Television footage showed the flag draped over the coffin of Rolando Mendoza, who was killed by a police sniper Monday after he opened fire on the Hong Kong tourists he had held hostage for a day while demanding his job back.
The 55-year-old was a decorated officer who was once cited by the police force as one of the "10 outstanding policemen" in the Philippines.
Mendoza's family had placed the flag on the coffin, which was displayed in their hometown in Batangas province, south of Manila, ahead of the funeral Saturday. They removed it after China's protest.
"The person who deserves a national flag at funeral should be someone of heroism, decency and integrity, not someone who inflicts atrocity on innocent lives," the Chinese Embassy said in a terse statement.
"This is nothing but a smear on the dignity of the Philippine national flag," it said.
It added that it condemns "the brutality of the criminal and expresses its strong indignation over this irritating act." Mendoza opened fire after police bungled negotiations with him, a mistake that has already caused dismay in Beijing and Hong Kong although the spat did not result in a recall of ambassadors. Philippine President Benigno Aquino III said he "begged for understanding" while promising to punish those responsible.
Philippine National Police spokesman Agrimero Cruz said police authorities did not give the order required for draping a national flag on Mendoza's coffin, who had received medals while in service.
"When he took hostages, all his decorations have lost their meaning," he said.
China's Foreign Ministry on Thursday pressed Manila to complete the investigation of the hostage crisis "as soon as possible." Internet users mostly from Hong Kong and China were already incensed by photographs posted on social networking sites a day after the tragedy showing curious Filipino onlookers, including some police officers, smiling with the bullet-riddled bus in the background.
But others, including three of Aquino's sisters, placed flowers, lit candles and offered prayers.
Manila police chief Rodolfo Magtibay told a Senate hearing on Thursday that he gave the order to assault the bus carrying a Hong Kong tour guide and 20 tourists after hearing shots following a breakdown in the negotiations with Mendoza. He said he believed his team was equipped and ready.
Mendoza, who was dismissed last year on charges of extortion and grave threats, released several children and elderly hostages early on, but later shot at the remaining 15 people. Eight were killed before a police sniper took him out and seven others were rescued, some of them seriously wounded.
Philippine officials are now bracing for the economic backlash after Hong Kong authorities urged its citizens not to travel here.
About 140,000 Hong Kong tourists visit the Philippines yearly. National carrier Philippine Airlines said at least 558 tourists from Hong Kong and China have canceled their bookings.
Concerns also were raised about the future and safety of more than 100,000 Filipinos working in Hong Kong, mostly as maids, who contributed to the $17.3 billion sent home in 2009 by about 9 million overseas Filipinos — remittances that keep the economy afloat.
Philippine opposition leader Rep. Edcel Lagman called for the resignation of the interior secretary and heads of the president's communications group, saying the Aquino government "failed miserably" in handling the crisis.
The daylong standoff between the hijacker and police — broadcast live on TV — shocked residents in Hong Kong, a safe, affluent city that rarely sees violent crimes.
Magtibay has taken leave and four leaders of the assault team that eventually stormed the bus have been relieved pending an investigation. Officials have said the firearms used by 200 police commandos will be subjected to ballistic tests to see if some of the hostages were hit by police gunfire.
Army crack troops trained to deal with hostage situations were sent to the bus hijacking site this week but were not used by the ground commander, the military said on Thursday.
Spokesman Brig. Gen. Jose Mabanta could not say if the outcome of the hijacking, in which eight hostages and the gunman were killed, would have been different if the squad was used instead of the police's Special Weapons and Tactics team.
The botched rescue has been widely criticized, particularly in Hong Kong, where all the victims were residents, and China, and the new administration of President Benigno Aquino has been accused of poor management of both the siege and its aftermath.
Mabanta said the police accepted the offer of the specialist squad, but then did not use it in resolving the hostage-taking.
"The Light Reaction Company which we presented as a very viable alternate is highly-trained, highly-equipped, standards coming from the US armed forces," he told a media briefing.
"It's specialty is hostage-taking and release of hostages."
The police have said there had been defects including poor handling of the negotiations, and that the assault team was inadequately trained, equipped and led.
Light Reaction squads are used to fight Islamist militants of the Abu Sayyaf group in the southern Philippines, Mabanta said.
On Wednesday, Chief Superintendent Rodolofo Magtibay, the head of police in area of the capital where the bloody siege took place, stood down while it was investigated. A police spokesman had said Magtibay was the ground commander.
On Thursday, Magtibay told a Senate inquiry he had not called for extra help as he thought the SWAT team could handle the situation.
Mabanta said he did not know if the outcome would have been different if the military squad had been used.
"I never can say because that may be presumptuous. It can be so, I don't really know," he said.
On Thursday, the officer appointed acting Manila police chief after his predecessor stood down in the wake of a botched hostage rescue has himself been replaced, heaping further humiliation on the Philippines' security forces.
Senior Superintendent Francisco Villaroman was made acting head of the Manila Police District after the ground commander stood down on Wednesday while the hijack drama was investigated.
Villaroman was replaced after one day. Police gave no reason for his removal, but the Philippine Daily Inquirer newspaper said Villaroman was among police officers charged in the disappearance of two Hong Kong residents in the Philippines in 1998 and 1999.
"That is true," Villaroman told ANC television. "Nine years ago there were charges against me. This is all politics. All of us who were with Senator Lacson were dragged in the case."
Panfilo Lacson had headed the Presidential Anti-Organized Crime Trask Force and Villaroman had served under him. Lacson, now a senator, is currently on the run after he was charged with two murders. He denies the charges.
"For nine years, the case was with the Ombudsman. It wasn't moving because there was no basis, no evidence, no material evidence," Villaroman said.
The hijacking has highlighted the poor security in the Philippines, which is a major reason why foreign investors largely shun the impoverished Southeast Asian country.
Aquino said the SWAT team's slow-motion attempts to storm the bus, broadcast live around the world by TV networks, had left him exasperated and should never have happened.
Maoist guerrillas, who have been fighting an insurgency for more than 40 years, killed eight police officers and a village official on Saturday, and a soldier on Sunday.
The government is also trying to negotiate a peace deal with Muslim separatists to end another long-running insurgency.
On Monday morning, hours before the bus hijacking, a South Korean was shot dead in Manila and two of his companions seized. They were later released.
On Thursday, four people were shot dead on southern Mindanao island after armed men posing as police ambushed a bus.
Consultancy Pacific Strategies and Assessments said it had recorded 138 kidnappings in the Philippines in 2009.
