The fighting flared up after the MILF guerrillas accused the paramilitary forces of attacking them in response to a June 23 bomb attack on a convoy carrying Maguindanao Gov. Andal Ampatuan in Shariff Aguak town.
Six people were killed, but Ampatuan, also a Muslim who has had differences with the rebels, escaped unhurt.
Police blamed two MILF commanders, Said Pakiladatu and Amiril Kato Ombra, for the attack.
The wife of one of them was killed in a drive-by shooting in Southern Cotabato yesterday, according to police, while the rebels said the incident would not affect the peace process.
Brig. Gen. Jose Angel Honrado, Armed Forces spokesman, said the rebels and armed civilians controlled by the provincial government of Maguindanao have been observing a truce after the intervention of Malaysian-led ceasefire observers and a joint government-rebel committee.
"This is a good development. We have to find out what really happened and institute measures so this will not be repeated," Honrado told Manila radio station dzXL.
Col. Felipe Tabas Jr., the regional military commander, said the two sides briefly exchanged fire early yesterday, but there were no reports of casualties.
"There is a move now to have a ceasefire," Tabas said.
Despite accusing Army troops of backing the paramilitary forces, MILF spokesman Eid Kabalu said the situation was under control and described the fighting as an isolated case.
The government and the rebels signed a ceasefire pact three years ago amid ongoing negotiations.
"At first, the military kept its hands off because of a ceasefire agreement. But in the end they violated it," Kabalu said.
Tabas denied the military was involved, saying troops were only keeping a busy highway open since the fighting erupted.
Chief MILF negotiator Mohagher Iqbal, who has been engaged in the talks with the government on ending a decades-long Muslim separatist rebellion, accused the militiamen of torching several houses and warned that "the level of trust and confidence among peace negotiators was being eroded."
Meanwhile, Pakiladatu denied any role in the Shariff Aguak bombing, saying he was ready to present himself for questioning by the government and MILF peace panels.
"As long as we follow the process stated in the ceasefire agreement," he told Catholic radio station dxMS in halting Tagalog. — John Unson, Roel Pareño