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It was in 1862 when settlements began to appear in the areas between south of Ormoc farther down towards the town of Bay-Bay. The appearance of these settlements was soon followed by the formation of barangays. Among these settlements, Sebugay led in population.

Due to the constant danger posed by marauding bands of Moros who plundered the coastal settlements and kidnapped a number of its inhabitants, the village heads soon got together and formed a junta. Among those kidnapped and killed was a prominent Sebugaynon couple, Ta Sindi and her husband. During that eventful gathering, it was agreed to adopt St. James the Apostle as their patron saint. The village heads stayed near the shore at Wangag, where mounted volunteers scanned the seas for the Moro vintas. When the dreaded vessels appeared, the guards beat their gongs on top of a tower as a warning of impending danger. The men would then take their families to safety and afterwards, gather along the shore with their bolos and spears ready. Blood flowed both from the attackers and the attacked.

The growing community was then under the parish of Ormoc. Father Catalino Cabada , parish priest of Ormoc (1849-1867) came to organize the said community, but some family heads disagreed with the establishment of a poblacion near the Sebugaynon River. This river always threatened the lives of the settlers that lived along its side. Most of them agreed to have the poblacion situated in Balugo but a strong-willed Sebugaynon, Eusebio Calabia, who later became known as Kapitan Sebio, gave a suggestion. He proposed that the image of the patron saint be tied on horseback and wherever the horse would first stop, that particular place would become the site of the poblacion. The church was built near the beach across the place where the horse had indicated.

The majority of the settlers disliked the name Sebugaynons. One day, the settlers held a meeting with the purpose of renaming the community "Herrera," in honor of Governor Herrera, thus expediting its recognition as a pueblo. When the junta was formed, a sailboat, coming from Pilar Island and on its way to Ormoc, dropped anchor. A Spanish priest on board saw in the many beautiful lakes and the numerous springs a similarity with the town in his own native province of Galicia, Spain. The Spanish town which was named "Albujera" - - which means "fresh water lake" - - was noted for the healthful springs and cool lagoons. The Spanish priest lost no time in naming the town after his own municipality and the name "Albujera" or "Albuhera" was popularly adopted by the people of the town.

The Spanish priest who was also the parish pastor of Pilar, Cebu at that time was given the honor of christening the town during its inauguration in 1918. The town officials have since carried the name "Albujera" in their records. However, for easier pronunciation and because the natives of the town always referred to the municipality as "Albuera", prominent citizens petitioned to have the name changed officially. The request was granted and the name remained to this date.

The town of Albuera lies on the western coast of Leyte. It is only 14 kilometers away from the City of Ormoc. Despite its being a fifth-class community, the people have always been self-sufficient and Albuera has never had a deficit since its inauguration.

Father Leoncio Faelnar, the first parish priest, served for 25 years (1862-1887). He organized the parish of Albuera extending from Benolho to Tenag-an. He was responsible for the erection of the church which was completed by Father Casimiro Abete. This stood for many years but was destroyed during World War II. A new and beautiful church now stands in its place, through the efforts of the beloved and energetic parish priest of the town, Fr. Frumenico Cainglet.

The Town boasts of a semi-concrete municipal building. Streets within the poblacion are reinforced with cement along the ditches giving the town a neat look and at the same time providing security against muddy streets during the rainy months.

Infrastructure projects like a puericulture center, pre-fab school buildings and concrete tennis courts have been built through the efforts of the civic conscious people of Albuera. Artesian wells and a rural health center station have likewise been established. However, there are certain projects the people would greatly benefit from, like the construction of roads that would link Albuera to the eastern coast as a market for its products which have depended entirely on the markets of Ormoc City and neighboring municipalities. Furthermore, the installation of a water system, construction of permanent dikes to contain river floods, a seawall and wharf as well as some bridges are some long-range development plans envisioned by the townspeople of Albuera to give them inestimable benefits.