Allan Jazmines, a senior member of the Communist Party's leadership, was arrested Monday shortly before a cease-fire went into effect for the weeklong talks, which are aimed at ending a four-decade-long conflict that has killed tens of thousands of people.
In his opening statement, rebel negotiator Luis Jalandoni urged the government to release Jazmines and four other imprisoned rebel leaders.
"Such a release will be of positive value towards the continuation of the peace negotiations," he said.
He also called for the release of 350 "political prisoners," whom he said had been "victims of false charges" under the former political regime.
Government chief negotiator Alexander Padilla said the prisoner issue should be dealt with on the side, so that negotiators can focus on the core issues of the talks being held outside the Norwegian capital.
"We are focused on trying to come up with solutions to the armed conflict," Padilla said. "That will mean talking about economic and social reforms and political and constitutional reforms."
It's the first time since on-and-off talks started 25 years ago that the rebels have agreed to a cease-fire during the negotiations. Mediated by Norway, the negotiations are intended to start discussions on economic and political reforms to end the hostilities.
Padilla said he hoped that a "just and equitable peace settlement" could be achieved "in three years, maybe much, much less."
The rebels walked away from peace talks brokered by Norway in 2004, suspecting then-President Gloria Macapagal Arroyo's government of instigating their inclusion on U.S. and European Union terrorist lists.
Army troops and police captured Jazmines at a rebel safehouse in Baliuag town in Bulacan province before nightfall Monday, military chief of staff Gen. Ricardo David Jr. said. He was served warrants for murder and rebellion.
Jazmines is a member of the central committee of the Communist Party of the Philippines. The military says it will release him if he is among the rebels to be granted temporary immunity by the government due to their involvement in the talks.
Government negotiators have expressed hope that last year's election of reformist President Benigno Aquino III on the promise he would reduce poverty and improve governance would soften the rural-based insurgency, which has survived decades of military crackdown.
In a report released ahead of the talks, the government said the communist guerrillas grew stronger last year after a long period of battle losses, acquiring more fighters and guns and killing more government forces in a spike of attacks.
The confidential government threat assessment report said the guerrillas managed to re-establish six rural strongholds that had been overrun by the military and staged 413 attacks - 11 percent more than in 2009. A copy was obtained by The Associated Press.
The report said government forces killed 35 rebels last year and captured 131 others while more than 150 surrendered.