Foreign Secretary Albert del Rosario said at a news conference that his department summoned Chinese Ambassador Ma Keqing and handed her a note notifying the Chinese government that the Philippine government is bringing both countries' conflicting claims to an international tribunal.
The move is likely to bring an angry response from China, the Philippines' third-largest trading partner.
Several countries claim parts of the South China Sea, and China claims virtually all of it. It has confronted Philippine ships in a standoff over the Scarborough Shoal, which both countries claim. The Philippines withdrew ships from the shoal last June and has since protested China's buildup.
There are fears that territorial conflicts in the region, including a dispute between Japan and China in the East China Sea, could spark Asia's next major armed conflict.
The Philippines hopes that arbitration through an arbitral tribunal operating under the 1982 United Nations Convention on the Law of the Sea would lead to a decision that would direct China to respect the Philippines' claims. But even if a tribunal ruled against China, Beijing could choose to simply ignore the ruling.
Del Rosario said that the Philippines made the move after previous diplomatic efforts to resolve the territorial rifts failed.
"The Philippines has exhausted almost all political and diplomatic avenues for a peaceful negotiated settlement of its maritime disputes with China," del Rosario said. He added the Philippine government hopes that the legal step it has taken "shall bring this dispute to a durable solution."
"We are all for improving our economic relations with China but it should not be at the expense of surrendering our national sovereignty," he said.
The Chinese Foreign Ministry in Beijing did not immediately comment, asking that questions be submitted by fax.
In the note handed by Filipino diplomats to the Chinese ambassador, the Philippines listed several aggressive moves it alleged were launched by China in recent years to fortify its territorial claims, including the occupation of South China Sea islands and the enactment of a Chinese law that would allow Chinese patrol vessels to block and board foreign ships passing through vast stretches of waters that Beijing claims.
Del Rosario said the Philippines' move was made independently of its ally the United States, which has called for a peaceful resolution of the claims and a guarantee that freedom of navigation will not be hindered.
Other countries clashing with China over South China Sea territory, including Vietnam, could benefit from the Philippine action without risking possible Chinese retaliatory steps.
Associated Press writer Hrvoje Hranjski in Manila contributed to this report.