The Philippine military pounded rebel Muslim positions on Sunday, shooting off a barrage of artillery and mortar fire and firing rockets from helicopters at suspected MILF positions in North Cotabato province after hundreds of separatists refused to leave Catholic farmlands they have occupied since last month.

Lieutenant-General Cardozo Luna, the military vice-chief of staff, said the separatists entrenched themselves in the remote villages despite a government ultimatum to leave.

Breakaway group

Luna said the military operation, involving more than 2,000 troops, was not directed against MILF in general, but a group headed by MILF commander Umbra Kato, who is no longer following the orders of the group's main leadership.

"The MILF rebels have defied their own leadership and have refused to leave the area," he said.

The MILF has been fighting a decades-long war for an Islamic state [EPA]
He said they were supposed to have complied with a government deal with the MILF leadership to move out of the disputed areas, but "they just re-positioned and occupied other villages".

Nearly 130,000 people fled their homes and more than half were staying in temporary shelters while dozens of houses were destroyed, a disaster official said.

But the military said the escalating violence would not halt voting in local elections in Muslim areas elsewhere on the resource-rich southern island of Mindanao on Monday.

Brigadier-General Jorge Segovia, an army spokesman, said "fighting has not spilled over to the Muslim areas".

The violence is the worst seen since the Supreme Court halted plans to establish an extended Muslim homeland in the southern Philippines last week.

The agreement on the size of a Muslim homeland and a future government's powers, including rights over exploring and developing mineral reserves, oil and gas, was halted amid protests by Catholic politicians.

"We really wanted the elections postponed because it could delay the implementation of any agreement that would be reached if the two sides conclude a deal by November 2009," Mohaqher Iqbal, the MILF's chief peace negotiator, told Reuters.

Polls continue

Election officials said despite the violence turnout was good with queues outside polling stations before voting started.

"It seems that we are having a good election, and the people, our brothers and sisters in the south are showing us the way," Jose Melo, head of the elections body, said.

An estimated 1.6 million voters will choose a new governor, a vice-governor and 24 members of a regional legislative assembly that is to serve a three-year term.

The 12,000-strong MILF has been waging a 30-year guerrilla campaign for a separate Islamic state in the south of the largely-Christian Philippines.

The separatists signed a ceasefire with the government in 2003 to open the way for peace talks, and both sides said in July they had completed a draft agreement for recognition of MILF's "ancestral domain" in the south.

However, local officials in Mindanao opposed the agreement and filed a suit with the Supreme Court, leading to a suspension of the draft accord and raising new tensions.

The court has asked the government to submit arguments defending the agreement.