Sabah is ours. We should claim it


By Mel Sta. Maria

Atty. Mel Sta. Maria is a professor at the Ateneo School of Law. He is the resident legal analyst of News5 on TV5.

Sabah is Philippine territory. We must assert our claim. The ancient 1878 lease contract must end.

In 1704, the Sultan of Brunei gave the sovereignty of Northern Borneo, now called Sabah, to the Sultan of Sulu in gratitude for the latter’s assistance in quelling a widespread rebellion in Brunei. In January 22, 1878, the Sultan of Sulu entered into a contract bestowing rights to Gustavus Baron de Overbeck and Alfred Dent over Sabah. The latter later formed the British North Borneo Company (BNBC) which was granted a charter by the British Government. Subsequently, BNBC assigned the contract to the British Empire.

Six days after the Philippines was granted independence by the United States, the British Empire on July 10 1946 decided to officially take over the sovereignty of Sabah. In 1962, the Sultan of Sulu entered into an agreement with the Government of the Philippines ceding sovereignty of Sabah to the latter and empowering the GRP to claim Sabah for the Philippines. And when the British Empire granted independence to its colony , Malaysia, in 1963, it included Sabah in the Federation of Malaysia.

Malaysia and the Philippines both claim Sabah. Malaysia anchors its title on state succession from the British Empire. On the other hand, the Philippine claim is based on historic title and cession. Which country has the better right?

There is no doubt that the Philippines has a better right.

The resolution of the question lies in the nature of the deed which the Sultan of Sulu entered into with Gustavus Baron de Overbeck and Alfred Dent which was assigned to the British Empire. Malaysia claims that the contract was, in effect, one of sale where the Sultan of Sulu ceded Sabah for a price. On the other hand, the Philippines and the Sultanate of Sulu assert that the grant was a lease arrangement.

Let us examine the deed. It specifically provides that the Sultan of Sulu and his heirs and successors

“do hereby desire to lease of our own free will and satisfaction, to Gustavus Baron de Overbeck of Hongkong, and to Alfred Dent, Esquire, of London, who act as a representative of a British Company, together with their heirs, associates, successors, and assigns forever and until the end of time, all rights and powers which we possess over territories and lands tributary to uson the mainland of the Island of Borneo, …. ( description of Sabah)”

Sultan of Sulu Jamalul Kiram

photo of the Sultan of Sulu Jamalul Kiram from the British North Borneo Company

The wordings of this contract as to the operative prestation are very clear. It is a “lease”. Indeed, the word “lease” was again used in relation to the payment of the financial consideration, thus:

“in consideration of the territorial lease, the Honorable Gustavus Baron de Overbeck and to Alfred Dent, promise to pay His Majesty Maulama Sultan Mohammad Jamalul Ahlam Kiram and to his heirs and successors, the sum of five thousand dollars annually, to be paid each and every year.”

And then, “lease” was mentioned again twice in another paragraph as follows:

“The abovementioned territories are from today truly leased to Gustavus Baron de Overbeck and to Alfred Dent, Esquire,as already said, together with their heirs, their associates (company) and to their successors and assignees for as long as they choose or desire to use them, but the rights and powers thereby leased shall not be transferred to another nation without the consent of His Majesty’s Government.”

The repeated reference to “lease” highlights the clear intention of the parties. Ownership-dominion over the subject property was still with the Sultan of Sulu. The land mass was only subjected to encumbrances in favor of Von Overbeck and Dent. The original contract was written in Arabic and the word used was “pajak”. This has already been interpreted as “lease” and not cession or sale by a number of well known international translators. Moreover, Von Overbeck and Dent were very capable negotiators and merchants and they would not have agreed to anything that would not reflect the agreement of the parties.

To support the argument that it was a sale, the fact that possessory right was given to the transferees “until the end time” has been asserted. This is not decisive. It is not extraordinary that lease contracts even today are granted for long periods such as 25 years, 50 years ,100 years and so on. There are even contracts like “usufructs” which grant possessory rights ( not ownership title) on a possessor until the lifetime of the owner. Legally, a lease confers real rights which, even under ordinary local law, can be automatically transmitted to the lessee’s heirs living in the leased premises. This is why, unless allowed by specific provisions of law or contract, a lessor cannot simply eject the heirs of a lessee on the ground of the death of the lessee. It is clear that a lease in perpetuity does not and cannot negate the superior ownership title of the Sultan of Sulu when the contract was entered into.

