Lawyer Maridol Leong, 33, and her five-year-old daughter Alexandra were released in the town of Tungawan near this southern city, said Senior Superintendent Julmunir Jubail, deputy operations chief of the regional police command based here.
Sharif Julabbi, senior MILF adviser for Western Mindanao, confirmed the release of mother and daughter, saying a small amount was paid as "board and lodging" to a rogue MILF unit which held the two for more than three months.
"We told the kidnappers that they should release their victims or we will crush them," Julabbi said.
Julabbi said the kidnappers initially demanded a P50-million ransom for the Leongs but later settled for a lower amount.
Leong, whose husband owns a cannery, Montanio Sardines, and her daughter were abducted in the former’s law office in Dipolog City last March 29, by an MILF group headed by one Akiddin Asimuddin, and were brought to Tungawan, Zamâ€â€boanga del Sur.
"They are in good health," said Julabbi.
Leong is a niece of retired Maj. Gen. Ramon Montaño, a former chief of the defunct Philippine Constabulary-Integrated National Police.
Julabbi said he had discussed the kidnapping case with an aide of President Arroyo, Presidential Assistant for Mindanao Jesus Dureza, in April while the two sides were conducting preliminary talks.
"I sent my men to the field to locate the victims," Julabbi said over dzMM radio in Manila.
Jubail said he did not have details of the release. The Leongs underwent a debriefing before they were sent to Manila aboard a commercial flight.
Vice President Teofisto Guingona flew to Libya late Monday to attend the opening of the landmark peace talks yesterday, to end the 23-year rebellion of the 12,500-member MILF.
The MILF has been fighting for an independent Islamic state in Mindanao, the southern third of the mainly Roman Catholic Philippine archipelago.
A smaller Muslim rebel group, the Abu Sayyaf, holds up to 26 hostages, including three Americans, on Basilan island near this city.  Roel Pareño, Jaime Laude