The Southeast Asian nation, once considered the region's economic laggard, was upgraded to "Baa2" from its previous level of "Baa3" the lowest of Moody's investment-grade ranks.
The country has a "stable" outlook, a statement from the credit rating agency said.
The move comes after Moody's, Fitch and Standard and Poor's all raised the Philippines to investment-grade levels in 2013, indicating a lower risk to investors.
"The key drivers of the decision are ongoing debt reduction, aided by improvements in fiscal management (and) continued favourable prospects for strong economic growth," Moody's said.
The Philippines is also enjoying only "limited vulnerability to the common risks currently affecting emerging markets", the agency added.
Moody's praised the government's fiscal management, saying this has lowered the Philippines' debt burden while keeping the fiscal deficit low.
"The resilience of private investment portends the sustainability of higher overall growth relative to peers over the next two years," Moody's added.
It cited the economic recovery of the United States, the Philippines' main economic partner, as well as lower commodity prices as other signs of a strong outlook.
The Philippines has also shown itself more capable of standing up to "global pressures" affecting other emerging markets, such as the fall in oil prices and the slowing of China's growth, the agency said.
But it cautioned that the government's targets of 6.5 to 7.5 percent economic growth for this year might be too hard to achieve.
President Benigno Aquino's spokesman Mr Edwin Lacierda said the upgrade was hard-won at a time when rating agencies are taking a conservative approach to handing out upgrades.
"With these upgrades comes increased fiscal flexibility, and the Filipino people can be assured that our administration will continue channelling these gains towards the benefit of the broader spectrum of society," Mr Lacierda said.
The Philippines has recently shed its image as one of the weakest economies in Southeast Asia, posting 7.2 percent growth last year.
But natural disasters, including a spate of killer typhoons, have slowed growth to 5.8 percent in the first nine months of 2014 and a quarter of the population still live below the poverty line, government figures show.
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