The municipality of Sagbayan was created on February 9, 1949 by virtue of Executive Order No. 204 of the late President Elpidio Quirino. It comprises some of the barangays of the municipalities of Clarin, Inabanga and Carmen. Sagbayan was first named “BORJA” in honor of the first elected Civil Governor of Bohol, the late Honorable Salustiano Borja and in the later years the name of the town was returned to Sagbayan, which was the name of the barrio.

The creation of the municipality of Sagbayan was a brainchild of the prominent and daring citizen of the former barrio of Sagbayan, the late Baudillo Torrefranca, who came from the barrio of Nahawan, Clarin in the year 1915. His purpose of coming to the place was to assess the real properties there for taxation. At that time he was employed in the Office of the Provincial Assessor. After the assessment work was over, he transferred his residence in Sagbayan. He bought a land from Pastor Samputon with an area of approximately 80 hectares.

The barrio of Sagbayan, which was part of Clarin, was inhabited by few people whose livelihood depended upon the product of their daily toil on the farms. The place was partly covered by forest in which wild animals thrived and inhabitants remote from civilization. As the years went by, the population of the place increased by leaps and bounds due to immigration of the people from nearby province of Cebu to agriculture-minded people who were attracted by the rich plains of the barrio of Sagbayan came to purchase lands and cultivated them.

In 1931, Mr. Baudillo Torrefranca presented a resolution before the Honorable Council of Clarin requesting the adoption of a resolution recommending to the Office of the President for the conversion of the barrio of Sagbayan into a municipality composing the several barrios of Clarin, Carmen, Inabanga and Balilihan. The Municipal Council of Clarin strongly opposed the proposal of Mr. Torrefranca. Despite the strong objections of the municipal officials of Clarin, his dream did not end. Instead he organized the people of barrios Sagbayan into an organization called “MGA ANAK NI SENIOR SAN AGUSTIN”.

On December 8, 1941, the Second Worlds War broke out and others believed that would be the end of the struggle for the creation of Sagbayan into an independent town. On the other hand Mr. Torrefranca never give up hope to end his golden desire. In the year 1946, the Philippines was liberated from Japanese regime and that was the time for revival of the movement for the creation of the town. He worked hard with other community leaders to pursue the movement and in 1949 when all pertinent papers were completed Mr. Baudillo Torrefranca went to Manila and submitted the papers to the Office of the President. The Office of the President referred the matter to the Office of the Provincial Board of Bohol requiring the submission of a resolution recommending approval of the creation of barrio Sagbayan into a new municipality.

The Provincial Board submitted a resolution in favor of the people of Sagbayan and February 9, 1949, Executive Order No. 204 was issued by the President of the Philippines, His Excellency Elpidio Quirino, creating the Municipality of Borja and appointed its First Municipal Officials.