China's southern island province of Hainan passed the rule in November and it took effect this year as tensions escalate over overlapping claims to the waters between China, the Philippines, Vietnam and other nations.
"The Hainan fisheries law is only one of the unilateral measures by China to force a change in the regional status quo in order to advance its... Position of undisputed sovereignty over nearly the entire SCS (South China Sea)," Foreign Department spokesman Raul Hernandez said in a statement.
China's territorial claims over the South China Sea overlap those of the Philippines as well as Brunei, Malaysia, Vietnam and Taiwan.
Hernandez added that China's claim to the entire South China Sea was in "gross violation of international law.
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"It is the core issue that must be singularly and fully addressed," he said, calling on China to agree to have the issue brought to an international arbitration tribunal.
"We reiterate our invitation to China to join us in arbitration as we intend to proceed with or without China for a final disposition," he added.
It took its case to a tribunal last year under the United Nations Convention on the Law of the Sea -- a 1982 treaty signed by both countries -- but China swiftly dismissed the action.
Philippine Defence Secretary Voltaire Gazmin said this week that Filipino fishermen would ignore the Hainan rule.
The US State Department has called the introduction of the rule a "provocative and potentially dangerous act".