Wednesday's firefight was the bloodiest battle involving the Abu Sayyaf in at least two years. It also raises questions about the effectiveness of US support to Filipino troops.
No group has claimed responsibility for the surge of violence in the island chain where a separatist organization and Al Qaeda-linked militant groups are active.
Abu Sayyaf vows to kill one of three hostages if government troops do not withdraw from their stronghold.
Renewed violence on the island shows the challenge of wiping out militant groups for good.