The military initially reported three people were killed, but police and army officials later corrected themselves and said there were no deaths.

The bus had stopped at a Digos city terminal on the way to the regional centre of Davao. Moments after the driver returned and started the engine, the blast shattered the windows and some of the seats, said provincial police chief Cesario Darantinao.

He told The Associated Press that police recovered broken nails used as shrapnel.

Among the 27 wounded, four were in serious condition and were taken to Davao Medical Centre, a one-hour drive from Digos, Darantinao said.

He said most of the victims suffered burns and cuts on their legs.

The owner of the bus company, who is also the mayor of a nearby town, had complained of extortion demands purportedly from communist rebels, Darantinao said.

The company did not provide police with details of the threat, he said.

Earlier in the week, regional military spokesman Major Armand Rico said security forces foiled a terrorist bomb attack in Davao city when they intercepted a motorcycle rigged with explosives. The driver escaped, he said.

Apart from Muslim militants, communist rebels and extortion gangs operate in the area.