Members of the Abu Sayyaf extremist group and other gunmen raided the town of Maluso on the island of Basilan before dawn, killing a government militiaman and 10 civilians, said regional health chief Dr Kadil Jojo Sinolinding.
Seventeen people were also wounded in the attack with nine in critical condition, four of whom were children, said Sinolinding after treating the victims.
"Most of the victims were still asleep when they were strafed and then their houses were torched," he said.
Soldiers were sent to secure the area but the attackers fled after burning four houses including the village chairman's, said military spokeswoman Lieutenant Steffani Cacho.
The military is searching for the attackers but there have been no reports of further clashes.
The attack, led by Abu Sayyaf commander Puruji Indama, was motivated by a personal grudge with the village chairman, said Basilan police chief Senior Superintendent Antonio Mendoza.
The attack came hours after two men kidnapped by the same group in Maluso over three months ago walked free.