Health Secretary Francisco Duque said 28 brands of candy, chocolate, yoghurt and powdered and liquid milk products would be delisted from a government ban after tests showed they were free of melamine, which had been added to milk in China to cheat in quality tests.
"The two milk products found to be tainted were obviously smuggled into the country from China," Duque said.
He said the government's food safety bureau had no import record of the two milk products that tested positive for melamine contamination.
"We're still conducting laboratory tests on more products and the results would be made public next week," he added, asking people to report stores that continued to distribute and sell the contaminated milk products.
The health department's food safety bureau plans to test about 200 food products imported from China that contain milk after the melamine scare spread across the world last month.
Duque said the government was shutting down a warehouse in Manila after it was found repacking powdered milk imported from China even after an import ban was imposed two weeks ago.
"We will close down all outlets found distributing and selling banned milk products," he said, adding administrative and criminal cases were being prepared against the importers.
Thousands of children in China have fallen sick and four have died after drinking contaminated milk.
Countries around the world have banned Chinese dairy imports as the pervasiveness of the contamination has become clear.
Scores of foreign companies have been forced to recall products made with Chinese dairy ingredients or to reassure customers their goods are safe.
Duque said the government would regularly issue an update on products that were tested positive or negative for melamine contamination to prevent people from panicking.