China has assured the Philippines it will not occupy new features or territory in the South China Sea, under a new "status quo" brokered by Manila as both sides try to strengthen their relations, the Philippine defense minister said.

Philippine Foreign Secretary Alan Peter Cayetano also said the Philippines was working on a "commercial deal" with China to explore and exploit oil and gas resources in disputed areas of the South China Sea with an aim to begin drilling within a year.

The defense minister, Delfin Lorenzana, told a congressional hearing the Philippines and China had reached a "modus vivendi" or a way to get along, in the South China Sea that prohibits new occupation of islands.

"The Chinese will not occupy new features in the South China Sea nor they are going to build structures in Scarborough Shoal," Lorenzana told lawmakers late on Monday, referring to a prime fishing ground close to the Philippines that China blockaded from 2012 to 2016.

China claims almost the entire South China Sea, a waterway through which about $3 trillion worth of sea-borne trade passes every year. Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have conflicting claims in the area.

Asked about the Philippine comments, Chinese Foreign Ministry spokeswoman Hua Chunying said China had sovereignty over the Spratly Islands and their nearby waters, and China would continue to dedicate itself to peacefully resolving the dispute through talks with the parties directly involved.

Philippine President Rodrigo Duterte, who took office in June last year, has courted China and avoided rows over maritime sovereignty that dogged his predecessors, while berating traditional ally the United States over several issues.

China has built seven islands upon reefs in disputed areas, three of which, experts say, are capable of accommodating fighter jets. They have runways, radars and surface-to-air missiles which China says are for defense.

Lorenzana did not comment when lawmakers, citing reports from the military, told him five Chinese ships had showed up almost 5 km off the Philippine-held Thitu Island in the Spratly archipelago on Aug. 12.

The military's public affairs chief, Colonel Edgard Arevalo, declined to comment until the armed forces had the "whole picture on the current situation."