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After obtaining peace with various indigenous nations and kingdoms, he made Cebu the capital of the Spanish East Indies in 1565 and later transferred to Manila in 1571.In 1528, Hernán Cortés established settlements in North America and López de Legazpi traveled to Mexico (New Spain) to start a new life.On May 30, 1570, Bambalito sailed to Tondo with Caracoas and encountered the Spaniards at Bangkusay Channel, headed by Martin de Goiti on June 3, 1571.Bambalito and his fleet had lost the battle, and after disputes and hostility had erupted between the two groups, the Spaniards occupied the Islamized states of Tondo and Maynila.Rajah Soliman had his conditions for Bambalito that if they were able to kill as least 50 Spaniards, he would revoke his alliance with López de Legazpi, and the Old Ache would help to expel the conquerors.Bambalito rode back to Macabebe and formed a fleet of two thousand five hundred moros consisting of soldiers from the villages along Manila Bay particularly from Macabebe and Hagonoy.
The Spaniards established a colony, naming the settlements "Villa del Santisimo Nombre de Jesús" (Town of the Most Holy Name of Jesus) after an image of Sto. In 1569, due to a scarcity of food provisions in Cebu, López de Legazpi transferred to Panay town on the island of Panay, where they were peacefully welcomed by the people in the Kedatuan of Madja-as.
However, the Rajah's ally in northern shores of Manila Bay, historically known as the young Bambalito of Macabebe, asked Rajah Soliman (Old Ache) to revoke his alliance with the Spaniards.
Rajah Matanda refused because of the "word of honor" of the Spaniards.
Both groups agreed to organize a city council, consisting of two mayors, twelve councilors and a secretary.
López de Legazpi established a settlement there on June 24, 1571, and he also ordered the construction of the walled city of Intramuros.