It was the fourth such blast to hit buses on the island of Mindanao since last month. The earlier attacks injured several passengers.
Military and police have linked these attacks to the extremist Abu Sayyaf secessionist group or to a Muslim separatist group. But no one has yet claimed responsibility for Tuesday's blast.
The bombing prompted the military to inspect all buses at checkpoints along the two national highways in the western half of Mindanao. The military has also instructed police to establish security measures at the region's 300 bus terminals, Lt. Gen. Edgardo Espinosa said.
The bus was parked outside a row of eateries in Dipolog City, about 16 miles east of Zamboanga, when the bomb exploded in the middle of the vehicle, police officer Virgilo Fuentevilla said.
A 30-year-old mother was found dead on the bus, while her husband, 36, 6-year-old daughter and 2-year-old son died at a hospital, Fuentevilla added.
At least 29 additional passengers who had been resting on the bus, along with three street vendors, were treated at hospitals. Some were in critical condition. The rest of the approximately 60 passengers had left the bus before the explosion, Fuentevilla said.
The lunchtime blast also injured several passengers on another bus parked beside the first.
Police were investigating the type of explosives used. They suspected that a timing device similar to those employed in the other recent bombings, was used.