The Philippines said its flagship navy vessel was involved in a standoff on Wednesday with two Chinese surveillance ships that had blocked the arrest of Chinese fishermen in the South China Sea.
Eight Chinese fishing vessels were anchored within Philippine territory off Scarborough Shoal, 124 nautical miles from the western coast of the country's main island of Luzon, the government said.
The foreign affairs department statement said the Philippines' flagship naval vessel, the Gregorio Del Pilar, found the eight vessels there on Sunday while patrolling the area.
Two 'Chinese maritime surveillance ships' then sailed to the shoal on Tuesday, the statement said.
The surveillance ships placed themselves between the Gregorio del Pilar and the fishing vessels, "thus preventing the arrest of the erring Chinese fishermen", the statement said.
"The situation has remained unchanged as of this morning," it said.
The statement said Foreign Affairs Secretary Albert del Rosario contacted China's ambassador to the Philippines, Ma Keqing, on Tuesday night to emphasise that the area was 'an integral part of Philippine territory'.
Del Rosario invited Ma to the foreign affairs department headquarters on Wednesday morning to broker a diplomatic solution, according to the statement.
The incident is the latest flare-up in tensions between the two countries over competing territorial claims to parts of the South China Sea, which is believed to sit atop vast oil and gas deposits.
China insists it has sovereign rights to all of the South China Sea, even waters close to the coast of other countries and hundreds of kilometres (miles) from its own landmass.
The Philippines says it has sovereign rights over areas of the sea within its 200-nautical-mile exclusive economic zone, and that its position is supported by international law.
Apart from China and the Philippines, Taiwan, Malaysia, Brunei and Vietnam, also have overlapping claims to parts of the South China Sea, making the waters one of Asia's potential flashpoints for armed conflict.
The Philippines and Vietnam complained last year of increasingly aggressive acts by China in staking its claim to the South China Sea.
The Philippines accused Chinese vessels of firing warning shots at Filipino fishermen, as well as harassing an oil exploration vessel.
Zhang Hua, spokesman for China's embassy in Manila, said on Wednesday he had no comment on the latest standoff.