President Benigno S. Aquino III signed the bill into law Friday, The New York Times reported.
The law makes the "arrest, detention, abduction or any other form of deprivation of liberty committed by agents of the state" punishable by life in prison.
It holds superior officers responsible for such abductions committed by those under their command.
Human Rights Watch hailed the law, which it called "the first of its kind in Asia and a major milestone in ending this horrific human rights violation."
The Philippines human rights group Karapatanhas documented more than 1,000 abductions at the hands of state officials since the end of the dictatorship of Fernando Marcos in 1986, the BBC reported.
About 12 of such cases have occurred since Aquino took office in 2010.