After the dispatch of Carvajal to Panama, as already mentioned, Hinojosa set sail with ten vessels, and continued along the coast to the north till he arrived at Buenaventura, a small sea port at the mouth of the river San Juan which forms the southern boundary of Popayan, the government of Benalcazar. He proposed to learn at this place the situation and intentions of the viceroy, and to have seized any vessels that might be at this harbour, to prevent them from being employed by the viceroy for returning to Peru. On arriving at Buenaventura, Hinojosa sent some soldiers on shore, who brought off eight or ten of the inhabitants, from whom he learnt that the viceroy remained at Popayan, engaged in assembling troops and military stores for attempting to return into Peru; and that finding Yllanez and Guzman delayed their return from Panama, he had sent off his brother Vela Nunnez with several corporals on their way to Panama, to expedite the transmission of such reinforcements as could be procured, and had supplied him for that purpose with all the money belonging to the king at Popayan. Hinojosa was likewise informed that Vela Nunnez had the charge of a bastard son of Gonzalo Pizarro of twelve years old, who was found by the viceroy at Quito, and was now sent away to Panama, in the hope that the merchants of Panama might ransom him at a high price to acquire the good will of Gonzalo. The individual who communicated all this information added that the viceroy had employed a number of Indians to cut down a quantity of timber, which was to be conveyed to Buenaventura, on purpose to build a small vessel for the accommodation of Vela Nunnez; who must now be within a short distance of Buenaventura, and had sent this person before to inquire if he might come in safety to that place.

On receiving this intelligence, Hinojosa landed two confidential officers with a party of soldiers, giving them orders to take two several routes into the interior, as pointed out by the informant, on purpose to take Vela Nunnez. Accordingly, one of these officers came up with Vela Nunnez, and the other got hold of Rodrigo Mexia and Saavedra with the son of Gonzalo Pizarro18. Both of these parties carried considerable sums of money, which was pillaged by the soldiers of Hinojosa; and the prisoners were brought on board the vessels, where great rejoicings were made for the happy success of this enterprize, by which their acquisition of Panama must be facilitated, and because they had done especial good service to Gonzalo by the liberation of his son.

Hinojosa now resumed his voyage, in the course of which he fell in with Rodrigo de Carvajal, who gave him an account of the situation of affairs at Panama, and recommended the propriety of using judicious measures against that place, as it was provided for defence. Hinojosa accordingly appeared before Panama with eleven ships and two hundred and fifty soldiers. At this time there were more than five hundred men in Panama, all tolerably well armed, who were drawn, out under the command of Casaos to oppose the landing of the Pizarrians. But among these there were many merchants and tradesmen, little adapted for war, who hardly knew how to use their weapons, and many of whom were even unable to fire off a musquet. Many among them had no intention of fighting or of opposing the descent of the insurgents of Peru, whose arrival they were disposed to consider as more advantageous than prejudicial. The merchants expected to be able to sell their commodities, and the tradesmen were in hope of procuring profitable employment, each according to his occupation. Besides, the rich merchants had partners or factors who resided in Peru, and had charge of their most valuable effects; and were afraid, if they concurred in opposing Hinojosa, that Gonzalo Pizarro might revenge himself by seizing their goods and maltreating their partners and factors. Those who were principally inclined to oppose the landing of Hinojosa, were Pedro Casaos the governor, Guzman and Yllanez the captains belonging to the viceroy, Arias de Azevedo, Juan Fernandez de Rebollido, Andrew de Arayza, Juan de Zabala, Juan Vendrel, and some other considerable inhabitants of Panama; some from principles of loyalty, others from fear of future evils, lest Hinojosa might act with the same violence as had been done by Bachicao.