The contract clause providing that the transferees shall not assign “to another nation without the consent of his Majesty’s Government” does not help the Malaysians. The phrase “his Majesty’s Government” clearly refers to the Sultan of Sulu or his successors and not to the British monarchy. To say that the consent refers to the consent of the British Empire is not textually supported by the deed itself. A cursory reading of the grant shows that the transferees were not even representing the British empire. They were acting for themselves and as representative of an unnamed “British Company.” This later turned out to be the British North Borneo Company which was not even in existence at the signing of the contract. It was only subsequently given a Charter by the British government.

It is also argued that the fact that contract stipulation providing that any dispute between the transferors and the transferees “shall be brought for consideration or judgment To His Majesty’s Consul General in Brunei” signifies that the parties admit the sovereignty of the British Empire. That assertion likewise is wrong. Legally, this conflict-resolution-provision is an ordinary arbitration clause.

It is standard in any contract to stipulate where and which body shall resolve disputes and claims of the parties. It is normal that third parties without any legal connection to the contract are designated as arbitrators by agreement of the parties. Today, for example, disputes in the Philippines between Philippine Corporations governed by Philippine laws may be ventilated by agreement of parties in the Arbitration Tribunal of Singapore, Hong Kong, or Melbourne. And this does not necessarily mean that the parties are under the sovereignty of, subjects or citizens of Singapore, Hong Kong or Melbourne.

Also, was the “the sum of five thousand dollars annually, to be paid each and every year” rental or purchase price? Significant indicators to negate a “purchase price” are present. In a contract of sale, the consideration must be a specific price-certain. Though it may be paid in installments, there will be a final payment. It can never be left indefinitely unknown. In the 1878 deed, it is indefinite and that indefiniteness made uncertain the alleged price. Rentals, on the other hand, are small and could never be the equivalent of the actual value of the land. They are also for a fixed amount and usually paid at regular intervals, subject only to change as allowed by law or the stipulations of the parties. All the signs of a rental are therefore present. It will indeed strain one’s credulity to stretch the import of the financial consideration in the 1878 deed as a purchase price.

The claim of the Philippines is very straightforward. It is based on historic title emanating from the ownership of the Sultan of Sulu in 1878 which was transferred to the Philippines in 1962 by way of cession, a mode of acquiring property under international law. The historic title of the Sultan of Sulu over Sabah has already been internationally admitted. In fact, the very origin of the dispute which is the grant, deed, or contract as discussed above is the very evidence of that historic title. Nobody questions that it was the Sultan of Sulu who could have exercised ownership and dominion over Sabah such that he was the only one who executed the contract in 1878 with Overbeck and Dent which, in turn, was assigned to the British Empire.

Prior to 1946, the Borneans were not even subjects of the British Empire like the Indians in India or the South Africans in Africa or some other colonies. It was only after the Second World War when it declared that the British Empire intends to include Sabah as part of the future Federation of Malaysia that this was done. How could the British Empire include a land mass which it possessed merely by way of a transferred-contract of lease in a plan that created a new state? There was absolutely no legal-ownership-title to transfer. It was simply a land-grabbed property to be given to another. It is axiomatic in property law that the transferee has no greater rights than the transferor.

To protect the Sultanate of Sulu’s ownership interest over Sabah, the Sultanate sought the aid of the Philippine government in 1962. This led to the signing of the cession-agreement where the Sultan of Sulu ceded sovereign rights over Sabah to the Philippines and where the Philippine government agreed to represent the royal family of Sulu in their claim over Sabah in the international arena, particularly against Great Britain at that time. By this cession, Sabah has become part of the territory of the Philippines with the Sultan of Sulu and his family having proprietary rights over the same inside Philippine territory.

