Leigh R. Wright in the journal article “Historical Notes on the North Borneo Dispute” published in The Journal of Asian Studies, Vol. 24, No 3 (May, 1966) made some rather interesting and salient points to the discussion. She notes that while the Sulu claim of sovereignty over North Borneo prior to the 1878 treaty with Baron Overbeck is open to dispute, there is ample oral and written documentation which proves that Brunei held sway over North Borneo before it was even ceded to the British North Borneo Company. In fact, after the signing of treaties, “[f]ew people seriously questioned the British North Borneo Company’s rights of sovereignty until the Philippines pressed their claim in 1962. Most observers of the last and present century refer to the cession as complete.” In any case, she says, the effect of the Madrid Protocol of 1885 signed by Spain and Britain effectively demonstrates that Spain as the colonial power of the Philippines Islands had abandoned all claims that it may have over North Borneo.
The Madrid Protocol of 1885 is an agreement between Great Britain, Germany and Spain to recognize the sovereignty of Spain over the Sulu Archipelago as well as the limit of Spanish influence in the region (Articles I and II). The most interesting point to note that under the agreement (specifically, Article III), Spain as the colonial power ruling the Philippines islands — including the Mindanao and Sulu areas — clearly relinquishes all claims to Borneo.