Muslim rebels threatened yesterday to behead two of their 10 foreign hostages being held in a mountain hideout in Jolo, Sulu if the military does not withdraw troops encircling the area.
Later in the day, about 100 heavily armed Abu Sayyaf rebels attempted to break through the military cordon and clashed with government troops, wounding at least five soldiers, military officials said.
There was no immediate word on casualties among the rebels, who apparently retreated.
A police report described the incident as a "chance encounter."
Soldiers said they had orders to shoot anyone who entered the area.
In announcing the rebel threat, Abu Escobar, an Abu Sayyaf leader, said the troops have moved so close to the hideout that the kidnappers can see them.
If the government does not pull back the soldiers, "we will surprise them," he said in an interview with local radio station dxRZ. "Maybe two heads for tomorrow."
The hostages were kidnapped April 23 from the Malaysian diving resort of Sipadan Island and brought to Jolo, which is about one hour away by boat.
Another group of Abu Sayyaf rebels who are holding 27 other hostages on neighboring Basilan island claimed two weeks ago to have beheaded two of their captives, triggering a military assault on their stronghold which so far has failed to find the hostages.
The 21 hostages in Jolo also appealed to the government to pull back the troops encircling them to avoid clashes and allow the kidnappers to obtain food.
The kidnappers "can't get much food, much water because the camp is surrounded by the Philippine Army and so they can't get anything for us," Stephane Loisy, a hostage from France, told journalists. "We eat only rice, and the only water we have is the water from rain."
Nur Misuari, the government's negotiator, said he was told yesterday by the military that the encirclement of the area would stay "as is."
He said the Abu Sayyaf rebels have refused to begin formal negotiations unless the troops are moved.
"They are demanding that government forces must withdraw from their present position to a safe distance," he said. "And as soon as that happens they are ready to open talks with me."
The Abu Sayyaf is the smaller of two groups fighting for a separate Islamic state in Mindanao.
The 10 foreign hostages being held in a bamboo hut wrote letters to their embassies asking them to pressure the Philippine government to speed up negotiations and stop military operations.
"We are in a very serious situation. I would like to make that clear," said German hostage Werner Wallert. "We are risking our lives here and if the Philippine government should try to march in and find a military solution, there will be bloodshed, nothing else."
For her part, hostage Sonia Wending of France said: "Today is a very good day because we had rain and we could wash and we had lunch too."
"Sometimes we're laughing because if not, we'll become crazy. Sometimes we're joking because we can't believe we are still here," she added.
Several journalists who accompanied a doctor to the hideout on Monday were able to interview the hostages, who complained of food shortages, fevers and infections.
The doctor later reported that most of the hostages appeared exhausted and dehydrated.
She said she told the rebels that two captives, Loisy and Renate Wallert, Werner's wife, needed to be hospitalized, but the rebels did not immediately agree. Loisy is suffering from a urinary tract infection and Wallert has cardiopulmonary disease and high blood pressure, she said.
About 50 to 70 heavily armed Abu Sayyaf rebels, their faces covered with hoods, guarded the area, about 45 minutes up a rugged path from the nearest road.
The hostages include tourists from Germany, France, South Africa, Finland and Lebanon, and resort workers from the Philippines and Malaysia.
In Basilan, the military admitted Tuesday it was unable to find the 27 hostages after overrunning the main Abu Sayyaf stronghold.
Defense Secretary Orlando Mercado said soldiers are now searching surrounding areas for the captives, who were among about 50 seized by the rebels from two schools on March 20 for use as human shields after an attack on a military outpost. The rebels later released some of the hostages.
The military took control of the camp on Sunday after fierce gunbattles and troops believed some of the rebels and the hostages may be in a maze of World War II tunnels in the complex.
But Mercado told the ABS-CBN television station: "Our troops are no longer moving around in the complex that we overran. As far as we are concerned we are moving out in the surrounding areas in the hope of being able to still find and locate those who have been kidnapped and held as hostages for more than a month now."
Lt. Gen. Diomedio Villanueva, chief of the AFP Southern Command, had earlier said there was a gap in the perimeter cordon around the camp at one stage during the fighting because casualties had to be evacuated. He said the rebels and the hostages could have slipped away then.
"It is possible the hostages may have been taken out of camp ... especially on the third day when we had to evacuate some casualties and it might have been possible that at that time there was a gap in the perimeter," Villanueva told radio station dzMM.
"Nevertheless, as long as the hostages are safe, that will be good news for us," he added. "For as long as we don't see that they are dead."
At least 50 rebels and 10 soldiers were killed in the fighting. The assault was launched after the Abu Sayyaf guerrillas said they had beheaded two male adults from among the hostages because the government had not responded favorably to their demands.
The rebels had demanded the release of three Muslim militants held in US jails, including one believed to be the mastermind of the bomb attack on New York's World Trade Center in 1993.
Asked if it was possible the rebels may have joined up with another group of Abu Sayyaf guerrillas holding 21 hostages on Jolo, Mercado said such reports were speculation.
At Camp Aguinaldo, the military received reports that the Abu Sayyaf's No. 2 man was killed during an assault in Basilan.
AFP spokesman Col. Rafael Romero identified the rebel leader as Hapilon Isnelon.
Meanwhile, the Philippine National Police (PNP) has offered to mount a commando-type operation to rescue the hostages, but this was flatly rejected by the AFP.
"The AFP declined the offer and adopted a conventional military operation," said PNP spokesman Superintendent Nicanor Bartolome.
A source said the police had planned to send about 100 members of the elite PNP Special Action Force to Jolo.
"They are trained for close-quarter combat as well as insertion and extraction techniques. These are tested methods for the release of the hostages and the neutralization of hostages-takers," the source said.
Executive Secretary Ronaldo Zamora has rejected the rebels' calls that the UN or envoys from the hostages' countries be allowed to act as mediators.
President Estrada has also refused to end military operations against terrorists.
In a related development, Foreign Affairs Secretary Domingo Siazon Jr. said they will advise foreigners against going to Mindanao at this time, when Muslim rebels have intensified their attacks against government forces and even civilians.
He said their presence there might only entice the rebels to kidnap them.
"We advise them to just stay here in Manila, where we can get in touch with them everyday," he said.
In Kuala Lumpur, Malaysia expressed hope that negotiations will lead to the release of the hostages.
"God willing, we can resolve the situation as soon as the parties involved have spoken about having negotiations," Deputy Prime Minister Abdullah Ahmad Badawi was quoted as saying by the national news agency Bernama.
He urged a peaceful solution.
"We also do not want the release of the hostages to be done the military way," he said.