President Gloria Macapagal Arroyo declared an "all-out-war" against the Abu Sayyaf extremist group in Jolo, southern Philippines, after the group claimed they would decapitate American hostage Jeffrey Schilling and offer his head as a gift on her 54th birthday on April 5.

"My government will not be held hostage by a band of bandits. I have ordered an all-out-war against the Abu Sayyaf and their gang of bandits. The full force of the law would be unleashed on them. We shall pursue everyone of them relentlessly, pursue them and annihilate them," said Arroyo in a statement released late afternoon.

"This is the kind of war that we cannot afford not to wage. We are going to get them," vowed Arroyo, adding, "I warn the Abu Sayyaf not to harm the hostage. If they think they can get away with it, they have another thing coming."

Four hours earlier, Abu Sayyaf spokesman Abu Sabaya said in a local radio station in Mindanao "at exactly 5pm on Thursday, Schilling will be beheaded and that is our birthday gift to (President) Gloria Macapagal-Arroyo."

"Schilling is seriously sick, but we have decided to kill him and offer his head as a gift to President Arroyo. The threat against Schilling is not a joke. This will surely shame the administration of (President) Gloria and the United States government." He did not say where Schilling would be beheaded.

"This speaks volumes for these bandits, whose greed and bestiality go against everything we, Christians and Muslims alike, hold sacred," said Arroyo, adding, "The U.S. government supports our government's move. And Charge d Affaires Michael Malinowsky says the U.S. government is praying for our soldiers."

Schilling, 26, a black American convert to Islam from Oakland, California, had married Ivi Osani, Sabaya's cousin in March last year. He was not allowed to return when the couple visited the group's jungle hideout in Jolo on August 28 last year.

"Please let my husband go free, it's been seven months now. I hope that you will stay strong. No matter what, I still love you very much," Osani said in the same radio interview.
Negotiation

Hoping for a negotiation, Sabaya said only Saudi Arabia's ambassador to the Philippines Al Ghamby could save the American, adding, "We want to talk to the ambassador of Saudi Arabia to the Philippines and the Philippine government should send him to us because he is the only person who could save Schilling."

Manila has 72 hours to send the Saudi Arabian ambassador, Sabaya said, adding, "If the ambassador fails to show up, then it is over. You better inform his mother in the U.S. about his execution so she may talk for the last time to her son."

The Abu Sayyaf claimed Schilling was a spy of the U.S. Central Intelligence Agency. The U.S. linked the group to Saudi dissident Osama bin Laden, believed as the mastermind of the twin car-bomb attacks on American embassies in East Africa two years ago and the World Trade Centre bombing in New York in 1995.

"We will never negotiate with a terrorist group," said defence Secretary Angelo Reyes.