Philippine government thesis on Sabah: The contract of 1878 was a lease, and not a transfer of ownership or sovereignty

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, was present at the signing of the contract and as witness, he characterized the contract as a lease and referred to the money payment as annual rentals.

Contrary to allegations, the Philippine claim had been studied for years before 1962. While serving in the Department of Foreign Affairs in 1946, Diosdado Macapagal, who later became President of the Philippines, advocated the filing of the claim. The official filing of the claim took place on June 22, 1962.

The claims are of sovereignty, jurisdiction, and proprietary ownership to North Borneo. Philippines being successor-in- interest of the Sultan of Sulu derived its legal and historical rights in North Borneo. In the early part of the 1960’s 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. 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 their 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.

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. 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…"

The above letter was done 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 who made the protest alone; also the Dutch government protested the same. 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.”

The Philippine government therefore, strongly argues that the transfer of rights, powers, and interest by the British North Borneo Company to the British Crown is not possible, known as North Borneo Cession Order of 1946 (that took place six days immediately after the Philippines was declared independent by the United States).

In the International Law, a transferee (British Crown) can not 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. The1930 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.” 

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 their respective boundaries, the United States did not cede or waive anything to the British Crown.

Macaskie Dictum of 1939. In 1939, the heirs of Sultan Jamalul Kiram filed a suit case in the court of Borneo for the purpose of collecting the money due to them under the 1878 Grant. 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 English translation by Maxwell and Gibson (that translated the Grant of 1878 as cessation instead of lease, which is wrong according to a later translation). It should be recalled, that the Grant in 1878 is in Arabic and is worded in the Malayan language. At the time the lawyer of the heirs filed the case, he had no original copy of the Grant in 1878.

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 is to be paid to the heirs is “cession money.” Recognition of the Sultan of Sulu of the Sovereignty of Spain over “Sulu and its dependencies” (the main island of Sulu and the tributaries) in 1878 and the eventual renunciation in 1885.

According to this interpretation, Spain acquired sovereignty over North Borneo in 1878 when it signed the protocol of March 7, 1885 with Germany and Great Britain. In that protocol of peace, Spain gave up all claims of sovereignty over North Borneo to Great Britain; hence, sovereignty over the territory was transferred to Great Britain. 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, there was no essence at all that Spain was transferring 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:” 

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. Even if one would insist to assume that the signing of the sultan in 1885 recognizing Spanish sovereignty over “Jolo and its dependencies” resulted to transfer of sovereignty is still out of premise.

Because in the protocol of peace in 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 premise 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, was impossible.

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*Photo shows banner announcing the first national salvo held on 15 October 2011 to tackle the nation's Sabah claim sponsored by the Pimentel Center for Local Governance. Original can be viewed at the Philippine Sabah Claim Forum on Facebook.

**Photo shows 1878 Grant in Arabic

NB: The following is an excerpt from an article in Wikepedia "The North Borneo Dispute" and alleges that following the surrender of the Japanese invading army at the end of WWII, the colonial offices in London simply declared North Borneo (Sabah) as part of the renewed British colonial empire. http://en.wikipedia.org/wiki/North_Borneo_dispute

"The surrender by the Japanese Army was takeb by the Commander of Australia's 9th Division on 12th September 1945. In the meantime, Colonial Office officials in London had been deciding the future of British Borneo (Sabah). Sarawak and North Borneo (Sabah) were to be ceded to the British Crown by the Rajah of Sarawak and The Chartered Company, and a new Treaty of protection negotiated with the Sultan of Brunei. By July 1946, new colonial governments had been established in both Kuching and Jesselton. The people of North Borneo (Sabah) happily accepted the new colonial regime."