A Marine was also killed and four others were wounded in the fighting. One of the wounded died later while undergoing treatment at Camp Navarro General Hospital at the Armed Forces Southern Command (Southcom) headquarters in Zamboanga City.
Lt. Gen. Narciso Abaya, Southcom chief, said the Marines had been tracking down the bandits in a densely forested area in Patikul town since Sunday.
"We have reliable information that the unidentified commander and 16 others have been killed," he said. "The Abu Sayyaf suffered a bigger number of casualty. We have already warned them that when we fight, we give them hell."
The Abu Sayyafs death toll has risen to 19 since the military offensive in Sulu started last week, he added.
Abaya said the bandits with their seven hostages three Indonesian seamen and four Jehovas Witnesses woman evangelists have been mobile as they tried to elude pursuing troops.
"They know the nooks and crannies of Sulu but we will force them to come out," he said.
The Abu Sayyaf bandits have ran out of medical and water supplies as Marines and Army troops cut them off from all food reserves and water supply in the mountains, he added.
Last week, a Marine and two Abu Sayyaf gunmen were killed when troops encountered the bandits in Mt. Mungit, also in Patikul town.
Four soldiers and an undetermined number of Abu Sayyaf fighters and partisans of former Muslim autonomous region governor Nur Misuari were also wounded in the clash.
Lt. Col. John Martir, Marine Forces South deputy commander and spokesman, said the military offensive continued as the Abu Sayyaf fled with their casualties.
"Aside from the slain bandits, the troops also recovered an M16 attached with M203 grenade launcher believed to be a weapon of a bandit leader," he said.
Martir said troops found assorted empty shells and traces of blood along the escape routes of the Abu Sayyaf, which led to the border with Panamao town.
"The recovery of the empty shells signified the bandits were firing on their retreat to slow down our troops as they were inflicted with heavy casualty," he said.
It was the fourth time that Marines have clashed with the men of Abu Sayyaf leader Radulan Sahiron since last month, he added.
Col. Alexander Aleo, Army commander in Sulu, said he has deployed troops to the expected escape route of the Abu Sayyaf to prevent the bandits from eluding pursuing Marines.
"There are other factions like the group of Robot who are trying to link up their forces but the presence of the soldiers keeps them on the run," he said.
The troop movement would stop other Abu Sayyaf groups from reinforcing their fleeing comrades, he added.