The Philippine Claim Over Sabah

A Historical Discourse of the Philippine Claim over Sabah

By Amando Respicio Boncales, B.A., M.S.Ed., M.A., (PhD).

Northern Illinois University
arboncales.niu.edu

May 2013

Historiographical Essay
The Philippine-Malaysian dispute over the State of Sabah remains a
contentious diplomatic issue. There is a very limited amount of literature available
that discusses this complex issue. The works of Teodoro Agoncillo and Renato
Constantino, nationalist historians, discuss the issue. The objective of this study is
to shed light on the historical background of the Philippine claim over Sabah by
examining how various authors in the field presented the issue.
In 1878, the Sulu sultan entered into a deed of pajak with Austrian Gustavus
Baron de Overbeck and Englishman Alfred Dent, who were representatives of a
British company. The deed was written in Arabic. In 1946, Professor Harold Conklin
translated the term “pajak” as “lease.” The 1878 deed provided for an annual
rental. This treaty constitutes the main basis of the territorial dispute between the
Philippines and Malaysia over Sabah. The Philippines claims that the term “pajak”
means “lease,” while Malaysia claims that it means “cession.”[1]
The Philippine claim to Sabah was formally filed in 1961 at The United
Nations during the administration of President Diosdado Macapagal (1961-1965)
based on historical and legal claims. President Ferdinand Marcos assumed
presidency in 1965. His alleged Jabiddah plan, supposedly proposing the invasion
of Sabah, was publicly exposed, bringing the relations of Malaysia and the
Philippines into a state of mistrust.[2]
The first foreign scholar to have extensively analyzed the Philippine claim to
Sabah was Michael Leifer, author of the monograph The Philippine Claim to Sabah.
It was a major departure from the documents published by the Philippines
government because it was the first to put the Sabah issue in its proper historical
contest. The paper provides a good background of the Philippine claim to Sabah,
although it relies heavily on a two-volume set of documents published by the
Philippine government. Leifer also utilizes newspaper articles and books to place
the Sabah issue in the context of Macapagal’s presidency.
 The author asserts Macapagal envisioned this as a diplomatic gain rather
than a political gain. Macapagal pictured Mania as the center of Southeast Asia, a
Mecca where the other Asian countries to flock to on pilgrimage. He saw this new
role as a means to become accepted by the mainstream Asian countries by its stand
with Indonesia against United Kingdom backed Malaysia. He hoped to gain a new
respect for the voice of the Philippines, who up until this time had been mostly
overlooked, shunned even because of its support of American positions. They saw
their position as both the protagonist and mediator. Indonesia was perfectly
willing to let Philippines take that role.[3]
Leifer maintains that the Macapagal approach to the issue more was
unbalanced.[4] Macapagal’s plan to use the Philippines to block Malaysia and
establish respect among Southeast Asia was flawed. The flaw was in his inability to
see the contradictions of his policy. Maphilindo, was meant as an alternative to
Malaysia and should have been an alliance among the states, bonded over their
fear of the Chinese and their desire to expand.
For Malaysia, however, the Chinese community is not an insignificant
numerical minority without domestic political import. Thus, to accept the
implications of Maphilindo was to invite alienation on the part of the Malaysian
Chinese.[5]
In 1969, the year after Leifer’s book was published, under the auspices of the
National Historical Commission, the Philippines organized a conference on Sabah.
The proceedings were published in a book titled Symposium on Sabah. One of the
important chapters within the book is that of Prof. Rolando N. Quintos, who
suggests alternatives for the solution of the Sabah dispute in his chapter, “The
Sabah Question: Prospects and Alternatives." Quintos offers some provocative
ideas and argues that the issue of Sabah should be seen in its two aspects: First, the
legal issue in regard to the proprietary rights of the heirs of the Sultanate; and
second, the question of political jurisdiction over Sabah. Quintos proposed a
compromise deal, arguing further that "the Philippines [shall] accept the justice of
the Malaysian appeal to self-determination and accept as final the conclusion of
the U.N. Secretary General the United Nation of September 1963, provided that
the Malaysians are willing to submit the issue to the World Court or to a mutually
acceptable mediating body.”[6]
The work of a Malaysian, Mohammed bin Dato Othman Ariff, The Philippine
Claim to Sabah: Its Historical, Legal and Political Implications, extensively discusses
the legal issues surrounding the claim. The main thesis of this book is to discredit
the legal basis of the Philippine claim to Sabah. The author emphasizes the legal
foundation of the United Kingdom’s claim to Sabah based on possession and
consolidation through peaceful and continuous display of State activities.
