Spanish – Portuguese War ( 1776 – 77 ) The Spanish - Portuguese War was fought between 1776 - 1777 over the border between Spanish and Portuguese South America . Portuguese attack . In the previous Spanish - Portuguese War , 1761 - 1763 , Spain had conquered the Colonia del Sacramento , Santa Tecla , San Miguel , Santa Teresa and Rio Grande de São Pedro in the First Cevallos expedition . Colonia del Sacramento was returned to Portugal in the Treaty of Paris , but Santa Tecla , San Miguel , Santa Teresa and Rio Grande de São Pedro remained in Spanish hands , much to the frustration of the Portuguese . They started assembling troops and harassing the Spanish as early as 1767 . Over the years the Portuguese built up an army of 6 , 000 men , considerably more than the 1 , 450 Spanish troops in the area . The matter escalated in February 1776 when two Portuguese fleets under Robert MacDouall and Jorge Hardcastle landed troops near the fortress of Rio Grande de São Pedro , and started shelling the place . A Spanish fleet under Francisco Javier Morales came to their help with a naval battle as result . After 3 hours of battle the Spanish had 16 killed and 24 wounded , while the Portuguese lost two vessels . After this sea - battle , Portuguese land forces pushed forward and the Spanish commander Juan José de Vértiz y Salcedo was forced to withdraw and give up the entire Rio Grande area . Spanish response . The response of the Spanish King Charles III of Spain was swift . There was little fear that Portugal ' s old ally Great Britain would come to their aid , as it was fully occupied by the American Revolutionary War . King Charles III promoted Governor Pedro Antonio de Cevallos to Viceroy of the Río de la Plata and gave him the leadership of the expedition . Cevallos had already proven his ability in the First Cevallos expedition ( 1762 – 1763 ) , when he had conquered Colonia del Sacramento and had marched deep into Portuguese territory . Cevallos was in Spain and organized personally the expedition from Cadiz . He had 9 , 000 men , and a fleet of 6 warships ( " Poderoso " , 70 guns , " Santiago la América " , 64 , " San Dámaso " , 70 , " Septentrión " , 70 , " Monarca " , 70 , and " San José " , 70 ) , 6 frigates , a number of smaller ships and 100 transport ships at his disposal . The commander of the fleet was Francisco Javier Everardo Tilly y García de Paredes , marqués de Casa Tilly . The fleet left Cadiz on November 20 and arrived in South America on 18 February 1777 , capturing several Portuguese ships on the way . There they encountered the Portuguese fleet of Robert MacDouall , which was much smaller and managed to escape . Cevallos decided to attack the island of Santa Catarina on 23 February . When the Portuguese saw the formidable Spanish fleet disembark their troops , the garrison fled to the mainland without firing a shot . On 20 March , Cevallos sailed towards his second target , Rio Grande de São Pedro , but the fleet was dispersed by a storm and had to return to Montevideo . There he split up his forces . He sailed himself with all the artillery to Colonia de Sacramento , where he started the siege on 23 May . The city capitulated on 3 June . The rest of the fleet was send to check the fleet of MacDouall , which was still a menace to be counted with . In fact this fleet surprised and captured the lone " San Agustín " , and renamed the ship " Santo Agostinho " . The new captain , who also played an important role in capturing the ship was an Englishman in Portuguese service , Arthur Phillip who later founded the city of Sydney . After the capture of Sacramento , Cevallos marched his troops towards Rio Grande de São Pedro , joined forces with the troops of Juan José Vertiz which were concentrated in Santa Teresa . Then he was ordered to stop his advance , as peace negotiations were started . Peace . On 24 February 1777 King Joseph I of Portugal died and his daughter and successor Maria I of Portugal concluded on October 1 the First Treaty of San Ildefonso with Spain . Spain returned the island of Santa Catarina to Portugal and recognized Rio Grande de São Pedro as Portuguese territory , but kept Colonia del Sacramento , Banda Oriental , and Misiones Orientales . Aftermath . One of the results of the war was that the Portuguese remained neutral when the American War of Independence became a global war in 1778 with the entry of the French . The Portuguese were bound to the British by treaty but disappointed by the lack of British support against Spain , Portugal did not itself enter the war .