Two Abu Sayyaf Group (ASG) members were killed in military operations against the terrorist group in Indanan, Sulu, the Armed Forces of the Philippines (AFP) said Thursday.
The AFP also reported that five other members of the ASG were wounded in a firefight.
On the government side, two soldiers suffered gunshot wounds while nine others had minor injuries.
The AFP said that a firefight ensued on Wednesday after troops from the 13th and 15th Scout Ranger Companies under the 2nd Scout Ranger Battalion encountered an undetermined number of ASG fighters in the area.
The AFP said the firefight between the ASG and government troops lasted 45 minutes. Government soldiers are continuing to pursue the ASG fighters who withdrew after the encounter.
The military has intensified its operations against the bandit group linked to the Islamic State following the beheading of German hostage Jurgen Gustav Kantner.
Government troops are still searching for the body of Kantner in Sulu.
President Rodrigo Duterte has apologized for the government's failure in securing the release of the 70-year old Kantner.
The Department of National Defense said the bandits are currently holding 31 hostages - 12 Vietnamese, 6 Filipinos, a Dutch, 7 Indonesians, and 5 Malaysians.
Security experts believe the group is unlikely to free any hostages without ransom.