Taal volcano, which sits in a lake south of Manila, exploded with a "short-lived" burst at 7:22 am (2322 GMT), the Philippines Institute of Volcanology and Seismology said in a statement.
It warned further eruptions were possible, which it said could trigger dangerous, fast-moving volcanic flows of gas, ash and debris, as well as a tsunami.
The seismological agency "strongly" recommended residents living in vulnerable communities around the lake be evacuated, as it raised the alert level from two to three.
The initial eruption was followed by "nearly continuous phreatomagmatic activity" that sent plumes stretching 1,500 meters (4,900 feet) into the air.
A phreatomagmatic eruption happens when molten rock comes into contact with underground or surface water, said Princess Cosalan, a scientist at the agency, likening it to pouring "water on a hot pan".
Cosalan told AFP that ash and steam emissions had quietened in the hours after the initial burst, but said the institute's on-site sensors continued to detect volcanic earthquakes and another eruption was "possible".
Residents of five villages were ordered to leave their homes, regional civil defense spokesman Kelvin John Reyes told AFP.
More than 12,000 people live in the settlements, according to the latest available official data.
Taal is one of the most active volcanoes in a nation hit periodically by eruptions and earthquakes due to its location on the Pacific "Ring of Fire" -- a zone of intense seismic activity.