Police eventually stormed the bus and killed Rolando Mendoza, the former police investigator, after negotiations broke down late on Monday night, ending an 11-hour standoff.
Buddhist monks joined relatives of victims for a ceremony at the hostage site on Tuesday, where incense sticks burned over food and flower offerings laid out on a makeshift altar.
"It is a sad day for the Philippines. It was a crime that never should have happened," Corazon Soliman, the social welfare minister, said while attending the ceremony.
Benigno Aquino, the Philippine president, has declared Wednesday a "national day of mourning" as a show of solidarity with Hong Kong over the deaths of its citizens.
Earlier, he pledged to conduct a "thorough investigation", saying the incident showed the need for more police training and better equipment.
But Aquino said Mendoza's access to TV and radio made it hard for police to launch a rescue mission on a bus parked some distance from cover.
"Another aspect that I think not too many people are aware was that at some point in time, when the action did occur, the hostage taker had surrounded himself with his hostages," Aquino he told a midnight news conference.
"He used them as body shields, which made our forces hesitate to employ deadly force."
Aquino also defended the Philippine police decision to wait more than 10 hours before storming the bus, because they believed they could convince the gunman to stand down.
Al Jazeera's Wayne Hay, reporting from Manila said "A full investigation will be carried out into what went on during those 12 hours".
But some passengers criticised the police response. One passenger, who identified herself as Mrs Leung, lost her husband and two daughters in a hail of bullets when police tried to storm the hijacked bus.
"The Philippine government ... I can't accept this," she said, in comments broadcast on Hong Kong TV.
"[The gunman] did not want to kill us. He only shot us after the negotiations failed," she said, sobbing.
Mendoza had been dismissed from the police force in 2008 over corruption allegations and seized the bus in a bid to win his job back.
The 55-year-old, dressed in camouflage uniform and armed with a M16 rifle and a jungle knife, hitched a ride with the bus load of tourists as they were visiting historic sites in Manila - then declared he was taking them hostage.
|Police tried to smash their way into the bus after ten hours of negotiations [AFP]
A total of 22 Hong Kong tourists and three Filipinos were initially on board the bus.
Mendoza released nine people, including three children and two of the Filipinos, during police negotiations.
The remaining Filipino, the bus driver, escaped when Mendoza began shooting at the hostages by nightfall.
The crisis eventually ended when police threw tear gas inside the bus, opening fire.
Gregory Mendoza, the brother of the hostage-taker, said Rolando had taken the hostages to demand his full pension, which had been cancelled when he was sacked.
"He is not in the state of his mind, he is not the same Captain Mendoza as before," Gregory Mendoza told Al Jazeera before the end of the standoff.
"According to him, he lost his life because of the dismissal."