An Adelaide man arrested in the Philippines for allegedly selling ecstasy has admitted he flushed drugs down the toilet during a police raid, but says he has been framed.

Key points: Manila police describe drugs as "blue cookie monster kind"

Manila police describe drugs as "blue cookie monster kind" Both men remain in police custody, but deny allegations

Both men remain in police custody, but deny allegations Police say pair linked to network supplying drugs at a concert

Police apprehended Australian Damian Berg and Canadian Jeremy Eaton inside a building in Manila's financial district after a drug bust operation late Monday night.

"We had a buy-bust operation and caught two multinationals who are selling ecstasy, more particularly the blue cookie monster kind," Philippines National Police investigator Enrico Rigor said.

Sachets of imported ecstasy tablets, a type of amphetamine and a party drug, were recovered from the two men.

Both men have denied the allegations, but remain in police custody.

Australian man Damian John Berg and Canadian man Jeremy Eaton say they have done nothing wrong. ( AAP )

"I noticed something else near the side table, so I flushed it down the toilet, down there, and then I got rid of another bag," Mr Berg said.

"I actually texted the individual and said 'what the' — sorry excuse my language — 'what the F, why are you bringing this shit here'."

Mr Berg is believed to have been living in the Philippines for several years.

Family rally in support

Mr Berg's father Geoff said the family may try to visit him at some stage, but were waiting to see how the investigation panned out.

He said his son did have legal representation, while his girlfriend was making sure he was OK while in custody.

The Berg family also issued a statement.

"What we do know is that Damian is in custody in Manila and is being treated OK," the statement said.

"It will take time before his case is heard, and until then we can't comment any more.

"As a family, we dearly love him and will be supporting him as much as we can."

President pushes for death penalty for drug criminals

Police say the drugs were part of a batch sold at a music concert in May. ( AAP: Philippine National Police )

Mr Eaton also denied he had the drugs.

"I walked into the building, I was jumped from behind, told I'm arrested," he said.

"I've never really been told what I'm arrested for, I've just been told 'you know what you did, you know what you did'."

Mr Eaton said a body search turned up nothing.

"I was in the wrong place and at the wrong time, and they think I'm somebody I'm not, so that's it," he said.

Police said the two suspects were linked to a network that sold party drugs to a concert in May, where five people died, allegedly from overdose.

Mr Berg and Mr Eaton will be charged for violating the Philippines' anti-illegal drugs law and could face up to 20 years in prison, police said.

Incoming Philippines president Rodrigo Duterte has vowed to impose the death penalty for all drug crimes.

Foreign Minister Julie Bishop said her department was providing consular assistance to Mr Berg.

When asked if Mr Berg may face the death penalty under the new President, she said as the matter was before the courts it was too early to speculate on an outcome.

"The new president has made a number of statements on this in the past," she said.

"It is quite clear to the region and the globe that Australia is against the death penalty."

Reuters/ABC