MANILA (3rd UPDATE) - The Philippines' biggest warship was locked in a standoff on Wednesday with two Chinese vessels in the South China Sea, reigniting tensions in a decades-long dispute over the resource-rich waters.
The Philippine government said the Chinese ships were blocking efforts by its navy flagship vessel to arrest Chinese fishermen that were found on the weekend to have illegally entered its territory.
In a dramatic day of diplomacy, the Philippines summoned the Chinese ambassador in Manila and lodged a formal protest, but China insisted it had sovereign rights over the area and ordered the Philippine warship to leave.
Philippine President Benigno Aquino said he was looking to end the standoff through diplomatic means.
"No one will benefit if we have violence," he told reporters.
Philippine Foreign Affairs Secretary Albert del Rosario said both sides wanted a peaceful resolution, but also cautioned that negotiations were at an "impasse" and his country was ready for the worst.
"If the Philippines is challenged, we are prepared to secure our sovereignty," del Rosario said.
The standoff was occurring at Scarborough Shoal, just 124 nautical miles from the Philippines' main island of Luzon.
Scarborough is ours: China
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 have overlapping claims to parts of the South China Sea, making the waters one of Asia's potential flashpoints for armed conflict.
The South China Sea holds enormous economic and political significance, as it is believed to sit atop vast oil and gas resources, has huge fish stocks and hosts shipping lanes that are vital for global trade.
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 and placing markers on islets within Philippine territory.
However this week's stand-off is the highest-profile in recent years.
It occurred after the Philippines detected eight Chinese fishing boats at Scarborough Shoal on Sunday.
The Philippines said the boats were subsequently found to have hauled in live sharks, corals and some endangered species including giant clams.
The two Chinese surveillance vessels appeared on the scene on Tuesday, and blocked the Philippine warship from approaching the fishing boats.
The Chinese embassy in Manila released a statement on Wednesday ordering the warship out of the disputed waters.
In Beijing, foreign ministry spokesman Liu Weimin accused the Philippines of "harassing" the Chinese fishermen and said a protest had been lodged.
"We urge the Philippine side... not to make new troubles and create conditions for the friendly relations of the two countries," Liu said.
But in Manila, Del Rosario insisted the Philippines could do as it pleased at Scarborough Shoal.
"We are there because we have sovereignty over the area. We want to be there and we have the right to be there," he said.
The Philippine coast guard also said it would deploy a boat to support the warship.
Help from United States
Philippine concerns about China's perceived aggressiveness prompted it to seek help last year from the United States in building up its poorly equipped military and weak maritime defence capabilities.
The United States responded favourably, delivering the Gregorio del Pilar, a a 115-metre (378-foot) decommissioned US coast guard cutter, to replace a World War II-era vessel as the Philippine Navy's biggest ship.
The Gregorio del Pilar is the vessel involved in Wednesday's stand-off.