The total value of the military procurement program wasn't mentioned but it will be implemented within Canada's $12.6 billion defense industry.
The Philippines' threadbare security set-up has come under spotlight as the country grapples with increasingly acrimonious exchanges with China over Beijing's territorial claim on Scarborough Shoal, a group of islands in the South China Sea which Manila says are well within the Philippine's 200-nautical-mile exclusive economic zone. The islets are also claimed by Taiwan.
Canadian Prime Minister Stephen Harper met with Philippines President Benigno Aquino in Manila and offered preferential terms for a defense deal that will likely benefit both sides. Canada's defense industry is hoping for more international business to help its recovery.
The Philippines' cash-strapped military hopes to get additional hardware, including naval craft, from the United States in the coming months.
The Philippine defense department and state-run Canadian Commercial Corp., a go-between organization serving the Canadian industry and foreign partners, signed the agreement as Harper met Aquino at Malacanang Presidential Palace in Manila.
"This memorandum of understanding will enable the Philippines to acquire the equipment and expertise it needs to fulfill the country's defense and security agenda," Harper said.
The as yet unspecified Filipino purchases of equipment and expertise from Canada's defense industry will be guaranteed by the Ottawa government.
Aquino said the deal "will help us in our efforts to build our defense and security capabilities" but declined to give details of the program.
Both Canada and the Philippines appear wary of making comments that could inflame the dispute over the islands.
"I cannot go into specifics lest they be observed by less friendly individuals," Aquino said.
China is not the only security issue facing the Philippines which also faces a long-running conflict with Muslim militants fighting for autonomy or self-rule.
Last month Aquino resumed reconciliation talks with Muslim representatives and reached a framework accord overseen by neighboring Malaysia and the Organization of Islamic Conference.
But senior government aides don't rule out continuing conflict and want the military to be better prepared to face up to a more violent Muslim revolt.
Five patrol boats bought from France in a $116 million deal are set to join refurbished equipment likely to be given by the United States. The U.S. military aid will include a Hamilton class cutter previously used by the U.S. Coast Guard.
Aquino says the Philippines needs to modernize its forces all along its 22,000 of coast line.