Another policeman was wounded, Bataoil said.
He said investigators believe the assailants belonged to a gang whose members have posed as police officers.
He said two of the slain assalants were found wearing police-style bulletproof vests.
The gang has been blamed for the killing of bank teller and two guards of an armoured truck that was picking up money from a bank on the University of the Philippines campus last month.
Deadly gun battle
Police commandos stopped the men on a highway in the Paranaque area, triggering a gun battle in which 10 of the criminals died, Glen Tecson, a senior superintendent of police, said.
"While they were fleeing, they fired assault rifles and a grenade launcher," he said.
Four of the men, who belong to a known robbery gang, escaped while an eight-year-old girl was among the bystanders killed.
Police could not confirm reports that the armed men intentionally fired on passers-by.
Lilia de Lima, a human rights commissioner, said her agency would look into the incident to make sure the police acted properly to protect the civilians.