With the help of American-made arms, the Philippines is strengthening and expanding its involvement in the middle of the South China Sea where three other Asian states claim potentially oi-rich Islands.

Manila has raised its flag over seven largely barren islands in the northeastern part of the Spratly group, one of them as recently as a few weeks ago and another late last year.

Philippines officials have sought to deny that the last takeover was so recent in order not to mar the Manila visit this week of Chinese Vice premier Li Hsien-nien whose country claims the entire island group, but several knowledgeable sources reached in Manila say the government placed troops on the seventh island for the first time - or at least after a very long absence - within the last month.

The expansion of Philippines power into the Spratlys since 1971 has asserted a claim for the oil-starved nation over islands that may sit on large underground oil pools. The legal dispute with China, Vietnam and Taiwan over the islands may delay serious drilling for some time, however. In any case, Manila's action provides Philippine President Ferdinand Marcos with an opportunity to demonstrate his commitment to .Philippine nationalism as political opponents accuse him of selling out local interests by allowing U.S. bases on Philippine soil.

Nearly a thousand Philippines marines are stationed on the Spratly Island. On one island, Parola, they have been known to exchange waves with Vietnamese soldiers 200 yards away on the isle of Pagasa, where its C47 Hercules transports and antique T28 fighters land. Manila wants to buy some F8 Buccaneer naval fighters from the United States. With the help of catapults and arresting gears, they could land and take off from the island as if it were a big aircraft carrier.

Interest in the islands was first stimulated by geological studies suggesting underground structures conducive to petroluem. This interest has increased since oil has been found just off the Philippines island of Palawan, 250 miles east of the Spratly group. Drilling in the Nido complex area near Palawan by American and Philippine interests suggest enough oil to provide 7 to 10 percent of national needs.

Philippine Energy Secretary Geronimo Z. Velasco said recently that is roughly the amount of oil the Chinese have recently promised to supply Manila at "friendly" prices, one reason for the Marcos Administration's extreme sensitivity toward Peking's view of the island issue.

American, Swedish and Philippine interests have been prospecting for oil in the Reed %Bank area, 150 miles northwest of Palawan and within the disputed zone. So far, the prospectors appear not to have found oil. Peking protested vigorously in 1976 when the Reed Bank explorations began. When asked last week about the new Philippine activity in the Spratlys, a Peking spokesman said that the earlier protest "still applied to the current situation."

The Manila stock market has gone up and down with reports and denials of new oil finds. Several leading Manila entrepreneurs, including Marcos' friend and in-law Herminio Disini, have invested in the oil exploration and the prospecting is expected to continue.

The Philippines claim the island on the grounds that they are closer to its territory and it controls more of the island than any of the other interested nations. The seven Manila-held islands - Pagasa, Parola, Kota, Likas, Lawak, Patagan, and the most recently occupied.. Panatan, total about 220 acres. Vietnam's three islands comprise only a quarter as much land and the single Taiwan-held island, ligaw, is about half as big as the seven Philippine islands combined.

The Vietnamese once fired at a Philippine aircraft passing by Pugad in 1976, but there have been no reported incidents since. Philippine generals say privately that fighters from the Vietnamese mainland would only have 10 minutes to maneuver over the islands before having to return for fuel in any air conflict, while Philippine aircraft would have at least 30 minuted.

But Marcos reportely reached a tentative agreement with Vietnamese Foreign Minister Nguyen Duy Trinh in January to settle any dispute over the islands amicably. In the meantime, he is attempting to strengthen his calim by encouraging civilian fishing enterprises on Pagasa and there are plans for regular civilian flights to the island in the near future.