Highly reliable sources told The STAR the ransom demand was relayed by the abductors via cellular phone to the captives relatives in Jakarta, Indonesia.
The three sailors ship captain Muntu Jacobus Winowatan, chief engineer Pieter Lerrich, and chief officer Julkifly were kidnapped on board their tugboat in the waters off Basilan.
Hopes of freeing the three hostages during the holidays dimmed as their relatives were unable to raise the ransom.
The sailors Singapore-based employer reportedly refused to shell out money for their ransom, which increased to $5 million after they were passed on from one bandit group to another.
Suspected Abu Sayyaf members are now reportedly holding the three Indonesians captive in Sulu.
"The health of the three hostages has been deteriorating fast and Winowatan could no longer walk. He has to be carried around," one of the sources said.
There has also been a stiff rivalry among various groups in Sulu offering to negotiate the release of the Indonesian sailors.
"Most of those wanting to be negotiators are local politicians who want to grab the credit and, at the same time, get their share of the ransom. They muddle the situation instead of helping the hostages," another source said.
The military has reportedly still failed to track down the bandits holding the Indonesians hostage, despite information supplied by local residents on their whereabouts.