Simply put, the Philippines’ claim is based on historic title originally belonging to the Sultan of Sulu and on cession. Both mode of acquisitions are accepted in international law. Malaysia’s claim is based on a commercial contract assigned to the British Empire which land-grabbed Sabah. Under international law, both latter instances cannot be the basis of a legal title leading to ownership.

In the 1960’s, we had great minds in the government, particularly in Congress, who fought for this territory. One of them was former Senator Jovito Salonga. In 1962, he was in the negotiating panel of the Philippines that confronted the British authorities. I could just imagine how these people might have underestimated the then young Filipino negotiator when he entered the negotiating room. They probably thought that he was just a mediocre, trouble-maker small Asian and Filipino lawyer……. until Salonga opened his mouth.

Salonga’s explanation on the matter was so solid and comprehensive that these British legal minds must have been stunned, listening with mouths agape. In front of them was in fact, a brilliant lawyer who placed number 1 in the Philippine Bar without yet finishing his institutional law studies, a scholar by all standards who took his Masters of Law in Harvard. He later finished his Doctorate of Laws in Yale with high honors and was awarded the prestigious Ambrose Gherini Prize for the best research paper in international law. His articulation of the Philippines’s legal position was simple, clear but legally sound. He said

Our claim is mainly based on the following propositions: that Overbeck and Dent, not being sovereign entities nor representing sovereign entities, could not and did not acquire dominion and sovereignty over North Borneo; that on the basis of authoritative British and Spanish documents, the British North Borneo Company, a private trading concern to whom Dent transferred his rights, did not and could not acquire dominion and sovereignty over North Borneo; that their rights were as those indicated in the basic contract, namely, that of a lessee and a mere delegate; that in accordance with established precedents in International Law, the assertion of sovereign rights by the British Crown in 1946, in complete disregard of the contract of 1878 and their solemn commitments, did not and cannot produce legal results in the form of a new tide. (Speech of then Congressman Jovito Salonga at the House of Representatives March 30, 1963)

At that time, the Philippines was very well represented by a crusading and dedicated public servant. With a valid legal claim on Sabah and a brilliant negotiator in Salonga, the great British Empire was made to stop for a while, think and ponder their next moves. Then the empire finally decided. Instead of confronting the issue head-on, the British decided to grant the Federation of Malaysia its independence in August 1963 and then left the Sabah problem as the headache of the new state.

Time passed. It seems that in previous years, the Philippines’ interest waned for various reasons. The recent events involving the crown prince of the Sultan going to Sabah should shake the Philippine government from its complacency over this issue.

It is time to again assert our rights over Philippine territory. Once asserted, it is also time to put an end to the 1878 contract of lease which up to now Malaysia is honoring by paying the miniscule rentals thereof.

In international law and in ordinary commercial law, there is an accepted legal principle that justifies the extinguishment of an obligation created by treaty or contract. This is known as the doctrine of rebus sic stantidbus. Quoting our very own Supreme Court in PNCC vs. CA ( G.R. No. 116896, May 5, 1997), “under this theory, the parties stipulate in the light of certain prevailing conditions, and once these conditions cease to exists, the contract also ceases to exist.” In international law, this rule posits that if there is a fundamental change in circumstances, the treaty must be rendered ineffective.

So many absolutely exceptional and fundamental changes have transpired since 1878 up to the present that require extinguishing the 1878 contract. For one, the rental after more than a hundred years has become so ridiculous. Also, the involved-sovereignties have unquestionably and irretrievably changed. In those times, the Republic of the Philippines and the Federation of Malaysia did not exist. Unlike in 1878, the economies of the different countries of the world are now so much global, sophisticated and intertwined. Even questions of security, alliances and national defense, whether local, regional or intenational, have been altered. Indeed, there are so many substantial changes that, legally, the 1878 agreement must be considered functus officio.

While Sabah is just a mass of property on earth, our claim is more than just a wish for additional territorial metes and bounds. Our assertion manifests our dignity and pride as Filipinos and exhibits that uniting idea that whether we are Christians or Muslims, we will stand and fight for each other and our principled causes. As George Willian Curtis said “A man’s country is not a certain area of land, of mountains, rivers, and woods, but it is a principle; and patriotism is loyalty to that principle.”–sabah-is-ours–we-should-claim-it

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