Moro National Liberation Front (MNLF) forces are holding as many as 30 civilians as hostages in Zamboanga City, the military said Monday.
The MNLF fighters, numbering about 200, occupied several villages in Zamboanga early Monday, and a policeman and a civilian were reported killed in clashes.
Brig. Gen. Domingo Tutaan, Armed Forces spokesperson, said the MNLF forces were holding from 20 to 30 civilians hostage.
Reports said MNLF snipers were shooting at police and military targets.
The local mayor Maria Isabelle Salazar has suspended all classes in Zamboanga because of the violence.
All flights to Zamboanga have also been cancelled.
Initial reports said the attackers were followers of Nur Misuari, chieftain of the MNLF, who earlier has earlier accused Manila of not honoring the 1996 peace accord it signed with the former rebel group.
Reports said heavily-armed rebels managed to sneak by boats before dawn and launched the attacks by sunrise.
It was not immediately known why the Western Mindanao Command failed to prevent the attacks.
One MNLF fighter, who positioned himself near Santa Barbara village, told radio network Radyo Agong that they came from Sulu province and is under Haber Malik, a lieutenant of Misuari.
Misuari ran for governor in the Muslim autonomous region in May this year, but lost. He also ran thrice as governor in Sulu province in previous years and also lost.
The attack was the second since 2001 when Misuari followers raided Zamboanga and the fighting left over 100 people dead.
AL JACINTO AND ANTHONY VARGAS