The Philippines should "react suitably" to China's "harassment" in the South China Sea, according to the country's military chief.

• The Philippines is prepared to react suitably against any future harassment from Chinese coast guards at a disputed shoal in the South China Sea as tensions continue to rise.
• Despite talks and other indications that the Philippines is attempting to de-escalate the situation, a warning has been issued.

Filipino soldiers will defend themselves against harassment from Chinese coast guards at the disputed Second Thomas Shoal, as stated by Gen. Romeo Brawner Jr., chief of the Philippines armed forces, on Thursday.

Philippine officials reported that the warning was issued after the Chinese Coast Guards seized and damaged two Philippine ships and injured military personnel on a resupply run to an outpost on the Shoal last month.

Since 1999, Manila has claimed that China has been trying to disrupt resupply runs to a Philippine ship anchored on the Shoal, which both countries assert as their own. The ship's presence has been used to strengthen Manila's maritime claims.

The Chinese Coast Guard used knives and axes during the latest escalation of violence against their Filipino counterparts.

Brawner stated that under the Rules of Engagement (ROE), a person has the right to defend themselves in any manner. For instance, if someone attacks, we will apply the same level of force necessary to defend ourselves, as Brawner explained after meeting with President Ferdinand R. Marcos Jr.

Filipino troops will defend themselves with knives if attacked, but will not use excessive force like gunfire.

Philippine vessels in the South China Sea have been met with an adversarial stance from Beijing, with reports indicating that water cannons and ramming have been used.

According to reports, Brawner stated that Marcos Jr had instructed his military to reduce tensions in the South China Sea.

The Philippines Foreign Affairs Secretary Enrique Manalo has confirmed that both sides were working towards reaching an "understanding or a possible agreement" over the Shoal.

While there has been "substantial progress" in developing measures towards de-escalation, "significant differences" persist.

The Philippines military has also demanded that China return seven firearms seized by the Chinese coast guard during the June 2 flare-up and pay approximately $1 million in compensation for damages, amid peace talks.

Brawner stated that Manila is considering filing a complaint against China for the cost of a Filipino sailor's surgery after he lost his right thumb during a confrontation with Chinese Coast Guard members.

On Thursday, a Beijing spokesperson stated that the Philippines had conducted an unlawful and inflammatory operation in Chinese territory and therefore should "pay the price for its own actions."

The latest incident at the Shoal has heightened concerns of an escalation between the two countries, as Beijing is testing the boundaries of the existing Philippine-U.S. defense agreement that guarantees to safeguard the Philippines against "armed attacks."

Rahman Yaacob of the Lowy Institute advised CNBC's "Squawk Box Asia" that it is in the best interest of all parties to deescalate the situation.

The South China Sea is a site of numerous contested territories, and tensions are escalating, causing worry among neighboring countries.

The Japanese ambassador to the Philippines, Kazuya Endo, stated that Tokyo is closely monitoring the negotiations between Manila and Beijing, emphasizing that concerns over the South China Sea are legitimate for Japan and the international community, and have a significant impact on regional peace and stability.

During a bilateral meeting with Philippine Foreign Affairs Secretary Enrique Manalo in Makati, the Thai government urged for "dialogue and diplomacy" in the South China Sea on Thursday.

China has refuted the Philippines' account of the Second Thomas Shoal incident, asserting that it took "appropriate" actions to "protect its sovereignty," and accusing the Philippines of encroaching on Chinese waters.