MANILA - The Philippine government has not given up on efforts to end the standoff without more bloodshed, a Palace official said.

"Despite the incident, our efforts to solve the issue peacefully continue," said Presidential spokesman Edwin Lacierda, referring to a clash Friday morning between followers of Sultan Jamalul Kiram III and Malaysian police that led to the death of 14 people.

"We wanted to resolve the situation peacefully, but the Kiram family said they're ready to die," Lacierda said.

The sultan's brother Raja Muda Agbimuddin Kiram, who is leading their supporters in Sabah, avoided capture in the shootout and will continue the fight, according to the clan's spokesperson, Abraham Idjirani.

"This is just the beginning," he warned.

Presidential Communications Development and Strategic Planning Office Secretary Ricky Carandang, in a press statement Friday night, expressed sadness over the deaths in Sabah. 

"We condole with the families of those who were lost," he said.

"Since the onset, our primary goal had been to resolve the situation without violence. That is why President Aquino urged the followers of the Kiram family to lay down their arms and return home, so that their grievances can be addressed through sober, productive dialogue," he added.

"There now exists a small window of opportunity to arrive at a peaceful conclusion to the situation in Lahad Datu; we are exerting every effort to seize that opportunity, and are hopeful that the Kiram family and their followers will seize it with us, so that further bloodshed may be avoided," Carandang said.

Malaysian Prime Minister Najib Razak also expressed regret over the bloodshed but said he had authorized police and armed forces to take whatever action necessary to end the impasse.

"I am very sad over the incident because what we had wanted to prevent, which is bloodshed, had actually happened," he said.

The two Southeast Asian neighbors were caught by surprise on February 12 when dozens of followers of the little-known sultan sailed from their remote Philippine islands to press the sultan's claim to Sabah, which is on Borneo island.

The 74-year-old sultan says he is heir to the Islamic Sultanate of Sulu, which once controlled parts of Borneo, as well as southern Philippine islands.

"It would be difficult to kill more than 300 people, it would be difficult to kill them. They have guns, and even if their guns are taken away, they have machetes. It would be hard to kill them, believe me," Kiram said.

He said he was hopeful that his men would not be harmed.

"I'm just hoping, because Malaysia is a Muslim country, and we believe that they are Islam, believing in one god, believing in the Koran, believing in all the Muslim belief. This is what I think -- they will not go to the extent of doing something cruel when they arrest (our supporters)," the sultan added.

Filipinos fired first: Sabah police

Sabah police commissioner Hamza Taib said the shootout was sparked when the intruders, who have been estimated variously at between 100 to 300 people, fired Friday at security forces as they were tightening their cordon in a remote corner of Sabah.

"The intruders fired at us, then we returned fire," he said.

"As a result of the [exchange] fire, two of my men died, three were injured and... 12 intruders died."

"The operation is still going on," he said, adding that police continued to surround the area where about 100 people were left.

Malaysia's state news agency Bernama reported earlier that two police commandos had been killed in a mortar shell explosion as they patrolled around the village where the gunmen were holed up.

Idjirani claimed that Malaysian snipers had killed 10 of the sultan's men and wounded four other members of the group.

Department of Foreign Affairs spokesman Raul Hernandez said Manila formally demanded a full account of the shootout as well as access to any detained Filipinos.

The Islamic Sultanate of Sulu leased northern Borneo to Europeans in the 1870s.

While the sultanate's authority gradually faded as Western colonial powers exerted their influence over the region, it continued to receive lease payments for Sabah.

The former British colony became part of the federation of Malaysia when it was formed in 1963.

Kiram and the other heirs of the sultan still receive nominal annual compensation from Malaysia -- the equivalent of about $1,700.

Idjirani suggested last week that the men would stand down if the compensation was substantially raised. - with reports from ANC, Agence France-Presse, Reuters