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.