The crash killed the pilot and co-pilot, while the rest of the victims are thought to be residents of the shanty town, said police chief inspector Enrique Sy.
"The plane struck one house but the others also went up in flames. These are informal settlers, packed into rows of houses," Sy told reporters.
Resident Maribel Savedoria tearfully recounted on local radio how her husband perished in the blaze after pushing her and their four children out through the window of their rented room.
"He pushed all of us out to save us, but he did not make it. There was an explosion and all my children sustained burns," she told DZBB radio.
Florencio Bernabe, the mayor of Paranaque district where the crash occurred, said that at least 50 shanties burned down and at least 20 other injured victims had been taken to hospital.
Gwendolyn Pang, secretary-general of the Philippine National Red Cross, confirmed that 10 injured victims were in one nearby hospital.
The blaze engulfed a nearby elementary school, she said, but it was empty at the time because it was a weekend.
Ramon Gutierrez, head of the Civil Aviation Authority of the Philippines, told DZBB radio in an interview that the pilot had asked to be allowed to make an emergency landing back at Manila airport shortly after take-off.
"Unfortunately, the plane did not make it," he said, adding that the cause of the crash was not immediately known.
He said the plane would have been carrying a full tank of fuel when it crashed.
It was scheduled to pick up cargo from the nearby island of Mindoro, he added.