The Municipality of San Agustin was originally known as Barrio Oteiza, one of the component barrios of the Municipality of Lianga, Surigao del Sur.

On June 6, 1951, however, by virtue of Executive Order No. 445, duly signed by then President Elpidio R. Quirino, Barrio Oteiza has been elevated to the status of a Municipality. It was named Municipality of Oteiza, with German Alameda, Sr., as its first municipal mayor. It had seven (7) component barrios and its seat of government was in Barrio Oteiza.

However, 3 years after the elevation of the Municipality of Oteiza, for unknown political reasons, by virtue of Executive Order No. 69, dated September 23, 1954, issued during the term of the late President Ramon D. Magsaysay, the seat of government has been transferred from Barrio Oteiza, to Barrio of Marihatag, one of the component barrios of Municipality of Oteiza.

This political maneuvering had caused confusions and commotions among the residents of the Municipality of Oteiza, especially that all of the infrastructures and development had now been focused and directed towards Barrio Marihatag. These events and the series of events that took place during this particular period, eventually, led to the regression of Municipality of Oteiza, from its status as municipality to becoming one of the component barrios of Municipality of Marihatag; which had been cemented with the issuance of Republic Act No. 1261, dated June 10, 1955. Furthermore, due to the inactivity and idleness of Barrio Oteiza in both the political scenery and infrastructural development, Barrio Oteiza had lost its status as a Barrio and later on, was merged with Barrio San Isidro, by virtue of Executive Order No. 27, dated August 27, 1959.

Nonetheless, with the untiring effort and representations of the late Municipal Mayors German R. Alameda, Sr. and Prudencio S. Ronquillo, and the unwavering support of the late Congressman Vicente Pimentel, Sr., on June 16, 1962, the Municipality of Oteiza has been re-established and recreated by virtue of Republic Act No. 3489. It has three (3) original component barangays, Barangay Oteiza (where the seat of Government is located), Barangay Salvacion and Barangay Sto. Niño. Taking the helm then as Municipal Mayor was the late Prudencio S. Ronquillo.

Five years later, on June 17, 1967, during the incumbency of the late Mayor Eufemio V. Darunday, by virtue of Republic Act No. 4903, the name Municipality of Oteiza has been renamed to the Municipality of San Agustin, in honor of the town’s patron saint, Saint Augustine. From the original three (3) component barangays, the Municipality of San Agustin is now comprised of 13 progressive barangays.