Under the leadership of Basilio Debuyan, the village slowly took its form. Houses were constructed in rows of   newly-built roads. A church and a plaza were likewise constructed. A Catholic Priest from Iloilo City visited once   a year. Debuyan became the first Cabeza under Capitan Mayor at Isio, about 52 kilometers north. The happy and   prosperous condition of the community was short-lived. The Canman-og River , later changed to Naga River and   presently called Sipalay River brought havoc and destruction through flood and inundation. Little by little, the place   was swallowed up until the church and the plaza were likewise carried away by the flood. The people decided to   transfer the place to a flat land across the river to the north. The selected area was a forestland. It was Debuyan   himself who felled down the first Narra tree. The former site is now known as Sipalay Diotay. It stands today, a   sentimental reminder of a once happy and prosperous village.

        When the Americans arrived in the Philippines , Sipalay was already a full-pledged barrio of the Municipality   of Cauayan . The barrio was the biggest and the most progressive district in the whole community. Debuyan   became the first Barrio Delegado under the American regime. During the early 1920s, a new feeling surged through   the hearts and minds of the people. It was their desire for independence, the urged to separate from the mother   town. For this purpose, a society, La Liga del Sur was formed. Prominent leaders of society were: Don Severo   Alejano, Mariano Mueda, Sr., Maximino Salveron, Inocencio Debuyan, Sr., Amando Zaragoza, Basilio Debuyan,   and Alfonso Custioso. The separation movement was the cry of the southern districts and Sipalay became its chief   advocate. Reasons for the movement were: distance of Sipalay from the Poblacion of Cauayan, 54 kilometers; no   roads connecting the two places and there seemed to be no efforts on the part of the town officials for the   constructions of same; the danger and hardship of the early travel; and the much delayed mails often time, letters,   dated a year ago arrived in Sipalay not by mail-carriers but by policemen whose presence were considered quite   an event. The cry for the creation of a municipality south of Cauayan was not only imperative but also reasonable.

        Sipalay got its name from the old native phrase si palay meaning 'there is rice'. Chinese traders, who were not   able to pronounce the 'R' in the local word Paray are believed to have helped disseminate the name Sipalay as rice   abundantly grows in the area and is freely traded.

        The original natives of Sipalay were the "tumandoks ", perhaps with Malay or Bornean roots . Immigrants from   Panay Island joined them later. These were families who ventured out to the sea to escape the oppressive Spanish   feudal system and found a new home in the paradise that is today Sipalay.

        With unflinching political will, its local officials spearheaded by the Municipal Mayor then, led Sipalay to   recovery and caused it to raise high above the economic setbacks and bloody turmoil of a low intensity civil war.   Not only were revenue surpluses generated starting 1989, but also for the next eight consecutive years, the   surpluses continued to rise. The peace and order situation, as it were, was somehow cajoled to a level allowing   people's lives and business to go back to "normal". Amazingly, some investments, particularly in tourism   development, flowed in.