Furthermore, Ariff illuminates the basis for the integration of Sabah to
Malaysia through the principle of self-determination.[7] On September 16, 1963
after a four-month referendum on Sabah and Sarawak, the Cobbold Commision
report was presented to the British government joining Malaya, Singapore, Brunei,
Sarawak and Sabah (North Borneo) to form Malaysia; this after just a month of
Sabah’s gaining it’s independence.[8] United Borneo Front chairman Jeffrey Kitingan
disputes the referendum in which Prime Minister Najib Tun Razak and other’s claim
that Sabahans’ desire to be part of Malaysia. “There has never been a referendum
on Sabah as stated by some academics. In fact, the so-called referendum in 1962-
63 was actually only a sampling survey of less than four percent of the Sabah
population,” he said.[9]
Finally, Ariff argues that the peaceful settlement of the dispute would
require the Philippines to drop the claim and concentrate all of its efforts in working
closely and cooperating with Malaysia in the context of Association of Southeast
Asian Nation ASEAN.[10] For the heirs of the Sultan of Sulu, given their established
proprietary rights in 1931 through the North Borneo Court, this kind of suggestion
is unacceptable.
Another non-Filipino scholar, S. Jayakumar, who is from the University of
Singapore, also argues that the Philippine case is weak. Like Ariff, Jayakumar
invokes the idea of effective occupation on the part of the United Kingdom in Sabah
since 1878, which granted the British North Borneo Company a charter of corporate
character. The author contends that the Philippine claim is abstract and vague,
based only on historically derived rights of the heirs of the Sultan of Sulu.
Jayakumar further argues that neither the Philippines nor the heirs of the Sultan
have exercised sovereignty or been in effective occupation of Sabah since 1878.
Also like Ariff, the author emphasizes the effective occupation of Sabah by the
United Kingdom. Therefore, Malaysia, as the successor state, is now the legitimate
sovereign of Sabah. Like Ariff, Jayakumar emphasizes the principle of self-
determination.
In Sulu and Sabah: A study of British policy toward the Philippines and North
Borneo (1978), Nicholas Tarling, an 18th century historian postulates British policy
going back as far as the 18th century and continuing until 1903 was the context for
Sulu and Sabah. In direct opposition to Tregonning’s assertion, Tarling claims the
13 Protocol of 1885 did not necessarily inherit the Sulu Sultanate’s sovereignty over
Sabah. He acknowledges the 1878 agreement between the Sultan of Sulu and
Baron Van Oberbeck was a lease rather than a cession. He does however agree with
Quintos that a continuation of the lease in perpetuity could very well be the
solution to the ongoing dispute.[11]
Under the agreement known as “The Madrid Protocol of 1885” Spain is
limited in its influence in the region including relinquishing all rights to Borneo. This
agreement between Spain, Germany and Great Britain requires Spain to renounce
all claims of sovereignty over the territories of Borneo that had belonged to the
Sultan of Sulu. It also renounced sovereignty that were made of up of the islands
of Balambangan, Banguey, and Malawali along with everything within three
maritime leagues from the coast and the territories that formed the “British North
Borneo Company.”[12]
One of the scholars in political science who has done considerable work on
the Sabah issue was Lela Garner Noble, author of the book Philippine Policy
Towards Sabah: Claim to Independence. The author argues that the Philippine
foreign policy on the Sabah issue during the time period from Macapagal through
Marcos was evidence of Philippine’s desire to be seen as independent from outside
forces, most specifically the United States. They wanted to improve what many
Filipinos felt was an embarrassing image as a puppet of the United States. The
claim to Sabah demonstrates an independent policy because the policy was “non-
American in conception or direction.”[13]
Like most scholars who examined the Sabah issue, Noble, Sussman, and
Leifer view the issue as a political question, and none of them consider the issue in
a historical way. Although Leifer did provide considerable background material
about the Sabah issue in his research, he still saw it as largely a contemporary
political angle. The authors mentioned above do not discuss the historical
background and instead concentrate on contemporary political issue only.
As one may recall, both Ariff and Jayakumar disagree with the Philippine
case. Regarding the transfer of sovereignty from the British North Borneo Company
to the British Crown of Sabah in the 1878 Deed of Lease, the Philippine government
takes the position that it was illegal and "an act of naked political aggrandizement."
Hence, the transfer of sovereignty from the British Crown to the Federation of
Malaysia of Sabah was unwarranted.
Paridah Abd. Samad and Darussalam Abu Bakar in "Malaysia-Philippine
Relations: The Issue of Sabah,” published in 1992, emphasized the bilateral
relations between the two countries. The paper presented sub-themes such as (a)
the political and security repercussions of the Sabah dispute with regard to the
Moro secessionism in the south, (b) the overlapping of territorial boundaries, (c)
Malaysian incursion into Philippine waters, and (d) the issue of Filipino refugees
and illegal immigrants in Sabah from the Macapagal to the Aquino
administrations.[14]
The Philippines has nothing to lose by preserving the status quo in
Sabah. Their inactivity comes at a price of missed opportunities. However,
Malaysia stands to benefit from the treasures of Sabah and its waters. Though the
price of the status quo is negligible, this non-resolution of a claim by the Philippines
would be a stumbling block to the intra-ASEAN cooperation.
