At least two people believed to be the hostage-takers were escorted to police vehicles after giving themselves up.
Cipriano Querol, a chief superintendent, earlier told local television that Ducat "will be in safe hands after he surrenders ... nothing will happen to him".
Guns and grenades
Ducat and his two associates took control of the bus after tricking the teachers into believing they were part of a contingent on a field trip.
"We assured [Ducat] that he will be in safe hands after he surrenders and that nothing will happen to him"
Chief Superintendent Cipriano Querol
In a note taped to the bus' windscreen the hostage-takers said they were armed with grenades and high-powered weapons.
Ducat is believed to be the owner of a day-care centre in the suburb of Tondo based in a poor Manila suburb where the incident is believed to have begun.
He said the hostage-taking was for the children's benefit.
"To the parents of the kids I am with... I am asking for justice so they can have continued education up to college,'' he said during the stand-off.
Police surrounded the bus and made contact with the men by phone and messages scribbled on sheets of card.
The children on board the bus are reported to be aged five and below.
Ducat earlier told local radio that he wanted to ensure the safety of the children and sought assurances that the police would not attack the bus.
"I want to go home to my children, I will surrender if I will be given an assurance by politicians that they will make sure these children finish college," Ducat said.
"I love these children. If blood will be spilled it will not come from me, it will be from the police outside."
'A good person'
|Dozens of children were held on the bus [AFP]|
Mothers of some of the hostages had appealed for their children's safety on local radio.
"We are asking him to free the children, to let our kids out,'' said Dema Arroyo, 29, mother of six-year-old hostage Angelica.
"We will forgive him if he will free our children. We have no ill feelings toward him. He is a good person."
A Philippine senator joined the negotiations and was seen boarding the bus to talk to the gunmen.
Senator Bong Revilla left the vehicle after about 45 minutes carrying a boy who had reportedly developed a fever during the stand-off.
Revilla, who said he knows Ducat, said the other children were in good shape.
He said Ducat was holding a grenade with the pin pulled out, and that his hands were shaking.
Esperanza Cabral, the Philippine social welfare secretary, reportedly also spoke with Ducat and offered assurances that the children would get a good education.
Television pictures showed the bus parked in the square in front of the city hall with curtains drawn across most of its windows.
Earlier a woman hostage, apparently one of the teachers, was seen through the front of the bus signalling for a phone as one of the men held what appeared to be a grenade at her side.
Police officials say they have been given orders to ensure that the hostage drama, playing out live on Philippine television, ends peacefully.
Local television reports said Ducat was probably the man of the same name who took two priests hostage in the late 1980s after a dispute over building a church.
In that incident, the weapons used turned out later to be fake and no one was harmed.
According to other reports, he unsuccessfully ran for Congress in 2001 and opened the Tondo day care centre three years ago.