The four-hour blaze - believed caused by a toppled candle - destroyed more than 100 shanties, each housing about 20 people, in the impoverished Tondo district, said Senior Fire Officer Wilson Tana.
Three members of a single family suffocated while trying to escape along an alleyway, while two people were injured, including a 19-year-old hit by a fire truck, according to Tana and radio reports.
Local officials were reportedly planning to convert a public high school into a temporary shelter for the evacuees. For the moment, authorities set up a relief centre in Tondo, where they were distributing noodles to the homeless.
Accidental fires are common in shanty colonies in and around Manila, most of them blamed on cramped living quarters and inadequate safety measures. Most residents lack tap water and rely on communal pumps.