Sustainability of the transplanted and flooded rice system is threatened by water and labor availability in many Asian countries including the Philippines. Dry direct seeding instead of transplanting is evolving as a viable crop establishment option to deal with labor and water shortages. Two experiments from July 2020 to June 2021 were conducted to determine the effect of different seeding rates [20 kg ha-1 (SR20), 40 kg ha-1 (SR40), 60 kg ha-1 (SR60), and 120 kg ha-1 (SR120)] on the growth, grain yield, and yield components of 2 rice varieties that were established through direct seeding in dry tilled soil and subsequently grown under flooded conditions. Seeding rates of SR40, SR60, and SR120 produced comparable and not significantly different grain yields. However, these seeding rates produced significantly higher grain yields than SR20 (20 kg ha-1). The lower grain yield in SR20 was due to lower panicle density which caused a reduction in sink size. Strong compensation between the number of panicles and the number of grains per panicle was observed in different seeding rates in both varieties. Plants grown at the high seeding rate (120 kg ha-1) had a higher number of panicles but with lower filled grains per panicle. On the other hand, plants grown at the low seeding rate (20 kg ha-1) had more filled grains per panicle with a lower number of panicles per m2. Yield component compensation to maintain desirable sink size was effective at 40 and 60 kg ha-1 seeding rates, although not enough at 20 kg ha-1. Moreover, a longer duration of tiller production was observed at the low seeding rate (SR20) which resulted in a higher number of late emergent tillers with poor grain production. The seed rate of 120 kg ha-1 in this study did not result in yield reduction due to an excessive number of tillers that eventually reduced the number of grains per panicle as observed in other studies. Compensation was between panicle number and grain number per panicle. SR40 and SR60 had similar yield levels with SR120 due to compensation among yield components, these seeding rates would be more attractive to farmers due to lower seed costs.