The clash occurred before dawn when a navy patrol boat confronted several boats carrying rebels of the Moro National Liberation Front (MNLF) near Zamboanga City, 875km south of Manila, military spokesperson Lieutenant Colonel Ramon Zagala said.
Zagala said about 300 MNLF fighters then swooped down on five villages as they attempted to reach the centre of the city to support a protest march, but were blocked by soldiers.
The MNLF signed a peace agreement with the government in 1996, but has accused the government of failing to implement the accord.
MNLF leader Nur Misuari recently revived the call for an independent Islamic state in the southern region of Mindanao, alleging that the government has ignored the group's grievances.
Zamboanga City Mayor Isabelle Climaco-Salazar said one soldier, one police officer and four civilians were killed in the hostilities, while 24 were wounded.
"The city government is mobilising all resources to address the situation brought about by the infiltration of alleged MNLF members in some coastal villages," she said.
The rebels were holding "more or less 20 civilians" captive in the village of Santa Catalina, said Senior Superintendent Wilben Mayor, a national police spokesperson.
Another 200 civilians were trapped in the area but were not being held by the guerrillas, he added.
Regional police chief Juanito Vano said negotiations were ongoing for the release of the civilian hostages.
Classes in schools and work in public and private offices were suspended, while more than 1 400 residents sought shelter at evacuation centres.
- SAPA
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