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It seems that no one actually knows if it comes form "nila" or "nilad". Researchers have theories but it's hard to tell now if the "d" was originally there or not.

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Here's a nice excerpt that sums up the possibilities, and I've also linked some more sources where this is explained a bit more.

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"The marshy delta at the mouth of the Pasig had an abundance of mangroves,
including a variety known as nilad, and was also overgrown with an indigo
plant called nila. Conflicting assumptions were made that the city's name
came from of these terms--hence Maynilad (where nilad is found), and Manilad
(where nilad abounds), or Maynila (where nila exists) and Manila (where nila
is plentiful)."

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https://digitalcommons.unomaha.edu/cgi/viewcontent.cgi?article=1230&context=cparpubarchives
https://www.jstor.org/stable/29791237?read-now=1&refreqid=excelsior%3A507cf6ab780a27d13a4504f342e2b1c5&seq=1#page_scan_tab_contents
https://www.jstor.org/stable/29791188?read-now=1&refreqid=excelsior%3Ad2ed71c793daa96219ecb27ab5138248&seq=1#page_scan_tab_contents
https://en.wikipedia.org/wiki/Prehistory_of_Manila