The activity is due to the Philippines' position on the Pacific "Ring of Fire", where tectonic plates collide deep below the Earth's surface.
Schools in the region around Taal, government offices and the Philippine Stock Exchange were closed as a precaution on Monday.
Aviation officials said they were working to resume flights at Manila's main international airport, which was shut down on Sunday due to the risk posed to planes by the volcanic ash.
Some 240 flights have been cancelled so far, snarling plans for tens of thousands of people travelling through the Ninoy Aquino International Airport.
"I'm disappointed because this (delay) means additional expense for me and it's tiring to wait," said stranded traveler Joan Diocaras, a 28-year-old Filipino who works in Taiwan.
"But there's nothing we can do."
Alert level raised
The eruption began with an explosion of superheated steam and rock, but by early on Monday "fountains" of lava had been spotted on Taal, the Philippine Institute of Volcanology and Seismology (Phivolcs) said.
Authorities raised the alert level to its second-highest level on Sunday, saying an "explosive eruption" could happen in "hours to days".
Phivolcs chief Renato Solidum said the lava was evidence of fresh movement in the volcano, but said it was unclear if Taal would "sustain its activity".
Government seismologists recorded magma moving towards the crater of Taal, which is located 65 kilometres south of Manila.
Apart from the ash, some particles up to 6.4 centimetres in diameter, larger than a golf ball, had reportedly fallen in areas around the lake, Phivolcs said.
Taal's last eruption was in 1977, Solidum said. — AFP