Soldiers captured the Abu Sayyaf camp in a forested area on the southern island of Basilan but an improvised explosive device left behind by the rebels, injured 12 soldiers on Sunday, said Major Filemon Tan.
"After we captured the camp, they were clearing the bunkers when the IED exploded," he said.
Malaysian jihadist Mohammad Najib Hussein alias Abu Anas was among the dead in the operation in Basilan, a Philippines Armed Forces spokesman said.
Hussein was a 38-year-old Malaysian shopkeeper turned bomb-maker associated with the Islamic State (IS). He is known as the key figure in the IS' Black Flag cell of Universiti Malaya professor, Dr Mahmud Ahmad, alias Abu Handzalah, who has been hiding with the Abu Sayyaf in southern Philippines.
About 300 soldiers, backed by artillery and attack helicopters, launched the attack on the Abu Sayyaf group on strife-torn Basilan about 885 kilometres (550 miles) from Manila on Monday, starting days of intense combat.
The battle involved as many as 150 members of the Abu Sayyaf group, according to the military, which also reported militant deaths that could not be verified.
A total of 26 Abu Sayyaf fighters were slain, Tan said but the military was unable to recover their bodies.
The Abu Sayyaf were set up by the brother-in-law of Osama bin Laden in the days just before he formed the al-Qaeda group. In the past decade, it has been known more for criminal acts including kidnapping for ransom, than for Islamist terrorism.
"The populace of the area, they confirmed it. They were buried at once according to Muslim tradition. Others were seen by our troops, being shot, falling and not getting up," he said.
The rest of the Abu Sayyaf members fled in different directions before dawn on Sunday, he said.
Sixteen Abu Sayyaf fighters were also wounded along with 14 soldiers before the IED blast on Sunday, Tan added.
Pursuit operations were continuing against the remnants of the Abu Sayyaf group and its leaders in Basilan, he said.
The captured camp, measuring 30,000 square metres (323,000 feet) could accomodate about 250 people with 28 structures including fortified bunkers, the military said.
Basilan, an impoverished island of about 400,000 people, has long been a stronghold of the Abu Sayyaf, a group formed in the 1990s with the help of Al-Qaeda founder Osama Bin Laden.
The Abu Sayyaf is infamous for kidnapping people, including foreigners and demanding huge ransoms for their release.
The group has also been blamed for the worst terror attacks in the country, including the firebombing of a ferry off Manila Bay in 2004 that killed over 100 people.
Last year, Abu Sayyaf leaders pledged allegiance to the Islamic State group, which controls vast swathes of Syria and Iraq.
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