They said investors also bought stocks of companies that are likely to report strong third-quarter results, while a much stronger peso provided an additional boost to sentiment.
The Philippine Stock Exchange composite index rose 24.58 points to 2,031.70, the day's high and the best finish since August 12 when it ended at 2,038.10. Turnover was 579.8 million shares worth 1.29 billion pesos (23.58 million dollars).
The broader all-shares index advanced 10.86 points to 1,229.63.
Gainers outnumbered losers 50 to 27, with 39 stocks unchanged.
As of midday, the Philippine peso was at 54.696 to the dollar, up from 54.72 Wednesday.
"Confidence has returned to the Philippine market," said Ron Rodrigo of Accord Capital Equities.
"Investors are hopeful the government will be able to solve its deficit problem now that the expanded VAT is being implemented," he remarked.
The new expanded VAT law, the cornerstone of the President Gloria Arroyo's fiscal reform program, took effect on November 1 despite strong opposition from some sectors and after months of delay.
"The peso's rise was also a major contributor to the stock market's rally," Rodrigo said. "This means companies are likely to report more (foreign exchange) gains."
Philippine Long Distance Telephone was the most actively traded stock, rising 35 pesos to 1,740.
Second top-traded Ayala Corp advanced 15 pesos to 310. Its real estate unit Ayala Land gained 10 centavos to 8.90 pesos.
SM Investments gained one peso to 241 while unit SM Prime Holdings ended unchanged at 8.20 pesos. San Miguel A shares ended unchanged at 65 pesos and its B shares, open to foreign investors, advanced 2.50 pesos to 92.