TO avoid a rupture in their already-delicate ties, both the Philippines and China are downplaying a recent ''incident'' on the high seas.
The skirmish of vessels last week was the first violent incident involving the two nations since their navies confronted each other near Mischief Reef in the Spratly Islands in May 1995, and the ninth in 17 months involving ships suspected to be from China. And it once again spotlighted a need for the Philippines to boost its external defense since American forces were forced to leave Subic Naval Base in 1992.
The Philippines Navy had reported that vessels flying the Chinese flag had exchanged fire with a gunboat 12 nautical miles off Campones Island, 72 miles northwest of Manila, and escaped after a 90-minute gun battle. Beijing has denied that its vessels had strayed into Philippine waters or traded fire with the Philippine gunboat.
Philippine President Fidel Ramos tried to smooth over the troubled diplomatic waters when he said the Chinese vessels were probably smugglers or pirates, and not Chinese Navy ships. At most, said other officials, the vessels were commandeered by rogue officers who had no official sanction from Beijing.
The official line on the Jan. 22 incident, which became public after a four-day delay, was to absolve Beijing of any blame. And Philippine Foreign Secretary Domingo Siazon said Manila would not file a diplomatic protest.
But last week's incident comes against a background of recent Chinese illegal behavior in acts of piracy and smuggling by its Navy ships ever since the United States left its large base on the South China Sea.
And it has amplified what is already known in the region - massive corruption in the Chinese military.
Officials at the Subic Bay Metropolitan Authority, which administers the former US base, report that Chinese Navy vessels are often suspected of taking part ''in boardings, seizure of ships, robberies'' off the west coast of Luzon.
They also recount the October 1994 arrest by Philippine customs of five Chinese military officers and 28 crew off Bataan Province near Manila. The ship, ''Gong Bian,'' was loaded with contraband cigarettes and firearms.
Manila's strategy ...
But many analysts see this bending backwards by officials to avoid accusing Beijing as a strategy to create goodwill toward China.
They cite as examples the return of all 33 Chinese arrested on the ''Gong Bian'' and also the release of 62 fishermen arrested for poaching in the Spratlys last year. The fishermen were pardoned and sent home only a fortnight ago after a court conviction.
The Philippines has been trying to create goodwill while it persuades the Chinese to start negotiations over its Spratly Islands claim.
The Spratlys, a group of far-flung islets and atolls straddling the vital sea lanes in the South China Sea, are claimed in whole by China and in part by the Philippines, Vietnam, Malaysia, Brunei, and Taiwan.
China's occupation in late 1994 of Mischief Reef, a Philippines claim, set off regional anxiety about its military ambitions.
''It is already in the military and the government mind-set that they are in no position to take on the Chinese. The Filipinos can only engage the Chinese in the diplomatic arena,'' says a Western diplomat in Manila.
... pays off
The Philippines' diplomatic offensive to get international opinion on its side after discovering the Chinese occupation of Mischief Reef has paid off.
China has since agreed to discuss the Spratlys claims with all claimants within the context of the United Nations Law of the Sea and in a multilateral basis.
While there has been no reaction from neighboring countries on the latest shoot-out, the region got a new round of jitters.
The report on the clash, which appears to have been deliberately leaked by the Philippine armed forces, was apparently aimed at prodding the Philippine congress to release money for the upgrading of the military, which is the region's poorest and worst equipped.
After the discovery of Chinese structures on Mischief Reef, Congress last year rushed passage of a bill allotting $1.9 billion to the armed forces for modernization.
But as President Ramos complained on Wednesday, no purchases of any equipment has been made because the law requires the legislature to approve the ''bill of particulars'' of the defense program.
''In the view of this recent incident, let us modernize our armed forces ... and the Navy must be given priority over all the other services because we have nothing but... maritime borders around the Philippines,'' Ramos said.
The withdrawal of the US military bases in 1992 stripped the Philippines of all external defense cover. It has no radar system and its porous archipelago coastline invites all kinds of intrusions and poaching by other nations.
It has been unable to get any military aid from anyone. Joint military exercises with US forces continue once a year although US military presence is is still not welcomed back. Attempts by the government to sign a commercial agreement to allow US naval ships to repair and refuel at local ports have been shot down by politicians and antibase groups.
The Philippines is conducting joint military exercises also with Singapore and next year with the Britain. But Manila is excluded from regional air exercises since it has no fighter planes to speak of.