The military yesterday said they are tightening the noose around the Abu Sayyaf as fighting continued for the third straight day with still no sighting of 18 hostages held by the militants in southern Basilan.

"The Abu Sayyaf are cornered and it's only a matter of time before we destroy them," said Lt. Gen. Roy Cimatu, commander of military forces in southern Philippines.

He said many guerrillas were trapped in villages in Lantawan after western parts of the town were sealed off.

More than 7,000 military and police troops have been deployed in Basilan since June in an offensive against an estimated 300 Abu Sayyaf guerrillas.

In a separate interview, Basilan army commander Col. Hermogenes Esperon said members of the elite Army Scout Ranger unit briefly clashed with guerrillas who tried to cross into the town's boundary leading to the provincial capital Isabela City early yesterday.

The gunmen, numbering about 10, retreated to Lantawan's hinterlands. There were no immediate reports of casualties, Esperon said on phone from Basilan.

"The rebels are probably facing a dilemma on how to escape government soldiers. We have forces moving in to their positions in all directions and the military has inflicted heavy casualties on them," Esperon said.

The fighting started in Isabela's coastal outskirts of Balatanay on Sunday when an army patrol stumbled on some 100 Abu Sayyaf gunmen.

Both groups called for reinforcements as the firefighting developed into a major battle. The navy sealed off all exits by sea as military air and ground bombardment continued to pound rebel positions.

More than 21 Abu Sayyaf gunmen are believed to have been killed in the three days of fighting, according to Cimatu.

He said troops have pinpointed the location of the Abu Sayyaf militants led by Abu Sabaya and Khadaffy Janjalani, believed to be the group's chieftain.

Esperon, however, said there is still no sighting of the hostages despite three days of heavy fighting.

But Sabaya, in a phone interview with a local radio station in Zamboanga City, said yesterday that the hostages are all alive but "very tired and afraid" because of the military offensive.

"The hostages are really very tired and afraid because government artillery fire is indiscriminate," said Sabaya. "The hostages can hardly speak for fear."

Sabaya also admitted responsibility for the mortar attacks on Friday in Isabela and warned the government "it is only the beginning", as he urged Muslims in Basilan to pack-up their belongings and leave the island.

The Abu Sayyaf, on its part, said it will wage a jihad against the Philippines government, following the government's support for the U.S.-led attacks against Osama bin Laden in Afghanistan, said an Abu Sayyaf leader in a television interview.

"Our brothers and sisters in the Philippines are prepared for the jihad," said a leader, identified by ABS CBN as Abu Abbas. His face was covered with ski mask.

"We have been studying for the past three months our plan to wage a jihad," said the leader, adding: "One of our plans is to bomb Makati City (the financial district)."

The Abu Sayyaf leader said Bin Laden was not the source of the group's high-powered firearms, adding that soldiers and policemen were the ones who had sold firearms to them.

"The report of Father Cirilo Nacorda is true," said the Abu Sayyaf leader, in reference to a reported collusion between the rebel group and the military.