The daylong sports festival was held on Vietnamese-occupied Southwest Cay Island and also included cultural presentations, the two countries' navies said in a joint statement. Philippine officials said about 40 Filipino navy personnel sailed by boat to the island, bringing local delicacies such as rice cakes.

China, the Philippines, Brunei, Malaysia, Taiwan and Vietnam have overlapping claims in the Spratlys, a group of mostly barren islands, reefs and atolls that are believed to be sitting atop oil and natural gas deposits and straddle some of the world's most traversed sea lanes.

Although they're technically rivals, Vietnam and the Philippines recently discussed ways to cooperate to ease tensions in the disputed waters, where both have been engaged in dangerous standoffs with China. Southwest Cay Island, which the Philippines also claims and calls Pugad, used to be occupied by Filipino troops but was seized by Vietnamese forces in the 1970s.

During the games, each team comprised Vietnamese and Filipinos to underscore the friendly nature of the event, Philippine navy spokesman Gerald Fabic said. "We're trying to set an example," he said. "We want to show that there can be other approaches to the disputes that can in fact ease the tensions."

The rare event aims "to foster camaraderie and friendly relations between the two nations," the two navies said, adding it was "proof that disputes do not hinder development of practical and tangible cooperation."

"This also serves as a model of cooperation for the other navies to emulate," they said.

China, which claims it has had sovereign rights over virtually the entire South China Sea since ancient times, has protested any military activity in the area other than its own. Beijing has so far ignored a call by the United States and other governments for it to define the limits of its claims.

In early May, China deployed an oil rig in waters also claimed by Vietnam, setting off violent protests in the Southeast Asian country that killed at least two Chinese and led to the burning of several factories suspected to be owned by Chinese. The violence has since died down, but Chinese and Vietnamese ships remain in a tense standoff near the rig.

Chinese coast guard ships have also faced off against a small contingent of Philippine marines stationed on a grounded navy ship in the Second Thomas Shoal in the Spratlys since last year. The Chinese ships have tried to block Philippine civilian vessels delivering fresh batch of marines and food supplies to the disputed shoal. (**)

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