Police fired at the tyres of a bus with Hong Kong tourists held by a heavily armed former policeman on board to immobilise it, and other policemen were poised to storm the vehicle even as a disgruntled ex-policeman threatened to kill 16 tourists from Hong Kong and a local driver he took hostage on a bus in the Philippine capital on Monday.
The gunamn says that he has already killed two people.
Television footage showed sparks at one of the tyres of the bus before the tire blew out.
The gunman's warning came about 10 hours into the hostage drama which began when he boarded a bus in Manila's tourist district in a desperate bid to clear his name after being discharged for extortion in 2008.
"I can see a lot of SWAT (special weapons and tactics police) coming in. I know they will kill me. They should all leave because anytime I will do the same here," Rolando Mendoza told the Radio Mindanao Network.
Mendoza, armed with an M-16 assault rifle, fired a warning shot at one stage during the crisis which was being aired live on national television, but nobody was injured, according to a police spokesman at the scene.
Philippine authorities said 22 tourists from Hong Kong were originally on board the bus, including children, as well as the local driver and two other Filipinos.
He released nine people throughout the day, three of them children.
But hopes of a quick ending to the crisis ended as night-time fell and Mendoza went on radio to deliver his threat while still holding 16 people captive.
Armed commandos were surrounding the vehicle, with television footage showing one hostage handcuffed near the bus driver's seat and others peering out from through the windows.
Mendoza, 55, was honoured by police chiefs in 1986 as one of the top 10 officers in the country. But he was discharged in 2008 for his alleged involvement in drug-related crimes and extortion, according to police.
"He wants to be reinstated in the service," Manila district police chief Superintendent Rodolfo Magtibay said.
Mendoza posted a series of written messages on the windows of the bus, one of which read: "Big mistake for big wrong decision", apparently in reference to his sacking.
Joseph Tung, executive director of the Travel Industry Council of Hong Kong, said the tourists on the bus were aged between four and 72. They were on a three-day tour and were scheduled to return to Hong Kong late Monday.
"We have never had anything like this before -- we are very much concerned," Tung said in Hong Kong.
Seven of the tourists, including three children and an elderly man, as well two Filipinos, were released at various times throughout the day.
It was not clear whether Mendoza had released all the children on board, or whether there were still others being held hostage.
The bus was parked in front of a grandstand at Rizal Park, a popular tourist destination just a few blocks from police headquarters.
Monday's bus hijack recalled a similar hostage-taking in 2007, when a troubled civil engineer armed with a grenade took over a bus and held 30 children but freed them after a 10-hour standoff with police.
The 2007 drama took place near Manila city hall, just off Rizal Park.
Monday's hostage-taking also added to a fast-growing number of attacks of foreigners in the Philippines.
Gunmen shot dead a South Korean man in a separate attack on Monday morning in another section of Manila. Police said the incidents were not related.
Last month, an American, a South African, a Briton and their Filipina partners were killed in spate of murder-robberies in Angeles City north of Manila. The alleged killer was arrested.