"The Islamic Army of Iraq — Khalid bin al-Waleed Brigade" said in a statement carried by Qatar-based Al-Jazeera television that it hadn't let hostage Angelo dela Cruz go but will give "the Philippines government 24 hours to withdraw from Iraq."
Philippine Labor Secretary Patricia Santo Tomas had quoted President Arroyo earlier Saturday as saying the insurgents in Iraq had freed dela Cruz.
The claim came after Arroyo's spokesman said the Southeast Asian country's small peacekeeping contingent in Iraq would be withdrawn when its stint ends Aug. 20, though no decision had been made on whether to send replacements.
CBS News Correspondent Elaine Cobbe, in Baghdad reports, "The hostage-takers have upped the ante - demanding hard evidence from the Philippines that it will withdraw its troops by July 20th. If that's not forthcoming within 24 hours, the Islamic militants say they'll behead the truck driver they've been holding since Wednesday. Earlier, Manila said it would pull its troops out once their mandate ends next month. But clearly, for the kidnappers, that's not good enough."
Meanwhile, Bulgarians were waiting with trepidation to hear about the fate of two of their countrymen taken captive by a separate group.
In other developments:
The Philippine government announced its plan to withdraw the peacekeepers on Saturday as the Arab television station Al-Jazeera showed a video of hostage dela Cruz appealing to Manila to give in to the insurgents' demands.
The government's announcement appeared to be deliberately ambiguous, representing the fine line that the Philippines was walking to obtain dela Cruz's release while remaining one of Washington's closest supporters of the global war on terrorism. But the move at first seemed to have satisfied the men who snatched dela Cruz Wednesday near restive Fallujah.
Before dela Cruz's kidnapping, the Philippines had been discussing whether to extend the peacekeeping mandate for the troops. The withdrawal would be a blow for the international coalition in Iraq.
But the government made no mention of any further action on the 4,000 or so Filipino contract workers who provide food services, janitorial work and building maintenance and would be more difficult to replace. They are considered crucial to the running of U.S. bases. Arroyo has already barred new workers from traveling to Iraq.
The kidnappers of dela Cruz had threatened in a video broadcast Wednesday to kill him if the Philippines didn't pull its 51 police and soldiers from Iraq within three days, a deadline that was drawing near on Saturday as the Filipino claim of the relase was made.
Jordanian militant Abu Musab al-Zarqawi's Tawhid and Jihad group, which has claimed responsibility for the beheadings of two captives in the past, threatened to kill the men Saturday if the United States did not release all Iraqi detainees — an ultimatum that has expired.
Bulgarian Foreign Minister Solomon Pasi suggested Saturday that the men were still alive, though he warned the information was "unconfirmed."
President Bush telephoned Bulgarian President Georgi Parvanov on Saturday to discuss the hostage situation.
Mr. Bush offered to assist but refused to negotiate with terrorists, the White House said. Parvanov affirmed Bulgaria's strong commitment to Iraq.
The Bulgarian Foreign Ministry said the Bulgarian truckers were kidnapped en route to the northern city of Mosul, coming from Bulgaria via Turkey and Syria. Their schedule would have put them in Mosul on June 29, the last day either man contacted his family.
Bulgaria has a 480-member infantry unit under Polish command in the southern city of Karbala, a small part of Iraq's 160,000 member multinational force.