You know your dog resource guards. You should have worked on this behavior a long time ago. Work on it now. Trade him a higher value treat. Praise him for giving the stick, toy, whatever to you. There is a lot of information here on correcting resource guarding.
Step up your management of this dog. Do not allow your dog off leash. Teach him to potty on leash. And yes - muzzle him. IMO what happened was your fault. You allowed your dog to be off leash. You weren't paying attention to him. You were on the phone. Up your obedience. You need to have a rock solid recall on your dog. Children need to be protected and so does your dog. That is your job.
Natty Boh 6-27-12
Annie 1998 - 8-2-12 RIP