The amazing escape is hugely embarrassing for the Phillippine government which is hosting Australian Prime Minister John Howard who arrived in Manila with a $3m counter-terrorism package.
Fath al-Rahman Al-Ghozi, the most senior Jemaah Islamiyah member jailed in the Philippines, escaped from a Manila prison early on Monday morning by walking out of his prison cell.
Two Filipino Abu Sayyaf guerrillas, detained for alleged terrorist activity in the same prison also escaped with Al-Ghozi.
Jail guard sacked
National police chief Hermogenes Ebdane confirmed he had sacked the jail's security detail at Camp Emro, a heavily guarded special detention centre in Manila.
A massive military manhunt has been launched, added armed forces spokesman Lieutenant Colonel Danilo Lucero.
"The military has already alerted the troops and intelligence units to intensify the manhunt against Fath al-Rahman and two of his companions," Lucero said. "So far there is no indication yet as to where the suspect had escaped."
Chief Ebdane added: "They are dangerous people, it's better for them to surrender. Special teams are now conducting manhunt operations to track down these fugitives."
He also confirmed that he had ordered an immediate investigation into the circumstances leading to the escape of Al-Ghozi and the Abu Sayyaf members.
Attacks were planned
Al-Ghozi, a self-confessed Indonesian operative of the JI, was sentenced to 17 years in a Philippines prison last year for possession of explosives. He told the Filipino court that he planned to use these for attacks in Asia.
President Gloria Arroyo greets
Australian PM John Howard
He has since given a deposition to Philippine prosecutors that the JI had funded the December 2000 bombing of the Manila light rail system that claimed 22 lives.
International security expert Rohan Gunaratna said this was a major breach of security because Al-Ghozi was the most important JI member in custody.
"He is the most experienced, the best trained and the most well motivated," he said.
And Gunaratna warned that Al-Ghozi was capable of quickly launching a terrorist attack.
"He is the one man who can put together an operation in such a short time. He knows how to purchase weapons, he knows how to put operations together, he knows security.
He added: "It is a very important lesson to other countries that they must not hold JI prisoners under conditions in which they can escape because they are very highly motivated."