The original war plan for the Japanese was to seize the DEI oil fields and as much territory as possible early on. From that point they'd force the Allies to grind away at those outposts and bleed them as much as possible in the process such that the weak and decadent Westerners would become so sick of the process that they'd accept a negotiated peace to end the war. That price of that peace would be that Japan would get to keep its oil access and be the dominant power in Asia. The US and the Brits could have their original colonial holdings back, of course.
To enact that strategy however, the Japanese had to get those oil fields in the first place. Getting them required expanding out through South East Asia and conquering the Philippines. In this ATL they've failed to do that. They've also failed to conquer quite so many of those barely above sea level at high tide atolls in the rest of the Pacific.
That means their entire original war plan has been rendered moot. They've no territorial holdings now with which to bleed the Westerners with in the retaking. And with the British still safely holding Singapore the Japanese position in the Philippines is now so horribly exposed as to be a constant liability.
The entire strategic objectives and purpose of taking the Philippines has now been rendered irrelevant by the strategic failures on other fronts of the Japanese attacks.
Taking and holding those individual islands served a useful purpose in OTL even as the Japanese knew they'd be cutoff. The Japanese didn't much plan of keeping them constantly supplied anyway. With the Philippines however, that's different. They have to keep the supplies constant as the troop levels there are too massive. If the Japanese presence in the Philippines was having some greater strategic effect then perhaps it would still be worth it but it isn't. There's no US Navy presence left in the islands. True, there's no land based American or Allied air power there either but there'd be little for that air power to threaten that isn't already in range of what's based out of Britain's continued holdings to the west.
Holding Bataan also isn't costing the US much in the way of strategic resources either. The Americans seem to be doing just fine even with access to Manila and the rest of the Philippine ports. And even without any offensives launched by the US or the Japanese troops in the Philippines it's still costing the Japanese dearly to remain there. The Japanese are losing troops due to illness as they're camped out in the field facing the Americans and the presence of those Japanese troops isn't being decisive there.
At this point, with the original war plan utterly shattered the Japanese would have to be looking for ways to respond to the new reality. That would involve some hard decisions but they've proven capable of that. And the reality of how costly it is in keeping the Philippine operation supported would have to be front and center in all this. At some point they'll recognize that the shipping loses alone are prohibitive and that the fuel consumption for the IJA is impossible to sustain as it's preventing the rest of the fleet from adequately meeting the US and RN threats.
The Japanese military, both the IJA and IJN, are too exposed in the Philippines now. Their presence there is gaining the Empire nothing while costing it irreplaceable troops, ships, supplies and fuel. This, while doing little - if anything - when it comes to halting or even hindering the Allied offensives against Japan.
Withdrawal then becomes a strategic imperative.
The essential point is that there was nothing in the Philippines that Japan really needed. They wanted the oil and the rubber and the tin of the DEI and Malaya and Borneo. But if you were going to seize those, you needed to make sure your flanks were covered as it was a long way back to the home islands.
How confident were the Japanese that the USA would not throw a hissy fit if they attacked Malaya, Borneo and the DEI? Not very, given the Lend-Lease act and other pro-British actions by FDR and his administration.
So, plan on the worst case scenario. Attack DEI and Malaya and the USA decides to join in. How do you counter this? War Plan Orange had to be a given in any staff college planning. So occupy Island chains that will attrite the US Fleet as it heads to manila. Attack the Philippines and destroy their warfighting capability. Force the USN to steam west to relive the forces in the Philippines.
There is nothing in the Philippines Japan really, really needs. So what if the US/Filipino forces retreat to Bataan? A self supporting POW camp.
To be brutally honest, and speaking from a staff college POV, the Philippines were a nice to have but not essential for the Japanese. They were a magnet for the USN and other US forces that would attempt to relieve them. But Dug-out Doug stuffed it up from the start by sending the Bataan supplies to behind the invasion beaches rather than direct to Bataan, sacrificing months of rations and supplies to his own misguided idea of defense of the Philippines. The rest is history in OTL. The fact that they have managed to survive this long in TTL is both a plus, in that the Japanese do really need to resolve this for propaganda purposes and a minus in the USA as questions are being asked about why there is no plan to rescue these brave American boys.