The deputy prime minister held talks with his Philippines defence counterpart Gilberto Teodoro in Darwin on Friday.
Their talks took place on the last day of operation Pitch Black, night flying exercises over northern Australia involving dozens of fighter planes and more than 2500 personnel from 21 nations, including the Philippines with 200 personnel.
Mr Marles said good progress was made in Friday's talks on an Australia-Philippines Defence Cooperation Agreement.
"We are really confident that we will be able to conclude and sign the defence cooperation arrangement later this year," he told reporters in a joint press conference with Mr Teodoro.
The two nations had reinforced a shared commitment to the global rules-based order and its application in the Indo-Pacific, particularly in the South China Sea and the West Philippine Sea.
"We very much stand with the Philippines in the assertion of the UN Convention on the Law of the Sea," Mr Marles said.
"We're roughly halfway between Canberra and Manila, which is just a bit of a reminder about how close we are to the Philippines and the fact that our two countries are very much neighbours."
Next year, Australian troops would be in the Philippines participating in Exercise Alon 2027, the largest exercise that Australia undertakes beyond its shores.
Philippines troops have just concluded Exercise Karabaru with Australian troops near Townsville and Australia is assisting on eight infrastructure projects underway across five military bases in the Philippines.
"All of this is an expression of how closely our two defence forces are working together," Mr Marles said.
Mr Teodoro said information sharing and secrecy agreements were needed so the two nations could work closely together in the cyber domain.
"We hope to derive best practices, lessons, and experiences from the mature system that Australia has," he said.
"We thank the people of Australia, the deputy prime minister, for the unconditional support given the Philippines in fighting for its rights in its maritime domain."
