I'm not shocked or horrified if by "top part of her mouth" you mean "upper lip." (It's hard to imagine this happening inside the mouth.) For many of us, babies and small children are yummy, and completely non-sexual, confections.
If your daughter giggled and wiggled, everything's probably fine. IF her daddy forces himself on her when she's indicating displeasure, then a problem could be developing with healthy boundaries, which could work to her detriment in the future.
I have to restrain myself not to excessivley snuggle my beautiful 4.5yo grandson every week when I see him – but he's also very affectionate, so I let him determine how much hugging and kissing happens. But both his mom and dad playfully nibble on him at times, and until he starts pushing them away with a "yuck," which he almost certainly will in the next year or three, there's no danger.
They've also had stranger-danger and good touch/bad touch talks with him. He knows that if he's EVER uncomfortable with the physical contact of another person, including his mom or dad, he should do his best to say no, get away, and report the behavior to a trusted adult.