The military added that a battalion commander and a soldier were also killed on Thursday in rebel mortar fire on an army base in another part of the island.
"There's still heavy fighting in the mountains of Panamao," Lieutenant-General Alberto Braganza, chief of the military's Southern Command, told reporters. "Our troops have encountered strong resistance from the rebels."
Some 4000 government troops have been battling 800 Islamist fighters from the Abu Sayyaf group and renegade members of the Moro National Liberation Front (MNLF).
The latest army operation follows a rebel ambush on a convoy of soldiers in Patikul town and the military says it has killed around 40 rebels since Monday.
The toll is the biggest since 2001 when 20 soldiers killed and about 50 wounded.
|Nearly 4000 Philippine troops are |
fighting about 800 fighters in Jolo
Braganza said soldiers recovered several bodies from the rebel hideout, adding many militants may have been killed in air strikes and artillery bombardments.
Earlier on Thursday, he brushed aside calls for a ceasefire from local Muslim leaders worried about villagers caught up in the fighting. It has been reported now that many thousands of residents have been evacuated as the fighting intensifies.
"To me, it's surrender or nothing," Braganza said.
The MNLF signed a peace deal with the government in 1996, but some disgruntled members joined the Abu Sayyaf and were involved in several kidnappings in 2000.
Abd al-Rahman Jamasali, a former MNLF member, was sent by Phillipine House of Representatives Speaker Jose de Venecia to talk to the rebels about a ceasefire.
But Jamasali said intermittent skirmishes prevented him and Sulu provincial governor Benjamin Loong from seeking out rebel leaders because the military could not ensure their safety.
The smaller Abu Sayyaf group and the MNLF have strongholds in the mountains and jungles of Jolo, one of the largest in a string of islands that stretches across the Sulu Sea between the southern Philippines and Borneo island.
Abu Sayyaf, mainly known for kidnappings, has also been blamed for bombings, including one on a ferry that subsequently sank, killing more than 100 people in February 2004.
President Gloria Macapagal Arroyo said on Thursday the military operations on Jolo were aimed at "terrorists and criminals", not the mainstream MNLF.
The government is due to restart peace talks in March with the Moro Islamic Liberation Front (MILF), which broke away from the MNLF in 1978.
The Moro Islamic Liberation Front
(MILF) seek independance
Arroyo said ambassadors from several Muslim countries were briefed at the foreign affairs department about the talks with the MILF, the largest Muslim rebel group in this mainly Roman Catholic country.
"We have assured them that the overall peace process holds firmly even amidst isolated hostilities," she said.
"We remain committed to a peaceful solution," Eid Kabalu, a spokesman for the MILF, said in response.