Nine people including four Philippine security officials were killed Tuesday during clashes with the Abu Sayyaf kidnap group on a popular resort island as millions prepare to travel for the Easter holiday.
The incursion on Bohol island would be the first on a key Philippine tourist destination in recent years by the group which pledges allegiance to the Islamic State and often targets foreigners in the lawless southern Mindanao region.
Five gunmen were killed while four assault rifles and an improvised explosive device were recovered in the fighting, officials said.
Just days earlier Australia and the US warned their citizens about possible "terrorist" kidnappings in Bohol or nearby Cebu island.
"We're quite worried... we are afraid of hostage situations," said Khent Guimalan, who works at the front desk of the upscale Bohol Beach Club.
"The mayor and police have tightened security. There's a checkpoint everywhere," Guimalan told AFP by phone from the Panglao tourist area, where she said hotels were fully booked until next week.
Following the clash authorities distributed photos of suspected Abu Sayyaf members asking locals to report any suspicious activity, according to Guimalan.
Local officials said the militants had used fast boats Monday to reach a village where they squared off against security forces early Tuesday.
- Whale sharks and tarsiers -
Security forces have been on alert for "potential activity on the part of some lawless elements" during the peak Easter tourist season, military spokesman Brigadier-General Restituto Padilla said.
"Our forces who were acting on this information were able to engage these lawless armed groups that are believed to be part of the Abu Sayyaf group from Mindanao," he said on ABS-CBN television.
The armed men sailed upriver from Inabanga, a farming and fishing coastal community some 780 kilometres away from the Abu Sayyaf stronghold of Jolo in the southern Philippines, local police told AFP.
Bohol, about 600 kilometres south of Manila, is a mere 30 minutes' boat ride away from the major port of Cebu on Cebu island, which is also among the country's top tourist draws.
The island is famous among foreign tourists who swim with docile whale sharks and marvel at tiny primates called tarsiers, go on cruises aboard boats on crystal-clear rivers and lounge on its beaches.
- Fighting by nightfall -
Three soldiers and one policeman were killed in the fighting, according to a joint statement from the region's military and police.
"The clearing operations are ongoing and we are pouring in more forces to help and assist," Padilla, the military spokesman, added.
The authorities said sporadic fighting continued at sundown.
Bohol provincial governor Edgar Chatto said the violence was isolated in one village, where he said an unspecified number of residents had already fled to safety in nearby areas.
"I am very disappointed that these elements coming out of nowhere are trying to destroy the lives of people living in peace," Chatto told AFP.
The Abu Sayyaf, also blamed for deadly bombings, has pledged allegiance to the Islamic State movement that holds large swathes of Iraq and Syria.
Over the past year the Abu Sayyaf has been expanding its activities, boarding commercial and fishing vessels off their southern island stronghold of Jolo, near Malaysia, and abducting dozens of foreign crew members.
They beheaded a German tourist earlier this year and two Canadian tourists last year. All three were snatched at sea.