Since none of the land features claimed by China on the Spratly Islands is entitled to exclusive economic zones (EEZ), the Arbitral Tribunal said it could declare that certain sea areas are within the Philippines' EEZ.
An EEZ, which stretches 200 nautical miles from the coast, gives a country the sole right to exploit resources within the zone.
The tribunal's ruling effectively reinforces the Philippines' claims to Mischief Reef and Second Thomas Shoal in the Spratlys, as well as Reed Bank, all of which lie close to the Philippine island of Palawan.
The tribunal found that those three are submerged at high tide and are not overlapped by any possible Chinese territorial entitlement.
Citing four examples of Chinese activities, the tribunal said it has "concluded that China had violated the Philippines' sovereign rights with respect to its exclusive economic zone and continental shelf".
First, it said that China interfered with Philippine petroleum exploration at Reed Bank, which is about 80 nautical miles from Palawan and more than 400 nautical miles from China. The area is known to be rich in oil and gas deposits.
The tribunal said China also sought to prohibit fishing by Philippine vessels within the Philippines' EEZ, and "failed to prevent Chinese fishermen from fishing within the Philippines' EEZ at Mischief Reef and Second Thomas Shoal".
China also "constructed installations and artificial islands at Mischief Reef without the authorisation of the Philippines", it said.
Satellite images show that China has reclaimed land around Mischief and has been building a runway there.
The tribunal also examined traditional fishing at Scarborough Shoal, located north of the Spratlys, which has been under Chinese control since 2012.
In recent years, Chinese coast guards have sought to bar Filipino fishermen from fishing near the Shoal, a chain of reefs and rocks about 120 nautical miles from the Philippine province of Zambales.
Because Scarborough Shoal is above water at high tide, the tribunal said it generates an entitlement to a territorial sea, referring to the 12-nautical-mile territorial border.
However, it is not an island so it does not generate an entitlement to an EEZ.
The tribunal also said fishermen from China were not the only ones with traditional fishing rights there because other countries had long fished in the area.
"Although the tribunal emphasised that it was not deciding sovereignty over Scarborough Shoal, it found that China had violated its duty to respect the traditional fishing rights of Philippine fishermen by halting access to the shoal after May 2012," it said.
The tribunal also held that Chinese law enforcement vessels had unlawfully created "a serious risk of collision" when they physically obstructed Philippine vessels there.