About 60 members of the notorious Abu Sayyaf kidnap-for- ransom group entered a town in their stronghold on Basilan island in the southern Mindanao region and began shooting, local police chief John Cundo told AFP.
"This is an act of terrorism and cowardice. When our forces engaged them in a 45-minute firefight and they felt our numbers and volume of fire they backed away and fled," Cundo said.
"What is unfortunate is that women and children were affected as they were still sleeping when this happened."
The Abu Sayyaf is a loose network of militants formed in the 1990s with seed money from Osama bin Laden's Al-Qaeda network.
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Its members have engaged in banditry and kidnapping, targeting foreigners in exchange for millions of dollars in ransom.
One faction based on Basilan has pledged allegiance to the Islamic State group.
It is not clear whether that faction was involved in today's attack on Maluso, although its members are among militants who have been occupying since May parts of Marawi, the largely Catholic nation's most important Islamic city.
President Rodrigo Duterte has imposed martial law across the southern third of the Philippines, including Basilan, to quell the militant threat.
Following today's attack, residents evacuated their homes in fear and authorities sent more troops to secure the area, according to Cundo.