MANILA (3rd UPDATE) — President Rodrigo Duterte has restored a pact governing the presence of US troops in the Philippines, the two countries' defense ministers said on Friday, reversing a decision that had caused increasing concern in Washington and Manila.

The Visiting Forces Agreement (VFA) provides rules for the rotation of thousands of US troops in and out of the Philippines for war drills and exercises. It has assumed additional importance as the United States and its allies contend with an increasingly assertive China.

Duterte last year said he was cancelling the VFA but had extended it until December.

Philippine Defense Secretary Delfin Lorenzana said he was unsure why Duterte had reversed himself but made the decision after meeting US Defense Secretary Lloyd Austin in Manila on Thursday.

Watch more in iWantv or TFC.tv

The Philippines is a US treaty ally, and several military agreements are dependent on the VFA.

Duterte vowed to terminate the pact after the United States canceled the US visa of a Philippine senator who is an ally of the president. But he had repeatedly pushed back the expiration date, the last time last month, maintaining it until the end of the year.

• 'Because of one senator': Duterte ally calls VFA cancellation 'impulsive'

PH, US: VFA 'vital' for security, stability in region

Foreign Affairs Secretary Teodoro Locsin, Jr. and the US Embassy in Manila, in separate statements, said the VFA is important for peace and stability in the Asia-Pacific region.

Locsin added that he already handed to Austin the diplomatic note recalling the abrogation of the pact.

"The alliance has stayed strong and overcome challenges. It is vital to maintaining stability in the Asia-Pacific region. All the protagonists in the region, without a single exception, see a strong US presence as imperative to peace and stability in Southeast Asia," said Locsin.

• READ: US Embassy lauds PH decision to restore VFA, says pact strengthens security in region

The official also described it as something that would benefit the two countries "rather than destructive conflict among themselves."

"The United States has shown its commitment to fulfill its obligations to us under the alliance. They have addressed issues arising from our security relationship with good faith," he noted.

Meanwhile, the US Embassy also welcomed the development, adding that it is supposedly good for strengthening the two countries' security, as well as the region's.

"We strongly believe that the VFA, and the broader alliance that the VFA enables, strengthens not only the security of our two nations, but also the rules-based order that benefits all nations in the Indo-Pacific," the statement read.

For the United States, having the ability to rotate in troops is important not only for the defense of the Philippines, but strategically when it comes to countering China's assertive behavior in the region.

"(Duterte's decision) opens up significant possibilities for strengthening the alliance that were otherwise closed," said Greg Poling of the Center for Strategic and International Studies.

There are long-standing tensions between the Philippines and China over disputed waters in the South China Sea.

The United States this month repeated a warning to China that an attack on Philippine forces in the South China Sea would trigger the 1951 US-Philippines Mutual Defense Treaty.

• China-US relations: Beijing threatens to deal ‘head-on’ blow after latest sanctions vs HK
• US repeats warning to China against attack on Philippine forces

There are, however, still questions about Duterte's unpredictability.

"Some of the celebration is premature... (the VFA) will continue to be under threat so long as Duterte remains president," said Aaron Connelly, with the International Institute for Strategic Studies.

Philippine presidential elections are set for 2022 and while Duterte is barred by the constitution from seeking re-election, his party has been encouraging him to run again for office, as vice president.

Duterte's decision to retain the VFA "is based on upholding PH strategic core interests, the clear definition of PH-US alliance as one between sovereign equals, and clarity of US position on its obligations and commitments under MDT," said his spokesman Harry Roque.

"PH will, however, continue to engage other countries for partnerships that work, based on our core national interests," Roque said in a statement.

- With reports from Willard Cheng and Jamaine Punzalan, ABS-CBN News