At least two people were killed and 15 injured when a bomb exploded on a crowded bus in the Philippine capital's financial district on Tuesday, authorities said.
The attack occurred two months after the United States and several other Western governments warned a terrorist attack in Manila was imminent, and followed a bus hijacking last year that left eight Hong Kong tourists dead.
"The explosive must have been placed underneath the passenger seat," Metropolitan Manila police chief Nicanor Bartolome said on ANC television.
"Initially, we have two confirmed deaths and 15 others are injured and are being attended to in hospitals."
The explosion happened on Tuesday afternoon as the bus travelled along one of Manila's busiest roads, on the edge of the Makati financial district.
Vice President Jejomar Binay, a former mayor of Makati, arrived quickly at the scene and said it appeared to be a powerful blast.
"There's a huge hole and the debris indicates it is a bomb," Binay said, adding the legs of one injured woman had been blown off.
Police investigators were seen scouring the scene for evidence, with blood drying on the pavement.
The driver, who survived the attack unscathed, said at least two men who acted strangely quickly got off the bus just moments before the explosion.
"They were moving from one seat to another although we had no idea there was an explosive aboard," the driver, Maximo Peligro, told reporters.
"It could not have been mechanical... it was very strong."
He said about 30 people were on board the bus when the blast hit.
In November, the US, Australian, British, Canadian, French and New Zealand governments updated their travel advisories to the Philippines to warn that terrorist attacks were likely.
Some of the warnings specifically mentioned that an attack would take place in Manila.
"Terrorist attacks could be indiscriminate and could occur not only in the southern islands but also in other areas, to include Manila," the US advisory said.
Philippine President Benigno Aquino strongly criticised the advisories, saying they were not based on firm intelligence, prompting some of the governments to downgrade the threat assessment.
However, the US maintained its warning, which could be viewed on its Manila embassy's website on Tuesday.
In an incident that was not terrorist-related but nevertheless raised international concerns about security in Manila, a disgruntled ex-policeman hijacked a tourist bus in August last year.
After a day-long stand-off, police stormed the bus and killed the hijacker, but eight Hong Kong tourists also died.
The Philippines faces a range of ongoing security threats, most prominently the Abu Sayyaf Muslim militant group that operates mainly in the south of the country, and communist rebels who have been waging a rebellion for 42 years.
The Abu Sayyaf bombed a passenger ferry on Manila Bay in 2004, killing more than 100 people in the country's worst terrorist attack, according to authorities.
The Abu Sayyaf was also blamed for a bomb attack on a bus near Makati in 2005 that left three people dead.
Armed gangs and other extortionists are also known to attack buses in the southern Philippines frequently.
Nine passengers were killed in one such attack in the south of the country in October last year that was blamed on former Muslim separatist rebels seeking to extort money from a local bus company.