History
In December 1905, a syndicate composed of William Salomon and Company, International Banking Corporation, Heidelbach, Ickelheimer and Company, Cornelius Vanderbilt III, Charles M. Swift, H. R. Wilson, and J. G. White and Company was the sole bidder for the right to construct railroads on Cebu, Panay and Negros.[6] In 1906, the syndicate was awarded the concession and the Philippine Railway Company Inc. was incorporated in the state of Connecticut, United States on March 5, 1906. [7] On May 28, 1906, the Philippine government formally passed an act granting the company the concession.[6][8]
The company became part of a "Manila syndicate", a collection of Philippine infrastructure companies including the Manila Electric Railway and Light Company, the Manila Construction Company, and the Manila Suburban Railways Company.[9] Later the Philippine Railways Construction Company was added.[9]
Construction began on a railroad from Iloilo City to Roxas City in Capiz with crews working from both cities and meeting in the middle in 1907.[7] Crews working from the north and south met at the railway track's highest elevation in a flag stop near Passi's border with Dumarao, later called Summit. Operations began immediately upon completion.[7]
In 1937, after three decades of operations, the railroad had not yet earned a profit.[10]
In 1939, three individuals were convicted in a fraud scheme involving bonds from the then Philippine Railway Company. In 1937, bonds in the "sick, sugary-hauling road" were selling for about US$11 and were about to mature apparently worthless.[11] The price of the bonds then rose rapidly to $31 a share because of rumors that the Philippine Commonwealth would buy them for $65.[11] Philippine Commonwealth President Manuel Quezon denied the rumor and the bonds crashed.[11] The U.S. Securities and Exchange Commission launched an investigation and William P. Buckner Jr. and William J. Gillespie, members of the bondholders protective committee, were convicted of mail fraud and conspiracy.[11] Also convicted of a lesser charge was Filipino Felipe Abreu Buencamino, whip of the Philippine Assembly and confidant of President Quezon, who allegedly received $50,000 to cooperate with the plan.[11]
In 1974, then-President Ferdinand Marcos entrusted its ownership, management and operations to Philippine Veterans Investment Development Corporation (PHIVIDEC) under DBP BR No. 3463, s. of 1974 as amended by BR No. 3593, s. of 1974. In consideration of DBP's transfer of the railway to PHIVIDEC and pursuant to a Deed of Assignment dated December 12, 1974, PHIVIDEC issued to DBP shares of stocks worth ₱5 million, PHIVIDEC spun off its transport division and organized a subsidiary corporation, Phividec Railways, Inc. In 1976, DBP extended to Phividec Railways, Inc. a ₱5.500 million Industrial Loan and a ₱4.000 million Guaranty Loan for the rehabilitation of the railroad tracks and acquisition of additional rolling stocks, as well as, major equipment. As security for the subject loan accommodation, Phividec Railways, Inc. mortgaged some of its assets in favor of DBP. On March 8, 1977, Phividec Railways, Inc. mortgaged in favor of DBP certain machinery and equipment located in Iloilo City and parcels of land.
On May 12, 1979, then-President Marcos approved the sale of PHIVIDEC's share in the Phividec Railways, Inc. to the Philippine Sugar Commission (PHILSUCOM). This covered the conversion of its ₱45 million DBP loan into equity either in the form of cumulative preferred shares or common shares with defined representation. Pursuant thereto, an agreement to sell 4,200,000 PHIVIDEC shares was entered into on May 25, 1979 by PHIVIDEC and PHILSUCOM, subject among others, the assumption by the latter of the obligations of the former with DBP and to guarantee the payment of such financial accommodations. Thereafter, Phividec Railways, Inc. changed its corporate name to Panay Railways, Incorporated (PRI).
Per Memorandum of Agreement among DBP, PHILSUCOM and PRI dated September 12, 1979, obligations with DPB, then amounting to ₱ 40 million will be automatically converted into 10% non-cumulative convertible preferred shares of PRI. The shares are redeemable commencing on the sixth (6th) year from date of issue and every year thereafter, such that the total preferred shares issued to DBP shall be fully redeemed on the fifteenth (15th) anniversary of the date of issue. Redemption may be accelerated at the option of PRI.
In compliance, thereto, PRI issued stock certificates aggregating to ₱53.727 million on various dates, the latest of which was issued on June 19, 1984. Despite the prohibition contained in the aforementioned Deed of Undertaking, PRI obtained a loan from the Traders Royal Bank (TRB) in the amount of ₱20.000 million and executed a Real Estate Mortgage on April 20, 1982. In July 1985, PRI ceased operation due to mounting losses and cash flow problems.
In 1989, freight operations ceased.
In May 1986, by virtue of Executive Order No. 18, then-President Corazon Aquino abolished the PHILSUCOM and created the Sugar Regulatory Administration (SRA) which assumed trusteeship of assets and records of PRI. By virtue of the Deed of Transfer dated February 27, 1987 executed by DBP pursuant to Presidential Proclamation No. 50 as amended and by Administrative Order No. 14, the National Government (NG) was mandated to take title and possession of all shares of stocks of PRI.
Meanwhile, Traders Royal Bank (TRB) foreclosed the PRI mortgaged properties and these were sold at a sheriff’s auction on January 20, 1986. TRB was declared the highest bidder for the sum of ₱ 37.33 million and a Deed of Definite Sale in favor of TRB was executed on December 27, 1989. An Affidavit of Consolidation of Ownership was executed on the same day.
By virtue of the Deed of Transfer dated February 27, 1987 executed by DBP pursuant to Presidential Proclamation No. 50 as amended and by Administrative Order No. 14, the National Government was mandated to take title and possession of all shares of stocks of PRI.
A Trust Agreement (TA) constituted as trustee over the properties of PRI then, Asset Privatization Trust (APT) and later succeeded by the Privatization and Management Office (PMO).
During the meeting with then-President Benigno Aquino III on September 28, 2015, the abolition of PRI had already been approved in principle. However, pending the issuance of a formal document approving such abolition, and the subsequent revocation of its certificate of registration with the SEC, PRI must follow the pertinent provisions of the Corporation Code and the Labor Code with respect to the procedure in closing down a corporation and separating its employees. On February 15, 2016, a memorandum from Executive Secretary Paquito Ochoa Jr. to Chairman Cesar L. Villanueva of the Governance Commission for Government Owned or Controlled Corporations (GCG) on the subject of Abolition of PRI stated, among others, the 1) approval by the Office of the President through the Executive Secretary of the GCG’s recommendation to abolish PRI and 2) the creation of a Technical Working Group (TWG) composed of representatives from various government agencies to coordinate with the GCG to implement the activities of abolition. The PRI Board of Directors and Management continue to manage and maintain to preserve the assets of the PRI until further instructions from the GCG on the implementation of the abolition.
PRI has 11 regular employees, 2 contract of service and 1 job order employee as of December 31, 2024.[12]
Revival proposal
In 2016, then-President Rodrigo Duterte included Panay Railways among his administration's priorities under the Build! Build! Build! program. However, the plans were never finalized.[13]
On March 24, 2022, Panay Railways announced it was opening to foreign ownership to facilitate the reconstruction of its former train lines.[14] The plan received support from the current administration of President Bongbong Marcos, with several foreign firms expressing interest, including China Railway International Group Ltd. (CRIG)[15] and United Kingdom-based Global Wealth Centres.[16] As of January 2023, eleven investors from Turkey, the United States, Saudi Arabia, Japan, England, and China had shown interest in reviving Panay Island's railway system.[5]