Malaysia is fully supported by Great Britain and the Commonwealth of
Nations in rejecting the claim, while the Philippines has literally no international
support. Even the United States, Philippine’s biggest ally had assumed a neutral
position. Though the other ASEAN countries appeared to distance themselves from
the issue so as not to take sides between two of their members, privately
acknowledged Malaysia’s rights to the territory.[15]
Malaysia asserts that it has honored its financial obligations and is prepared
to negotiate directly with the Sulu heirs without Philippine intrusion. They assert
this matter is between them and the heirs of the Sultan of Sulu. In fact the
descendants of the Sultan receives M$5,000 ($2,008 US) every year as part of the
cession of the area leased to the British Company in the 19th century.[16]
Arnold M. Azurin’s Beyond the Cult of Dissidence in Southern Philippines and
Wartorn Zones in the Global Village (1996) devoted Part Two to the Sabah issue.
Azurin argues in favor of dropping the Philippine claim, except the proprietary
rights of the heirs. The various treaties signed by the Sulu Sultan since the 18th
century followed a historical pattern of ceding and leasing certain portions of the
sultanate’s dominion to outside powers, depending on the rise and ebb of its own
fortunes and powers relative to that of the contracting parties. “Unfortunately,
those contending parties had in mind to transform the 'franchise' into a lasting
colonial dominion.”[17] Malacanang should have thought in the 1960s that to claim
ownership of a piece of land through Torrens Title is one thing, while claiming
dominion or sovereignty over a vast territory is another.[18]
Another work that has a fresh interpretation of the issue is Asiri Abubukar’s
“Bangsa Sug, Sabah and Sulus' quest for Peace and Autonomy in Southern
Philippines” (2000). The author asserts that there exists a continuing sense of
identification and affiliation among the Sulu people with Sabah. Because of the
strong sense of connection and affiliation to Sabah among the people in Sulu,
Abubakar argues that settling the Sabah issue is vital to peace process in the
southern Philippines, particularly in the quest for autonomy by the Sulu people.
The identification, connection, and affiliation of the Sulu people with Sabah is
through the defunct Sulu Sultanate; the influx of Filipino immigrants to Sabah
further reinforces the connection.[19]
Another factor that Abubakar pointed out is that the strategic location
for trade of the Sulu-Sabah area since the height of the Sulu Sultanate will continue
to be significant as part of the Brunei, Indonesia, Malaysia, Philippines-East Asian
Growth Area (BIMP-EAGA). The author believes the Sabah issue is intertwined with
the Moro problem in Mindanao.[20] He postulates that resolving the Sabah issue
would indeed move Southern Philippines closer to a lasting peace.
For the most part of the Sabah issue, it is the 1878 deed that causes the most
contention among various academics. Tarling maintains that the “territory was held
by the Company under a lease agreement, and this the British Government should
admit.”[21] However, he believes that the Philippine government cannot “inherit the
sultanate’s sovereignty over North Borneo” under the protocol of 1885. His
recommendation is the continuation of the lease in perpetuity.[22]
A History of modern Sabah: 1881-1963 (1960), written by historian K. G.
Tregonning, analyzes the Sabah issue that the agreement in 1878 between the Sulu
Sultans and Baron Van Overbeck was one of a cession not a lease; furthermore,
several treaties and international conventions have excluded North Borneo from
the territory of the Philippines.[23]
Arrif’s The Philippine Claim to Sabah: Its Historical, Legal and Political
Implications has a strong pro-Malaysian sentiments and maintains that the
agreement of 1878 was a “Deed of Cession.”[24] Instead, he recommends that given
the close historical ties between the peoples of the Philippines and North Borneo,
both Malaysia and the Philippines should maintain and promote healthy relations
to ensure the security of the region. The adaption of this “formula” would require
the Philippines to drop its claim and concentrate all of its efforts on working closely
with Malaysia.[25]
Leifer’s The Philippine Claim to Sabah clarifies that the focus of his study is
the political and non-legal aspect of the presentation of the Philippine claim.
However, he recognizes that the predecessors of the British North Borneo
Company (BNBC) were private lessees of the Sultan of Sulu, and in effect cannot
acquired dominion over a territory through a contract, also known as Pajak of 1878.
The BNBC was barred from acquiring sovereignty by its private status and by the
terms of its charter.[26]
International law provides for the lease of a territory in which a state grants
another state the right to control at least part of the lessor’s territory. Once the
territory is leased the sovereignty remains with the lessor and not under its
jurisdiction which is granted to the lessee. The lease of the territory is usually given
in exchange of an annual fee.[27]
After examining the existing literature regarding the Philippine claim, I
believe that the Philippine claim to Sabah is valid, with strong historical roots. It is
my opinion, like those of Tarling and Tregonning, that the Deed of 1878 is not a
transfer of sovereignty, but a lease granted by the Sultan of Sulu to British subjects;
a private venture. In this historiographical essay, I observe that the Sabah issue is a
post-colonial symptom that needs to be treated to achieve lasting peace in this part
of Southeast Asia, an opinion shared with Azurin’s Beyond the Cult of Dissidence in
Southern Philippines and Wartorn Zones in the Global Village.
Historical Foundation
The rise of Islam in Southeast Asia revolutionized specific social institutions
in the region. Islam as a politico-religious institution had triggered the modification
and introduction of social institutions that shaped present day Southeast Asia.
