The clash occurred near Patikul town on the remote southern island of Jolo, where gunmen from the Islamic militant group Abu Sayyaf are believed to be holding two Canadian hostages along with a Norwegian and a Filipina.
Regional mlitary spokesman Major Filemon Tan said that one soldier was killed and four wounded, but did not respond to queries about the status of the hostages thought to be held by the gunmen.
Eight of the around 100 attackers were also killed, Tan told reporters, adding that the militants belonged to an Abu Sayyaf faction led by Hajan Sawadjaan.
A Dutch bird watcher abducted in the southern Philippines in 2012 is also believed by the military to be held by the same group on Jolo.
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Founded in the early 1990s with seed money from late Al-Qaeda chief Osama bin Laden, Abu Sayyaf gained international notoriety for kidnapping dozens of foreign tourists for ransom in the early 2000s.
The group has also been blamed for the country's worst terrorist attacks, including the bombing of a ferry off Manila Bay in 2004 that killed more than 100 people.
The militant group beheaded a Malaysian hostage last month, weeks after a 74-year-old South Korean kidnapped in January was found dead, apparently from illness, on Jolo.