(Adds Arroyo meets children, local police chief sacked)

By Manny Mogato

MANILA, March 29 (Reuters) - Gunmen who held Philippine children and teachers for more than nine hours in a bus had dud grenades and authorities are investigating whether the hostage crisis was a political gimmick, officials said on Thursday.

Two men armed with grenades, an Uzi submachine gun and a revolver held 26 children and three teachers from a day care centre in a bus parked outside Manila City Hall on Wednesday, drawing a blaze of publicity.

A radio station quoted officials at the local police Explosives and Ordnance Division as saying the grenades were real but had no detonating mechanism. There was no immediate word on the other weapons used in the hostage-taking.

The police chief of the Manila district, Col. Danilo Abarzosa, was sacked for mishandling the incident, the government announced. Interior Secretary Ronaldo Puno said the usual procedures for hostage situations were not followed.

"From the very start we looked at the possibility of political motivation," Manila Mayor Jose Atienza told the radio station. "The campaign season is peaking. This could be part of a political exercise of some people, and we discussed the matter."

One of the gunmen, Jun Ducat, unsuccessfully ran for a seat in the House of Representatives in 2001. Congressional elections this year are to be held in May.

"Was Ducat acting alone or is a political figure behind him? We have to look at that angle also," Atienza said.

On Wednesday, virtually all of Manila came to a standstill as television broadcast live pictures of the crisis. The images were also beamed live around the world on international news channels.

During the siege, Ducat made a statement carried live on radio and television decrying corruption in the Philippines and demanding better education for the poor.

AIMED AT THE MAYOR?

Many of his comments were seen as directly aimed at Atienza and the city administration.

All the hostages were later released unharmed and the children were sent home after checks at hospital.

President Gloria Macapagal Arroyo spent about an hour with 21 of the children and their parents at the Malacanang presidential palace on Thursday afternoon, treating them to spaghetti, hot dogs and sandwiches.

"How was your field trip?" Arroyo asked one boy during a five minute chat with them before the "merienda," or teatime snack.

"We were held up on the street," said the boy, wearing a white T-shirt with the day care centre's logo and Jun Ducat's name printed in huge, bold letters at the back.

Police said Ducat and his accomplice were in custody and would be charged with kidnapping, illegal detention and illegal possession of weapons.

Police spokesman Cipriano Querol said none of the children's parents had yet lodged a complaint.

Ducat set up the day care centre which the children attended in the Tondo district where he is a popular figure.

In Tondo, the children were playing at home on Thursday and seemed little affected by the previous day's drama.

"At first, the parents were all angry at what he did. He used the children," said Adelfa Cabugayan, mother of a six-year-old girl taken captive.

"But then, we realised Ducat is a very good person. He did so much here in our community."

The parent of another six-year-old boy hostage, Evelyn Aberia, was more forgiving: "We want him to be released from jail. The children are all okay."

One of the teachers at the day care centre said they saw nothing wrong in what Ducat had done to the children. "We respect his beliefs," Elmer Calleja told Reuters.

"Even though we feel sad about what 'sir' did, we know that if you truly believe that what you're fighting for is right, you will do anything to achieve it even if other people will see it as something wrong."

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