Among the most important developments was the introduction of the sultanate (a
developed political and at the same time religion institution) to the region. For the
purpose of this research, my study will focused on the development of the Sulu
sultanate as part of the greater Malayan world and the eventual claim of the
Philippines to Sabah (as the political successor at sovereignty of the Sulu Sultanate).
The objective of this study is to trace the historical and legal basis of the
Philippine claim over the State of Sabah. The methodology of the study will be
thematical not chronological. Instead of being conscious of the timeline, the study
will concentrate on the major themes that shaped the sultanate’s Sabah dominion,
lease and agreements with western world and the present claim of the Philippines
to the Sabah State. The words “North Borneo,” “British Borneo” or “Sabah” are
used interchangeably in the study. These words are used to that portion of the
North Borneo Island to which the sultan of Sulu once ruled.
Available historical records seem to indicate that the dispute territory was a
possession of the Sultan of Sulu which evidently was leased to the founders of a
British chartered company. With protection of the crown guaranteed over the lease
territory, later became the foundation British annexation and colonization.
Eventually, Sabah was included in the federation of Malaysia.
The foundation of the Sultanate of Brunei and Sulu
The sultanates of Sulu and Borneo were well established political entity in
the Malay world during the late 15th and 16th century. The Arabs, who had settled
in Malacca in 1400, did not extended political control over the two sultanates other
than spreading the teaching of Islam. The Chinese did the same who frequented
the areas held by the two sultanates to trade with the natives.
The sultanate of Sulu was founded in 1380, nearly one and a half century
before the arrival of the Spaniards in the Philippines. The sultanate possessed an
efficient political organization, extending its influence in Zamboanga, Basilan,
Palawan, aside from the Sulu archipelago.[28] During its supremacy, the sultanate
extended its control as far as the Visayas and Luzon until controlled by the Spanish
conquistadores in the Philippines. For many years to come, as the colonial
government consolidated it territory, the sultanate was to remain a problem by the
Spanish and American colonial government (viewed as pirates and buccaneers).[29]
The Sultanate of Brunei, on the other hand, was founded in the 15th century.
For a brief period, it became a tributary of the Majapahit Empire.[30] Before the
British entry in to the region, the sultanate exercise nominal control over the whole
northwestern and eastern coast of the island.
Related by its common Malay origin, the two sultanates were bounded
together by religious ties with the spread of Islam in the Malay world. Trade
between their respective subjects served to reinforce this relationship even more.
Borneo and the Western World
The Portuguese and the Spaniards, in search of spice, were the earliest
among the westerners to arrive in the East Indies and establish themselves in
Malacca early in the 16th century. British interest in the Sulu-Borneo area stemmed
primarily from the East Indian Company’s desire to establish a factory.[31] The head
of this particular project was Alexander Dalrymple, who, in January 1761,
negotiated a Treaty of Friendship and Commerce with the Sultan of Sulu. The
agreement was confirmed by another treaty in February 1763 reiterating the major
provision, emphasizing defense alliance.
But the company appeared unable to take advantage of this concession.
When it finally decided, in 1769, to occupy Balambangan and made use of the
ceded territory, disease and strained relations with the Sultan of Sulu erupted that
led to open war, hence preventing the development of the enterprise. The
Balambanagn settlement was abandoned in 1775 until a second attempt was made
in 1803, which again was abandoned in 1805.
Under the Act of 1858, the East Indian Company was dissolved and its
interests were transferred to the crown. However, evidence seems to suggest that
the territories ceded by the Sulu failed to interest the British government further.
Lord Canning, as the first viceroy to British India, repudiated the “doctrine of lapse”
and was further enunciated by his predecessor (the Earl of Derby). The Earl of
Derby, in explaining to the British Ambassador in Germany the nature of Spanish
claim to North Borneo:
It should be mentioned that previously to 1836 Spain claimed the island on the
ground of first discovery, ancient treaties, and alleged occupations; but those
claims were never admitted by Great Britain. . . . Great Britain also had rights under
Treaties with Sulu, dated 1761, 1764, and 1769, BUT those treaties must be
considered as having lapsed.[32](Emphasis added)

Almost two decade before the dissolution of the East Indian Company, an
Englishman named James Brooke[33] visited Sarawak, and shortly after was offered
by the Sultan of Brunei the governorship of Sarawak in exchange for aid in the face
of continuing rebellion. Later in 1841, Brooke was proclaimed Rajah and in
subsequent years, he succeeded in minimizing piracy in Sarawak, Brunei, and North
Borneo with the cooperation of the British Navy. The involvement of Brooke made
him “the supreme ruler of Sarawak or the White Rajah.”[34]
In 1846, the British flag was raised on Labuan Island off the cost the east
coast of Sabah. And in the following year, Great Britain and Brunei the concluded
a Treaty of Friendship and Commerce, at the same time that Labuan was ceded in
perpetuity to the crown.
The United States became similarly attracted to Borneo, eager of obtaining
the favors that had been secured by other western powers. In 1850, a treaty was
signed for the United States advantages for the most favored nation, and later an
American consul was appointed to Brunei. Borneo-Sulu area became increasing
attractive in terms of commerce for its strategic location in the region, especially
maritime traffic.
