Police in the southern Philippines say the severed head of a kidnapped schoolteacher has been found in a bag at a petrol station.
Gabriel Canizares was abducted by Abu Sayyaf militants three weeks ago. His body is still missing.
He was travelling with colleagues on the island of Jolo when he was seized.
The militants had demanded a ransom equivalent to $42,000 (£25,000; 28,000 euros) for Mr Canizares, which his family refused to pay.
Education Secretary Jesli Lapus expressed shock at the teacher's killing, saying six other teachers who had been kidnapped by Abu Sayyaf earlier this year had all been released despite threats to behead them.
He said his department was at a loss as to how to ensure security for public schoolteachers in high-risk areas, and feared that the kidnappings would discourage others from teaching underprivileged youths in Muslim areas.
"We shall make them pay for the enormity of this savagery," President Gloria Arroyo's spokeswoman Lorelei Fajardo said in a statement after Mr Canizares' head was found.
She said Mrs Arroyo had ordered "punitive action" to "put an end to the Abu Sayyaf group's heinous and inhumane atrocities".
"The people of Jolo are condemning this dastardly act," Jolo municipal mayor Hussin Amin said in a television interview aired in Manila.
The beheading came three days before a visit to Manila by US Secretary of State Hillary Clinton, when security issues are expected to be a key topic.
Abu Sayyaf has been blamed for many of the country's worst terrorist attacks, including the firebombing of a ferry in Manila Bay that claimed more than 100 lives in 2005, and the abduction of American tourists in 2001.
A land mine explosion under a military convoy carrying American troops on 29 September killed two US Army Special Forces soldiers - the first US military deaths in the southern Philippines in seven years.
About 600 US troops are currently stationed in the south for training and humanitarian missions, but are barred by Philippine law from engaging in direct combat.