The severed head of a school principal who was abducted by Islamic militants in the troubled southern Philippines was dumped in a petrol station on Monday, authorities said.

The head of Gabriel Canizares was found inside a bag at a petrol station on Jolo island at dawn, 22 days after the 36-year-old man was kidnapped, local police chief inspector Usman Pingay said.

His body remains missing, police said.

Authorities had previously said militants from the Abu Sayyaf group, listed by the United States as a terrorist organisation, snatched Canizares from among a busload of teachers near the Jolo town of Patikul on October 18.

The Abu Sayyaf demanded a two-million-peso (42,373-dollar) ransom, which his relatives refused to pay.

"The people of Jolo are condemning this dastardly act," Jolo municipal mayor Hussin Amin said in a television interview aired in Manila.

The Abu Sayyaf has been blamed for many of the country's worst terrorist attacks.

They mostly operate out of Jolo, a hotbed of a decades-old Muslim separatist insurgency, where small numbers of US military advisers are providing training to Filipino counter-terrorism forces.