Brunei’s Cession of Sabah to Sulu.
Although wealthy, the Sultan of Brunei had a court that was corrupt and
ridden with intrigues. Consequently, the sultan found difficulty in extending control
to many of his datus throughout the domain, rebellion and strife was frequent in
the sultanate. It was under this circumstances that the territory, comprising most
of what is now Sabah State, was ceded to the neighboring sultanate as the prize for
military assistance.
The murder of the 12th Sultan of Brunei, Muhammad Ali, by Bendehara
Abdul Mubin resulted to civil war. The perpetrator claimed the throne but was
contested by Pengeran Bongso, a nephew and son-in-law of the deceased sultan.
Both contestants to the throne asked the support of Badarud-din, a relative of both
and the reigning Sultan of Sulu. Badarud-din was unable to solve the crisis, but
supported Pengeran Bongso (who took the name Sultan Muaddin). Sultan
Muaddin emerged victorious and the large territorial land known today as “the
State of Sabah” was ceded to the Sultanate of Sulu in exchange of the military help
and support.
The observation of the contemporary British officer will give us more insight
of the territory ceded:
The first material alteration in the sovereignty of the territorial possession took
place in the kingdom of Borneo Proper, when his Raja was obliged to call in the aid
of the Solos to defend him against an insurrection of the Maruts and Chinese. In
consideration of this important aid, the Raja of Borneo Proper ceded to the Sultan
of Solo all that portion of Borneo then belonging to him, from Kimanis in latitude
5° 30’ north to Tapean-durian, in the straits of Macassar, which include the whole
north of Borneo.[35]

The sultanate’s connection with Northern Borneo goes back as early as 1521,
as far as the written record is concerned, when a Brunei Sultan was married to a
Sulu princess. This early connection between the two sultanates cemented the
familial relationship. This political marriage developed into a politico-military
allegiance.
Meanwhile, as trade flourished in the region, the mercantilist policies
adapted by the colonial powers deprived the Sultanate of Brunei and Sulu of their
own profitable commercial activity. Thus driven into piracy and smuggling, the
Sulus and the Bruneis continually menaced western trade, presenting a problem
that was to persist for many years.
Territorial Grant from Brunei
Baron von Overbeck, Austrian Consul-General at Hongkong at that time,
convinced Dent in supporting a venture in Sabah and together they planned to sell
their rights to any interested government.[36] With the money he received from
Dent to conduct negotiations, the baron sailed to Brunei. He succeeded in
persuading the Sultan, who presumably could not resist the tempting
compensation offered. On December 29, 1877, the sultan entered into agreement
with von Overbeck, in which the latter gained three territorial “grant” and for which
the sultan received a total annual payment of 12, 000 Malayan Dollars. In addition
the sultan appointed von Overbeck “supreme ruler” with the title of “Maharajah of
Sabah and Rajah of Gaya and Sandakan,” with delegated powers to govern the
territory. [37]
 The Baron, however, evidently realized that several factors tended to
depreciate the value of the grants he had obtained. This is because more than a
century and a half earlier the territory had already been ceded to the Sultan of Sulu
who was in actual possession. Moreover, Brunei chiefs refused to recognize the
Sultan of Brunei’s rights to cede the territory.[38]
Von Overbeck, aware of the Sultan of Sulu’s dominion in North Borneo,
found it necessary to entered into negotiation with the sultan for the lease of the
territory. Overbeck and William W. Treacher, the Acting British Consul-General at
Labuan Island in Borneo, went to Sulu in January 1878. The contract dated January
22, 1878, was drafted by Overbeck himself and was written in Malayan language
with Arabic character.
Territorial Lease from Sulu.
From Labuan, Baron von Overbeck, Joseph W. Torrey, and William Clark
Cowie sailed to Jolo on board the steamer, America, arriving at their destination on
January 16. Consul Treacher also reached Jolo on the same day, having sailed
separately on the British Warship, Fly.
Von Overbeck and his companion were shrewd negotiators and their
combined effort brought to bear on the sultan, already hard-press by an ongoing
campaign in Sulu, was hardly in a position to refuse. During the bargaining, Cowie,
whom the sultan had great confidence as a gun-smuggling partner, contributed his
own persuasive influence after having been led to believed that von Overbeck
would reward him.[39]
Treacher, whom the sultan consulted, said that Overbeck represented “a
bona fide British company,” and intimated to the Sultan that the Spanish Captain-
General himself was at the head of the expedition already in Zamboanga poised
and ready to destroy Jolo; and that the Sultan of Brunei had recently ceded to them
the territory and was already to take possession of it anyway. [40] Evidently a lease
of the sultan’s possession in Sabah, its pertinent provisions read thus:
We Sri Paduka Maulana Al Sultan Mohammad Jamalul A’lam, son of Sari Paduka
Marhum Al Sultan Mohammad Pulalum, Sultan of Sulu and of all dependencies
thereof, on behalf of ourselves and for our heirs and successors, and with the
expressed desire of all Datus in common agreement, do hereby desire to lease of
our own free will and satisfaction, to Gustavus Baron de Overbeck of Hong Kong,
and to Alfred Dent, Esquire, of London, who act as representatives of a British
company, together with their heirs, associate, successors, and assigns forever and
until the end of time, all rights and powers which we possess over all the territories
and lands tributary from the Pandasan River on the east, and thence along the
whole east coast as far as Sibuku on the South, and including all territories, on the
Pandasan River and in the coastal area, known as Paitan, Sugut, Banggai, Labuk,
Sandakan, China-Batangan, Murniang and all other territories and coastal lands to
the south, bordering on Darvel Bay and as far as the Sibuku River, together with all
the lands which lie within nine miles from the coast.

