The government has rejected the demands of the Abu Sayyaf Group for an independent Islamic state in Mindanao in exchange for the release of an estimated 59 hostages.

"Any political demand against the constitution, the breakup of our territory, is definitely to be opposed by the government," said Armed Forces spokesman Brigadier General Edilberto Adan. The government has begun to use negotiations coupled with military action, a two pronged-approach, in solving the Abu Sayyaf problem, a softening from its original no negotiation and no ransom policy.

Negotiations with the Abu Sayyaf will continue, said Adan, adding the strategy was "to apply military pressure and, at the same time, communicate with them. It's a parallel approach of talk and fight."

The government expressed openness to the contact initiated by Abu Sabaya, a sign that it was prepared to negotiate with the group, despite its no ransom policy.

"Abu Sabaya made contact this morning with the government-designated intermediary William Castillo" said Presidential spokesman Rigoberto Tiglao, adding: "There's no actual talk on what they really want. But what's good is there is contact. So while military operations and the no-ransom policy continue, there's someone who talks to them. It's important to be able to open other venues for ending this hostage crisis."

"The strategy is to apply military pressure and at the same time, to communicate with them. We are establishing contact and find out what they want and under what conditions the hostages will be released – it is a parallel approach" Adan said without dwelling on the progress of the negotiations.

Adan and Tiglao described Castillo as "known to the Abu Sayyaf". Intermediaries had "established communication" with the rebels "only for the unconditional release of the hostages and not for ransom or any other concession," claimed National Security Adviser Roilo Golez.

"We do not want money, we just want the return of Sulu, Basilan and Tawi-Tawi ( to Muslim rule)," Abu Sayyaf spokesman Abu Sabaya said in a radio interview.

Several of the released hostages said they have overheard the Abu Sayyaf leaders complaining how their ancestors have been driven out of Mindanao, and would settle for the return to their custody of the provinces of Basilan, Tawi-Tawi, and Sulu. The Abu Sayyaf leaders also called for the full implementation of the Sharia Court, the freed hostages said.

Earlier, the government had refused to negotiate with the group which has been launching terrorist attacks every time the government started peace talks with separatist Muslim groups.