Villagers in the town of Talipao, near the Kamuntayan village in the provincial region of Sulu, led the Philippine military to the grave of Robert Hall.
The military did not confirm the body was that of Mr Hall but a source said the body was without its head, and appears to have been in the shallow grave for only a short time.
Robert Hall was beheaded by Abu Sayyaf terrorists just over two weeks ago after a ransom demand to free him was not met.
Police said the body will go through DNA forensics to determine if it is Mr Hall’s.
Mr Hall’s head was found outside a Roman Catholic cathedral in Talipao just after he was killed on June 13.
Hall was kidnapped along with John Ridsdel, a fellow Canadian and friend. To date, only one hostage remains from the Samal Island kidnapping – Kjartan Sikkengstad, a fellow Norwegian who is still held hostage in the jungles of Sulu.