Finding himself resisted, Hinojosa landed with two hundred men about two leagues from Panama, towards which place he marched close along the shore, being, protected on one flank by a range of rocks from the attack of cavalry, and on the other by the boats of his squadron armed with some pieces of artillery. Fifty of his soldiers were left on board for the defence of the ships, and orders were given to hang up Vela Nunnez and the other prisoners whenever the enemy were seen to attack him. Casaos marched with all his troops from Panama to meet Hinojosa, with the determination of giving battle: But when the hostile parties were almost within musquet shot and ready to engage, the whole priests and monks of Panama interposed between in procession, having their crucifixes veiled and every other demonstration of mourning, and prevailed on both sides to agree to a truce for that day, that endeavours might be used to bring about an accommodation. For this purpose negotiators were appointed on both sides; Don Balthasar de Castilia, son of the Conde de Gomera, was named by Hinojosa, and Don Pedro de Cabrera on the part of Casaos, and hostages were mutually interchanged.

The deputy of Hinojosa affected to be astonished at the opposition of the governor and inhabitants of Panama, since he not only meant no harm to any one, but had come expressly to repair the injuries which had formerly been done by Bachicao, to purchase such provisions and clothing as they wanted, and to repair their ships; declaring that their only object was to oblige the deposed viceroy to return to Spain, pursuant to the orders of the royal audience, as his continuance in the country occasioned perpetual discord in Peru. But, as the viceroy was not there, Hinojosa intended to make only a short stay in the place, having orders from Gonzalo to offer no injury to any one unless attacked, in which case he must defend himself as he best could. The opposite party alleged that the presence of Hinojosa in warlike guise was sufficient to excite suspicion; since, even allowing the government of Gonzalo in Peru to be legitimate as they pretended, he had no jurisdiction in Panama, and had no right to direct the proceedings of any one at that place. That Bachicao had formerly come among them under pretence of peace, yet had committed all those violences and injuries, which Hinojosa now pretended he was come to repair. After a long conference, it was at length agreed that Hinojosa should be permitted to take up his residence in Panama for thirty days, accompanied by fifty soldiers to serve as a guard for his personal safety; but that the fleet and all the other soldiers of his party should repair to the Pearl Islands, where workmen and all necessaries for the reparation of the ships could be procured; and that at the expiry of these thirty days, Hinojosa and his armament were to return to Peru.

On the conclusion of this convention, which was confirmed by mutual oaths and the interchange of hostages, Hinojosa took up his residence in Panama with a guard of fifty picked men, and hired a house in which he kept open table for every one who pleased to visit him, all of whom he allowed to divert themselves in play or otherwise as they pleased. By this procedure, he gained over most of the soldiers of Yllanez in a few days, and many other idle fellows joined themselves secretly to his party. It was even said that all these men had previously engaged by letter to have gone over to him if he and the governor had come to a battle on the former occasion. Indeed the governor and other principal persons of Panama had been chiefly induced to agree to the present accommodation by distrust of their soldiers, who were all eager for an opportunity of getting to Peru. By the above-mentioned means, Hinojosa soon saw himself at the head of a considerable body of troops, while the captains Yllanez and Guzman were almost deserted by all their men. As they saw likewise that the convention was in other respects ill observed, they secretly withdrew with fifteen men who yet remained, and endeavoured to get to Carthagena. Yllanez was taken soon afterwards by one of Hinojosas officers; on which he entered into the service of Gonzalo Pizarro, and was afterwards engaged on that side in the engagement at Nombre de Dios against Verdugo, to be afterwards related. Hinojosa continued to reside in Panama, where no one dared to oppose him. He increased the number of his troops from day to day, and kept them under excellent discipline, without allowing them to do injury to any of the inhabitants; neither did he intermeddle in any thing whatever except what concerned his troops. At this time Don Pedro de Cabrera and his son-in-law Hernan Mexia de Guzman, who had been banished from Peru by the viceroy, resided in Panama; and these two gentlemen were sent by Hinojosa, with a party of soldiers, to keep possession of the port of Nombre de Dios, which was of great importance to his security, and whence he might receive early intelligence from Spain and other places.