An audio technician, Jamil Omar, contacted police in Malaysia to say his aunt, Siti Kayam, had stumbled upon the wreckage while she and others were hunting for birds.
Police commissioner Jalaludin Abdul Rahman, said the woman claimed she climbed into the smashed fuselage and saw skeletons.
He said: 'Mr Jamil claimed his aunt had entered the aircraft wreckage, which had many human skeletons and bones.
'She also found a Malaysian flag measuring 70 inches long and 35 inches wide.'
According to local media reports: 'There was a skeleton still in the pilot's seat. The pilot had his safety belt on and the communication gear attached to his head and ears.'
Speculation grew that the wreckage could belong to the missing Malaysia Airlines flight that disappeared in March last year with 239 people on board.
Police remain reserved about the report, mindful of confirmation by French authorities that part of an aircraft wing – a flaperon – found on the island of Reunion in the west of the Indian Ocean earlier this year had been confirmed as being from MH370.
It would be unlikely that the flaperon had been able to drift from the Philippines to Reunion, given that land – Borneo, the Malaysian mainland and parts of Indonesia – would be in the way.
However, police are understood to have not dismissed the possibility that the flaperon could have broken off from the aircraft after it took off in March last year to fly from Kuala Lumpur to Beijing, the missing part causing the pilots problems in handling the jet.
Adding to the general mystery is the report by oil rig worker Mike McKay who told the Mail exclusively earlier this year that he stood by his observation of an 'aircraft on fire' as he stood at night on his rig off the southern tip of Vietnam.
For MH370 to have come down on remote Sugbai island, it would have had to divert from its north east course after take off and head due east towards the lower Philippines islands.