Saturday's clashes on the strife-torn island of Basilan came after an April 8 ransom deadline set by Abu Sayyaf, who had threatened to behead some of their foreign hostages.

At least four soldiers were beheaded in the fighting, which involved about a hundred Abu Sayyaf rebels, regional military spokesman Major Filemon Tan said.

Military chief General Hernando Iriberri, who flew to the southern command base in Zamboanga city, 44 kilometres from the violence, said the fighting lasted almost 10 hours.

"The whole armed forces is grieving," he told reporters.

He said a Moroccan national who was with the gunmen was killed in the clashes, identifying him as Mohammad Khattab, an instructor in making improvised explosive devices as well as an "Islamic jihadist preacher".

"He wanted to unify, organise all kidnap-for-ransom groups to be affiliated with an international terrorist organisation," the general said.

He would not identify the international group the Moroccan was allegedly working for.

Iriberri said operations were continuing, adding that "even as we speak, there is an encounter going on in the same place".

Military spokesman Colonel Noel Detoyato told GMA television in Manila that "our standing order... is no let-up in our combat operations so we expect in the next few days, there will be many more encounters".

The military spokesman for the unit involved in the battle said the soldiers were on their way to attack an Abu Sayyaf hideout when they were hit.

"Our group was heading to attack them. On the way, they were ambushed," Colonel Benedict Manquiquis told radio station DZRH.

"The enemy had the high ground so no matter where our soldiers fled to seek cover, they could still be hit by the heavy firepower and improvised explosive devices of the members of the Abu Sayyaf group."

Major Tan said that 53 soldiers and about 20 Abu Sayyaf had also been wounded in the violence.

Slain soldiers' remains  

A live screening of Filipino boxing legend Manny Pacquiao's last fight taking place in the US, which was scheduled to show at a military gym in Zamboanga, was called off as the facility prepared to receive the bodies of the slain soldiers.

The clash came shortly after a retired Italian priest being held hostage by Abu Sayyaf was freed on Friday.

The militant group had also threatened to kill a Norwegian and two Canadian hostages and a Filipina they kidnapped in September if a ransom was not paid by Friday.

The military said there has been no word on the hostages' fate since the deadline passed.

Eighteen other foreign hostages are being held in the Philippines, most or all of them thought to be in the hands of the Abu Sayyaf.

The Abu Sayyaf, a small group of militants known for kidnapping foreigners and demanding huge ransoms, was established in the early 1990s with seed money from Osama bin Laden's Al Qaeda network.

It has been blamed for the country's worst terror attacks, including a 2004 Manila Bay ferry bombing that claimed 116 lives.

Its leaders have in recent years pledged allegiance to the Islamic State group that controls vast swathes of Iraq and Syria.

They are based in the southern islands of Basilan and Jolo, which both have large Muslim populations.