An improvised explosive device tore through the bustling market in the heart of Davao city and close to one of its top hotels just before 11:00pm (local time) yesterday.
Authorities said the Abu Sayyaf, a small band of militants that has declared allegiance to the Islamic State group, most likely carried out the attack in response to a military offensive launched against it last week.
"The office of the president texted and confirmed that was an Abu Sayyaf retaliation. For the city government side, we are working on that it is an Abu Sayyaf retaliation," Davao mayor Sara Duterte, who is also the president's daughter, told CNN Philippines.
"We have predicted this and warned our troops accordingly but the enemy is also adept at using the democratic space granted by our constitution to move around freely and unimpeded to sow terror," Lorenzana said in a statement.
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Duterte, who was in Davao at the time of the attack but not near the market, told reporters before dawn today that it was an act of terrorism, as he announced extra powers for the military.
"The force just hurled me. I practically flew in the air," Adrian Abilanosa told AFP shortly after the attack as bodies lay strewn amid broken plastic tables and chairs.
Davao is the biggest city in the southern Philippines, with a population of about two million people. It is about 1,500 kilometres from the capital of Manila.
The city is part of the southern region of Mindanao, where Islamic militants have waged a decades-long separatist insurgency that has claimed more than 120,000 lives.
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