The agreement was signed a few hours after US President Barack Obama arrived in Manila on the last leg of his Asian tour.
The Enhanced Defence Co-operation Agreement (EDCA) was signed by Philippines Defence Minister Voltaire Gazmin and US ambassador to the Philippines, Philip Goldberg, at Camp Aguinaldo, the headquarters of the Philippines Armed Forces.
According to Goldberg, the agreement will help both the US and Philippines to "face more complex security situations, fight against terrorism and improve humanitarian assistance in natural disasters, such as the Haiyan (cyclone)".
"The EDCA recognises that we can do more to promote peace and security in the region", Goldberg said at the brief signing ceremony.
The ambassador also wanted to clarify that the US "is not going to re-establish permanent military bases in the former American colony".
On his part, the defence minister of the Asian country affirmed that the pact aims to "develop an alliance" between two countries that will make "infrastructure and equipment available when needed".
Although the details of the pact have not been revealed as yet, sources said that the agreement will have a duration of 10 years, according to local media.
The agreement between the US and the Philippines was signed amidst the territorial dispute between Manila and Beijing over several islands in the South China Sea.
These disputes gave rise to many incidents between fishermen and naval forces of both countries.
The US will increase its military presence in Philippines, where till now only 500 soldiers have been training anti-terrorist forces.
Activist groups in the Philippines opposed to this pact continued protesting on the streets of Manila Monday.
The protests started Wednesday against the agreement and Obama's visit.
"USA seeks to maintain its control in the region violating the national sovereignty and plundering the economies of their supposed allies", Renato Reyes, the secretary general of the Filipino activist group Bayan, said in a statement.
Obama, on the fourth and last phase of his Asian trip, reached the Asian nation Monday.
He is scheduled to meet his Philippines counterpart Beningo Aquino and discuss the military strategy of both countries among other things.