The Philippine Commission on Human Rights said the country's president-elect violated a law protecting women's rights by making a 'joke' about rape during the election campaign.
His comments, captured in a video, concern the rape and murder of an Australian missionary in 1989 in Davao.
36-year-old Jacqueline Hamill was killed alongside four other hostages.
His joke appeared to make fun of her death, saying she was "so beautiful" that "the mayor should have been first".
The commission said in a statement on its website that it found the "words and actions" of mayor Rodrigo Duterte of southern Davao city "to be discriminatory of women" under the law, named the Magna Carta of Women.
It asked the civil service commission, as well as the interior department, to consider taking "appropriate measures" against Mr Duterte.
It is unclear whether he would be able to appeal against the decision or what punishment he might face under the law.
The rights commission monitors violations and could recommend actions, however, it has no power of prosecution.
Chairperson Chito Gascon said the commission "has the sacred constitutional duty to protect human rights and to call out persons when these rights are violated no matter what their position in society may be.
"This mandate does not exculpate mayor Duterte from acts committed or words uttered in the course of the electoral campaign when it involves breaches to fundamental rights, in this case, the prohibition of gender-based discrimination and violence."
In April, a number of women's groups filed complaints against the mayor for what they said were offensive acts, including a campaign joke about wanting to be the first to rape Jacqueline Hamill who was gang-raped and killed by inmates in a 1989 Davao jail riot.
The 'joke' was also criticised by the Australian and US ambassadors in Manila.
Rodrigo Duterte told them to shut up.
Around 80% of Filipinos are Catholic and bishops in the country have urged people not to vote for him, however, Mr Duterte remains popular in the polls.