The cession (as the Malaysian prefer to interpret it) or lease (as the Sulu
Sultanate maintain) of Sabah to the British began in the Treaty of 1878 between
Baron de Overbeck and His Highness the Sultan Jamal Al-Alam was signed for an
annual payment of 5,000 Malayan dollars.
It should be noted that Consul Treacher succeeded in formalizing the
participation of his government in the agreement, by affixing the participation of
his government in the agreement, by affixing his signature as a sole witness to the
transaction. Unlike in the Brunei grants of the previous year, Treacher’s
recommendation were accepted by the Sulu Sultan, namely, that the “consent” of
the British government would first be obtained before any transfer of territory and
that its “consideration and judgment” shall be sought in event of any dispute.
Together with the Territorial Agreement, the sultan also appointed von
Overbeck as “supreme and independent ruler” with the title of “Datu Bandahara
and Rajah of Sandakan,” delegating him as a vassal power with which to administer
the territory. However, the sultan made it clear that Oberbeck made the title not
him.[41]
The Philippines Claim over Sabah and its Arguments.
It is the thesis of the Philippine government that the contract of 1878 was a
lease, and not a transfer of ownership or sovereignty. Treacher, who was present
at the signing of the contract and as witness, characterized the contract as a lease
and referred to the money payment as annual rentals.
Diosdado Macapagal, who served in the Department of Foreign Affairs in
1946 and later became President of the Philippines, advocated filing a claim at the
United Nations. The filing took place on June 22, 1962. They claim sovereignty,
jurisdiction and proprietary ownership of North Borneo. The Philippines claim they
have the legal and historical rights to North Borneo as the successor-in-interest of
the Sultan of Sulu.
In the early part of the 1960s it became an imperative for the Philippines,
aside from the strong historical and legal rights that North Borneo is important to
Philippine territory and vital to its security. At this time (1960’s), communism in the
region was in its height and Philippines were anxious that Malaya would succumb
to the potent communist threat from mainland Southeast Asia, creating a scenario
in which a communist territory would be immediately at the southern frontier of
the Philippines.[42]
Philippine anxiety on the communist threat has subsided, but another form
of menace developed. From the dynamics of the Muslim separatist movement in
the south, there evolved a more terrifying threat. The Sabah state of present
Malaysia harbored some of the kidnappers, Abu Sayyaf and Al-Quedah, provoking
international concern through widespread violence, state wide terror and their
vision of establishing independent states.
The British North Borneo Company based its rights from the grant signed in
January, 1878. In it, the sultan of Sulu granted certain concessions and privileges to
Baron de Overbeck, an Austrian national who was at the time the Austrian Consul-
General at Hongkong, and Alfred Dent, a British national, in consideration of an
annual rent or tribute of 5,000 Malayan dollars. Dent later bought out Overbeck,
and transferred his rights to the British North Borneo Company. The Company was
granted a Royal Charter on November 1, 1881.
The Philippine government argues that Overdeck and Dent (the leasors) did
not acquire sovereignty or dominion over North Borneo. This is because, according
to international law, sovereignty can be ceded only to sovereign entities (e.g.
government to government agreement) or to individuals acting for sovereign
entities (agreement between leaders of nations). Obviously, Overbeck and Dent
were private citizens of their respective countries who did not represent any
sovereign entities, but instead acted as mere businessmen who only acquired grant
of lease from the Sultan of Sulu. Hence, neither of them did not, and could not,
acquire sovereignty or dominion.[43]
The above letter was written by the British Foreign Minister to explain and
respond to the Spanish protest regarding the grant of Royal Charter to the British
North Borneo Company. It was not the Spanish crown which made the protest
alone; the Dutch government also protested in the same way. Again, Lord Granville
maintained in his letter to the Dutch that the British North Borneo Company was a
mere administrator, and that the “British Government assumed no sovereign rights
whatever in Borneo.”[44]
The Philippine government, therefore, strongly argues that the transfer of
rights, powers and interest by the British North Borneo Company to the British
Crown was not possible. North Borneo Cession Order of 1946 took place just six
days immediately after the Philippines was declared independent by the United
States. In the International Law, a transferee (British Crown) cannot acquire more
rights than the transferor (British North Borneo Company). In other words, how can
the British Crown exercise sovereign rights in the form of protectorate in 1946,
when the British North Borneo Company did not exercise nor assume sovereignty
over North Borneo? In other words, how can the British North Borneo Company
transfer sovereignty to the British Crown, which the company did not have in the
first place?
