After hours of running gunbattle, the soldiers captured top MILF commander Ayog Abdullah and six of his men.
No casualty was reported on the government side.
Lt. Gen. Narciso Abaya, military Southern Command chief, said the troops were on combat patrol when they encountered more than 100 heavily armed MILF guerrillas in the mountains of Barangay Angga-an in Damulong town.
"The rebels were forced to retreat more than four hours after they suffered a big loss," he said.
Abaya said the guerrillas fled to the mountains near the Bukidnon-Maguindanao border, bringing along the wounded with them.
"Abdullah with one of his six followers wounded were cornered and captured by pursuing troops," he said.
Abaya said troops from the Armys 8th Infantry Battalion stormed the defensive positions of the rebels with light machineguns and mortars.
The soldiers found at the scene a caliber .50 machinegun, two M-16 rifles, an M-14 snipers rifle, a Garand rifle, a handheld radio, assorted ammunition, and voluminous documents, he added.
Captured with Abdullah were Mohammad Namolid, Hadaphy Tabo, Taedo Diamlang, Jojo Odjuh, Mama Amponan and Mohammad Alem.
Meanwhile, MILF spokesman Eid Kabalu said yesterday Pentagon kidnap gang leader Tahir Alonto is hiding in a hinterland barangay in Bukidnon near the border with North Cotabato.
Kabalu told The STAR Alonto, who carries a P5 million bounty on his head, and some of his men have been seen in the towns of President Roxas and Carmen in North Cotabato.
Alonto fled to Barangay Damulog to prevent any encounter with MILF guerrillas who had seen him, he added.
Datu Norodin Lucman, a prominent Muslim leader and historian in Lanao del Sur, said the MILF has already acquired portable surface-to-air missiles, and lethal medium and heavy anti-tank weapons.
Speaking at the Citizens Caucus at the Sulo Hotel in Quezon City yesterday, Lucman said the MILF see the peace talks as a "one-way ticket to war" because they dont trust Defense Secretary Angelo Reyes, the architect of the all-out war policy during the Estrada administration.
Lucman said Reyes orchestrated the perceived links of the MILF with the terrorist group al-Qaeda to goad the US government into tagging the MILF as a terrorist organization.
Lucman said US troops in Mindanao might be caught in the middle of fighting between the Armed Forces and the MILF and trigger a shootout between the Americans and the Moro rebels.
Formal peace talks would resume anytime next month, as the Cabinet Oversight Committee drafts a peace agreement, while the separatist rebels finalize their own draft agreement.
"We are now in the process of finalizing our own proposal which would cover a comprehensive area, including issues on ancestral domain," Kabalu said.
However, Kabalu refused to reveal details of the proposed agreement which the MILF has reportedly drafted for submission to the government in next months peace talks in Kuala Lumpur, Malaysia. Roel Pareño, Bong Fabe, Perseus Echeminada, Edith Regalado