The fire-fight erupted as soldiers conducted a patrol in the village of Guinguinabang in Lacub town, Abra province, 340km north of Manila.
The troops were sent to the area after villagers complained of extortion by the communist rebels, said Lieutenant Colonel Virgilo Noora, an army battalion commander.
Noora said the guerrillas were also taking food from the villagers.
Communist rebels have been stepping up attacks against government forces since March, when the chairman of the Communist Party of the Philippines and his wife were arrested.
The guerrillas have been fighting the government since the late 1960s, making the movement one of the longest-running leftist insurgencies in Asia.