By Raju Gopalakrishnan

MANILA, Aug 19 (Reuters) - The Philippine military chief vowed on Tuesday to chase down Muslim rebels who attacked two towns in the south, saying the time to give peace a chance was now over.

At least 34 people, most of them civilians, were killed in the south of the Catholic-majority nation on Monday after hundreds of Muslim guerrillas attacked two towns, burning homes, raiding banks and forcing thousands to flee, officials said.

There were no immediate reports of fresh fighting on Tuesday in the Mindanao region, where a decades-long rebellion has prevented any significant development of some of the richest mineral and hyrdrocarbon resources in Southeast Asia.

Monday's attack was the bloodiest since a territorial deal with the Moro Islamic Liberation Front (MILF) stalled earlier this month and comes just days after government troops halted an offensive against MILF rebels in another part of Mindanao.

"You all know we have bent as far backward (as possible) to give peace a chance," military chief Gen. Alexander Yano said on radio on Tuesday.

"The patience of our soldiers in trying to uphold the primacy of the peace process is very commendable but at some point we really have to act decisively."

The military said 26 civilians and eight soldiers were killed in the fighting in Kolambugan and Kauswagan towns in the province of Lanao del Norte. Dozens of civilians were used as human shields and some of them were shot dead by retreating rebels.

Many of the country's Muslim minority live in Mindanao, but the towns and cities, most of which are on the coast, are dominated by Christians.

The MILF leadership has distanced itself from the latest attacks in Lanao del Norte, whose commercial capital Iligan, less than 20 km (12 miles) from Monday's battles, is an important centre for steel and hydropower.

"We regret the loss of lives and property in Lanao del Norte, but we would to emphasise that the MILF leadership has not authorised these actions," spokesman Eid Kabalu said, adding that th MILF remained committed to peace.

Yano said the MILF leaders had no control over field commanders.

"If they can't control them, the government will certainly control them and we will undertake our mandate to protect the people and the communities and we cannot renege on that constitutional mandate," he said.

"We will pursue and take aggressive action against the perpetrators of the dastardly acts committed against innocent civilians."

Last week, the military bombed MILF positions for four straight days, triggering an exodus of around 160,000 people, after accusations that the rebels had occupied Christian-owned farmlands.

The situation on the ground has deteriorated rapidly since the Supreme Court earlier this month halted a territorial deal between the MILF and Manila that was meant to re-open formal peace talks to end a conflict that has killed over 120,000 people.

Hawks on both sides have seized on the stalling of the peace moves to re-ignite fighting that has been mostly dormant since 2003.

Legal experts expect the court will rule that the agreement, which gives a future government of an expanded Muslim homeland wide political and economic powers, is unconstitutional.

A further bout of violence is expected following such a decision but an all-out war is not considered likely as neither side has the resources to deliver a knockout blow. (Additional reporting by Manny Mogato)

AlertNet news is provided by