It has been said that President Manuel L. Quezon of the Commonwealth of
the Philippines (the transitional, semi-autonomous government of the Philippines
under American sovereignty which preceded the independent republic) “had
decided not to recognize the continued existence of the Sultanate of Sulu,
particularly in reference to North Borneo.” The Philippine Department of Foreign
Affairs was not able to find a written record of this statement. This pronouncement
was against the Organic Law of the Philippine Commonwealth, since the power to
give and terminate recognition during the Commonwealth Philippines was vested
only in the Congress of the United States of America (being the colonial power).
Aside from the political technicality, International Law dictates that any withdrawal
or termination of recognition does not imply the dissolution of the entity affected
by the withdrawal.[45]
The Philippine government believes that Dent, who was granted a Royal
Charter in the form of British North Borneo Company by the British government, to
which the British Crown derived its claim of sovereignty, was not authorized to
acquire sovereignty or dominion. Evidence to this was the official correspondence
of Lord Earl Granville, British Foreign Minister at the time, in his letter to the British
Minister in Madrid dated January 7, 1882, explaining the character of the Charter
Grant of the British North Borneo Company, as follows:
The British Charter therefore differs essentially from the previous Charters granted
by the Crown to the East India company, the Hudson’s Bay Company, the New
Zealand Company, and other Associations of that character, in the fact that the
Crown in the present case assumes no dominion or sovereignty over the territories
occupied by the company, nor does it purport to grant to the Company any powers
of government thereover; it merely confer upon the persons associated the status
and incidents of a body corporate, and recognizes the grants of territory and the
powers of government made and delegated by the sultan in whom the sovereignty
remains vested…As regards the general feature of the undertaking, it is to be
observed that the territories granted to the Company have been for generations
under the government of the Sultan of Sulu and Brunei, with whom Great Britain
has had Treaties of Peace and Commerce.[46] [Emphasis Added]
 The British Foreign Minister writes this letter to explain and respond to the
Spanish protest regarding the grant of Royal Charter to the British North Borneo
Company. It was not the Spanish crown who made the protest alone; also the Dutch
government protested. Again Lord Granville maintains, in his letter to the Dutch,
that the British North Borneo Company was a mere administrator, and that “British
Government assumed no sovereign rights whatever in Borneo.”[47]
The Philippine government, therefore, strongly argues that the transfer of
rights, powers, and interest by the British North Borneo Company to the British
Crown, known as North Borneo Cession Order of 1946 (that took place six days
immediately after the Philippines was declared independent by the United States),
was not possible. In the International Law, a transferee (British Crown) cannot
acquire more rights than the transferor (British North Borneo Company). In other
words, how can the British Crown acquire sovereign rights (in the form of
protectorate in 1946), when the British North Borneo Company did not exercise
nor assume sovereignty over North Borneo? Again, since Overbeck and Dent did
not acquire rights of sovereignty or dominion over North Borneo their transferee
(British North Borneo Company), also, did not acquire rights of sovereignty or
dominion.
The 1930 Convention between the United States and Great Britain and its
implication to the Philippine Sabah Claim
Under the Carpenter Agreement of 1915, the Sultan of Sulu agreed to
relinquish its temporal power over Sulu but retained his sovereignty over North
Borneo. As Governor Carpenter clarified in this communication to the director of
the Non-Christian tribe on May 4, 1920, as follows:
It is necessary however that there be clearly (sic) of official record the fact that the
termination of the temporal sovereignty of the Sultanate of Sulu within American
territory is understood to be wholly without prejudice or effect as to the temporal
sovereignty and ecclesiastical authority of the sultanate beyond the territorial
jurisdiction of the United States Government especially with reference to that
portion of the Island of Borneo which as a dependency of the Sultanate of Sulu is
understood to be held under lease by the chartered company which is known as
the British North Borneo Company. ”

The American Governor General of the Philippine Island Francis B. Harrison

made it more clear that: “It is true Governor Carpenter’s contract or treaty with
the Sultan of Sulu of 1915 deprived the Sultan of his temporal sovereignty in the
 Philippine archipelago but did not interfere with the Sultan’s status of sovereignty
over British North Borneo lands.”[48]
It is in the context of this statement that the 1930 Convention between the
United States and Great Britain defined their respective boundaries. The United
States did not intend to claim North Borneo. By this act of defining the respective
boundaries, the United States did not cede or waive anything to the British Crown.
