At the time of the USAFFE surrender, Negros Island was divided into five military sectors, each garrisoned by an infantry battalion. Two battalion commanders, Majors Salvador Abcede and Ernesto S. Mata, flatly refused to obey the surrender orders, instead, they withdrew into the mountains and disbanded their units. The other three battalion commanders obeyed orders and surrendered, but the majority of their men didn't. They became an army of small guerrilla bands desperately in search of leadership.

In southern Negros Occidental the guerrilla groups united under command of Maj. Salvador Abcede, white those in the north united under Maj. Ernesto S. Mata. They made contact with Col. Peralia in Panay and affiliated with his IV Philippine Corps. Peralta designated their combined units as the 72nd Division with Abcede as Commanding Officer and Mata as Chief of Staff. Both were promoted to Lieutenant Colonel rank.

Silliman University Professor Henry Roy Bell suddenly found himself leader of a guerrilla movement. His former R.O.T.C. students had even posted notices in the lowland towns, report immediately to Mr. Bell in the mountains. Bell finally located an unsurrendered officer, Maj. Placido A Ausejo to take over military command while he devoted his efforts to organization, supply and  civil affairs. As this area was dependent upon Mindanao for a large part of its food supply, they affiliated with the Mindanao-Sulu Command of Col. Fertig, who promptly sent 10,000 pesos.  Mindanao currency to aid in their finance.

In northern Negros Oriental, Lt. Col. Gabriel Gador proclaimed himself supreme commander of all Negros with the assumed rank of Major General.

On the night of January 14, 1943, the submarine USS GUDGEON surtaced off Catmon Point and landed the first Penetration Party under command of Maj. Jesus Villamor whose mission was to set up an intelligence network in the Philippines.

To finance the new government. Governor Montelibano borrowed 700,000 pesos from wealthy plantation owners until permission could be obtained from President Quezon to print emergency currency.Since the Members of pre-surrender currency committees were all in Japanese controlled cities, President Quezon on July 11, 1943 created the Negros Emergency Currency Board composed of the following officials of the newly organized government: Governor Alfredo Montelibano as Chairman, with Acting Provincial Treasurer Pedro Elizalde and Provincial Auditor Alfredo Benedicta as Members. 

The Currency Board had not been authorized to print any currency, but Montelibano recommended: One hundred thousand monthly needs of Civil Government, fifty thousand monthly to be used for redemption of mutilated notes, and one million pesos for a revolving fund, army is asking one million monthly.

Quezon immediately approved the recommendations but stipulated the amount for the army as being subject to MacArthur's approval. Despite numerous requests, MacArthur would not commit any specified amount. And after liberation MacArthur would deny any responsibility for redemption of currency on the grounds that he had not given his approval.

Almost any type of paper available was used for printing. The greater portion of it was derived from commercially manufactured brown paper bags. The white paper used at Tolong was brought  in by submarine.

Printing operations ended on May 8, 1945. By that time the astounding total of 40,128,539  pesos had been printed, of which all but 8,346,000 had been issued. Unissued notes were ordered destroyed.