"The goal of updating and modernizing our armed forces is a long and painstaking process," Defense Secretary Voltaire Gazmin said at a ceremony for the commissioning of 10 newly acquired air force helicopters.
"That means we have to be frugal and acquire reliable platforms at very reasonable costs… as allowed by our meagre financial resources."
Since President Benigno Aquino took office in mid-2010, the Philippines has acquired two former US coast guard cutters, three landing craft from Australia and South Korea and seven surplus UH-1H helicopters, Reuters reported.
The increase in defense spending has been prompted partly by China's moves to stake its claim to most of the South China Sea, including building new islands in the Spratly archipelago and taking effective control of Scarborough Shoal after a standoff with the Philippine Navy.
Even with the budget increase, the government must still divide resources between external defense and internal threats like insurgencies and natural disasters, Gazmin and other security officials added.
Philippine Air Force chief Lieutenant-General Jeffrey Delgado said the ten new helicopters will be used to address internal security problems, Reuters reported.
The military expects more aircraft deliveries this year including possibly the first two of 12 FA-50 fighter jets earlier ordered from a South Korean supplier, Delgado told reporters.
Delgado said the FA-50S were mere "transition aircraft" toward more advanced fighters jets which the Philippines cannot now afford, Reuters reported.
Even with the new attention that is being dedicated to China, communist and Muslim insurgencies remained a priority, according to defense department spokesman Peter Paul Galvez.
"We are first focusing on internal security and in the succeeding horizons, we will go towards external defense," he said, adding that China "should stop their island-building. That steps up the pace of militarization," Galvez said.
US ambassador Philip Goldberg said the United States, the Philippines' closest defense ally, was ready to provide surplus military equipment and budgeted $50 million in foreign military aid to the Philippines last year, Reuters reported.