Spanish conquistadors stumbled on a small hut by the river’s bank where an old woman was fond winnowing pounded rice. One of them asked her, “¿Cómo se llama este lugar?” not knowing the native language of course. Much to the old woman’s surprise and perhaps excitement, she replied without much ado, “Ah, pasi,” which means some of the unhusked rice on her basket. She must have thought that they were eager to know what was in the basket and what she was doing, because she could not understand their language. From that time on, the Spanish begun to call the place Pasi at first until it later evolved into Passi. Such legends about name origins are common throughout towns and cities in the Philippines, the core plot being a Spaniard asking the non-Spanish speaking natives what the name of the place is and the latter responding in what would end up eventually as the name of the place.