Benigno Aquino, the Philippine president, has questioned the authenticity of an amateur video that appears to show hostages being shot at during a siege last month.
Fighting between the Philippine army and the hostage-takers left many dead near the southern city Zamboanga.
Human rights groups are calling for an investigation.
The Philippine military says the hostages were caught in the crossfire as the army fought the rebels.
Lieutenant-Colonel Ramon Zagala, speaking to Al Jazeera for the military, said civilian safety was the top priority.
"During this video we never fired at them; we were firing at sniper positions of the enemy. They [MNLF rebels] were the ones firing at the hostages," he said, referring to the Moro National Liberation Front.
"If you look at the video, you can see a bazooka aimed at the hostages.
"We were directed by the president to rescue the hostages and neutralise the threat. We were able to rescue 195 hostages. Unfortunately 12 were killed, eight directly by rebel fire and the other four, we think, were killed on a bus when a bomb went off."