Army troops and police killed ringleader Joselito Melloria in a gun battle with about seven militants near Clarin town in Bohol province. Melloria's companions fled and three of them were later killed by troops, military chief of staff Gen. Eduardo Ano said.
"They dared to go to an unfamiliar area and they couldn't find any support from villagers in Bohol," Ano said, adding that troops were continuing to hunt down the remaining militants.
Melloria fled with at least seven other militants. President Rodrigo Duterte offered a 1 million peso (USD 20,000) reward for information leading to their capture.
A military profile of Melloria, who uses the militant nom de guerre Abu Alih, said he converted to Islam when he married a Muslim woman in southern Zamboanga del Sur province in 2005.
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Philippine security officials say, had the Bohol plots been successful, Melloria would have been designated to lead Ansar Khilafa Philippines.
The fighting and foiled terror plots in Bohol have prompted Western countries to caution citizens from traveling to the central region.
The United States and the Philippines list Abu Sayyaf as a terrorist organization because its bombings, kidnappings for ransom and beheadings.