A spokesman for the Islamic State-linked Abu Sayyaf group told the Philippine Daily Inquirer that Canadian sailor Robert Hall was beheaded on Monday afternoon after the expiry of a deadline to pay a US$13 million ransom for three hostages.

The body would be dumped in a town, he said. Philippine media also quoted multiple sources confirming the killing because ransom demands were not met.

Canadian Prime Minister Justin Trudeau said his government has "compelling reason to believe" that Mr Hall is dead.

Mr Trudeau had hours earlier reiterated that Canada would not pay a ransom that would endanger the lives of more Canadians.

Emaciated and gaunt after eight months in captivity, Mr Hall had pleaded for the Philippines' president-elect Rodrigo Duterte to save his life in videos released by the kidnappers.

"I came into your beautiful country in good faith and in peace and here I am," Mr Hall, a one-time actor, insurance salesman and welding ship owner said in May.

"We hope that you can work on our behalf as soon as possible to get us out of here."

The kidnappers beheaded 68-year-old former Canadian mining consultant John Ridsdel on April 25 after his family failed to pay a ransom.

His head was found in a plastic bag on a street corner in the town of Jolo.

Mr Ridsdel was believed to have been suffering from severe tuberculosis before his death and the kidnappers refused to allow him to take any medicine.

His execution prompted the Philippine military to mount a renewed offensive against militant strongholds across a chain of small islands off Mindanao, the island that occupies about a third of the Philippines' land mass.

More than a dozen extremists have been killed in fighting.

The Abu Sayyaf's burgeoning kidnap business will present an early challenge for Mr Duterte, the tough-talking mayor of Davao City who is set to take office on June 30 after sweeping national elections in May.

Mr Duterte has called on the kidnappers to surrender or else "I will invade Jolo," referring to the island where Mr Hall, his girlfriend Maritess Flor, 40, and Norwegian Kjartan Sekkingstad, 56, were believed to have been held captive in remote village camps.

But in other comments he has indicated he wanted to deal with the extremists, saying "we don't go to war with our own people".

The Abu Sayyaf, a group formed in the 1990s with funding from Osama bin Laden's brother-in-law, claim they are fighting for Islam and last year claimed allegiance to Islamic State.

But security experts describe them as a small band of ruthless criminals who style themselves as Islamic extremists to push up their ransom demands.

The group kidnapped Australian adventurer Warren Rodwell in late 2011 and held him captive for 14 months before his family agreed to pay $93,000 for his release.

Mr Rodwell has advised Australians to stay away from the southern Philippines, where the Abu Sayyaf have been responsible for a trail of bombings, kidnappings and beheadings.

There were 78 kidnappings in the Philippines last year, 69 per cent of them in and around Mindanao. The Abu Sayyaf were responsible for 21.

Last week four Malaysian tugboat crew members kidnapped on April 1 were released after the kidnappers demanded a $US4.35 million ransom.

Fourteen Indonesian sailors seized on the high seas in March and April were released after ransoms were reportedly paid.

Mr Hall was on a world voyage in his yacht named Renova when 11 gunmen kidnapped him and the three other hostages from a marina on the island of Samal, a short boat ride from Mindanao which is home to an array of rebel and militant groups.