JOIN USSix hostages, including three children, were subsequently released, and appeared to be unhurt.
Police sharpshooters took positions around the white-blue-red bus, which was parked near a downtown Manila park, and negotiations to free the remaining hostages were under way, deputy director of Manila police Alex Gutierrez said.
Two of the Hong Kong tourists, both women, were the first to be released, followed by three young children and a woman accompanying them, Manila police chief Rodolfo Magtibay said. Police had earlier reported that the tourists were from South Korea but later corrected themselves.
Hong Thai Travel Services Ltd. General Manager Susanna Lau told Hong Kong's Cable TV that the bus was carrying a Hong Kong tour guide and 20 tourists - three children and 17 adults - and a local tour guide.
She said the group left on August 20 for a visit to Manila and was scheduled to fly back to Hong Kong on Monday.
Magtibay said the others on the bus included three Filipinos - a driver, a guide and a photographer.
The hostage-taker, identified as former Senior Inspector Rolando Mendoza, 55, was armed with an M16 rifle. He demanded that he be given back his job on the police force a year after he was fired, Magtibay said.
Mendoza hitched a ride on the bus from the historic walled city of Intramuros and then "declared he is taking the passengers hostage" when the bus reached Jose Rizal Park alongside Manila Bay.
The area also includes the seaside US Embassy and a number of hotels.
The curtains on the bus windows were drawn and live TV footage showed two police negotiators walking to and from the bus and communicating with Mendoza from the window near the driver's seat.
Magtibay said they were also using the driver's cell phone to talk to Mendoza. A brother of Mendoza was helping police in the negotiations, Magtibay said.
"We should really resolve this quickly so that it will not have a wider effect," Tourism Secretary Alberto Lim said.
According to newspapers reports from 2008, Mendoza was among five police officers who had been charged with robbery, extortion and grave threats after a Manila hotel chef filed a complaint alleging the policemen falsely accused him of using drugs to extort money.
Mendoza's younger brother, Gregorio, also a policeman, said his brother felt that "injustice was done on him."