Submission of the Sultan of Sulu of the Sovereignty of Spain 1851 and Protocol of
1885

Spain’s claim to North Borneo is based on the fact the sultanate “admitted
herself a vassal of Spain on the basis of this treaty Spain was claiming all the
possessions of Sulu and North Borneo.” However, this is not necessarily as it
seems. The fact is North Borneo was not included in the former treaty. The British
government did not recognize the Spanish claim. In a Protocol of Peace between
Spain, Germany and Great Britain signed March 7, 1885 Spain gave up its claims of
sovereignty over North Borneo to Great Britain leading to British claim of
sovereignty since then.[49]
The document signed by the sultan in 1878, recognizing Spanish
sovereignty over “Jolo and its dependencies,” had no mention on the inclusion of
the sultan’s territory in North Borneo. It is important to first clarify that Spain never
acquired sovereignty over North Borneo. In the protocol signed, the term
“pretension” to sovereignty over North Borneo was used; hence Spain did not
transfer sovereignty to Great Britain (a sovereignty Spain never had; it was merely
a pretension). Second, “Jolo and its dependencies” was a geo-political unit different
and distinct from the North Borneo possession. To give a more vivid example for
this argument, let us try to examine Spanish geo-political units in its Asian positions,
known as “Espana Oceanica:”[50]
1. The Philippine Archipelago proper;
2. The Island and archipelago of Jolo, conformably with existing treaties with the
Sultan of Sulu;
3. The portion of Northeast cost of Borneo that forms part of the dominion of the
Sultan;
4. The Marianas Islands; and
5. Other territories which now belong or which may belong in the future to Spain.
North Borneo was not considered a dependency of Jolo. As shown in the list of
“Espana Oceanica,” North Borneo was a geo-political unit different and distinct
from the Archipelago of Jolo. It is clear that the sultan did not include his territory
and dominion in North Borneo in signing the treaty recognizing the Spanish
sovereignty. Another thing to consider was the Spanish Geo-political division in
“Espana Oceanica.” In the Spanish geo-political law, the regulations were clear
about that.[51]
The signing of the sultan in 1885 recognizing Spanish sovereignty over “Jolo
and its dependencies” did not transfer sovereignty to Great Britain. In the protocol
of peace between Germany, Great Britain, and Spain, it was clearly stated that the
Spanish claim of sovereignty was worded in the text as “pretension.” By this, it did
not result in transfer of sovereignty from Spain to Great Britain. Therefore, the
contention that Spain’s renunciation of sovereignty over its North Borneo territory
in favor of Great Britain that resulted in transfer of sovereignty from the Sulu
Sultanate to Great Britain is incorrect.

Macaskie Dictum of 1939

In a 1939 case the heirs of Sultan Jamalul Kiram claimed money was owed to
them under the 1878 grant. They were awarded a “cession of right” by the High
Court of North Borneo. Nine heirs of the Sultan of Sulu won the award in the
Macaskie Judgment. Charles Frederick Cunningham Macaskie was the presiding
chief justice[52] The ruling was made on the shares entitled by each claimant. [53]
The issue before the court was the identity of the heirs of the sultan who
were entitled to receive payments after his death. Through their attorney, they
had the only an English translation by Maxwell and Gibson, a translation of the
Grant of 1878 that incorrectly characterized this as a cession instead of a lease. A
later translation made it clear that this was an incorrect translation.
It should be recalled, that the Grant in 1878 is in Arabic script and is worded
in the Malayan language. When the lawyer of the heirs filed the case, he had no
original copy of the Grant. The erroneous Maxwell-Gibson translation was the one
used, quoted, and paraphrased in the complaint filed by the attorney for the heirs
of the Sultan. Years after the Macaskie dictum was made (which translated the
Grant as cession instead of lease), the Philippine government had the copy
translated into English. According to the result of the translation, the Grant of 1878
was a Lease Agreement. Under this circumstance, the Philippine Government could
not accept the dictum of Judge Macaskie. In the judgment, the Grant of 1878 was
viewed as a permanent cession or sale, and that the money that was to be paid to
the heirs is “cession money.”[54]
The former United States Governor General of the Philippine Islands, Francis
Harrison repudiated the Macaskie judgment stating, “Upon examination of our
own translation of the original document (in photostat) it will be seen that Maxwell
and Gibson, the English authors on whose text the decision of Mr. Justice
Mackaskie was based, have changed the language so as to make the document a
grant cession instead of lease, as it really was, and as the word “padjak” in the
original really means. In view of this vital divergence from the original text, I do not
find myself able to give full faith and credit to the opinion of Mr. Justice Mackaskie
in the famous case in 1939 in Sandakan.”[55]
In a letter addressed to Vice President and Secretary of Foreign Affairs Elpidio
Quirino, dated February 27, 1947, Harrison explained that:
In reviewing the subject of the claims of the Sultanate of Sulu to their ancient
patrimony in North Borneo, one must come to the conclusion that the action of the
British Government in announcing on the sixteenth of July [the annexation of North
Borneo to the British Crown], just twelve days after the inauguration of the
Republic of the Philippines, a step taken by the British Government unilaterally, and
without any special notice to the Sultanate of Sulu, nor consideration of their legal
rights, was an act of political aggression which should promptly be repudiated by
the Government of the Republic of the Philippines.[56]

To conclude, the Malaysian claim to Sabah, based on the British claim, is not
sustainable. The territory was only leased as the British North Borneo Company
and not ceded as the Great Britain, and later Malaysia, have claimed.