The explosive, fashioned from a live mortar round rigged with an improvised, time-delayed blasting device, exploded at the door of a drug store in the market, said Chief Inspector Oscar Nantes, the municipal police chief.
"It triggered panic and escalated the tension in the whole town," Nantes said.
Mayor Vivencio Bataga said he was "very sure" that his political rivals were behind the blast.
"They really want to derail my administration and eliminate me before next years elections," he said.
Regional police director Acmad Omar also said the latest bombing was "politically motivated" but he would give no details.
Bataga survived a third attempt on his life last Sunday when a bomb went off in the premises of Our Lady of Mt. Carmel Church where he and his wife were on their way to attend Mass.
The bomb, fashioned from an 81-mm. mortar round, was planted along a path leading to the main door of the church. One of Batagas security escorts, a certain Nonong Obas, was wounded.
Since the blast, tension has gripped this town, aggravated by text messages threatening further attacks.
Bataga, along with four of his bodyguards, was wounded in a bomb explosion at the pubic transport terminal here last April 5 while he was overseeing the demolition of illegal vending stalls. Six innocent bystanders were also wounded.
Last Sept. 4, a B-40 anti-tank rocket nearly struck Batagas service vehicle while he was on his way home from the municipal hall. The rocket went off on a sidewalk, wounding two women.
Bataga, a former Army colonel, is known to be an iron-fisted leader due to his non-nonsense efforts against illegal loggers and drug dealers. He is also a vocal critic of Moro separatist guerrillas operating in his jurisdiction.
But a spokesman for the Moro Islamic Liberation Front denied they were involved in the attacks, noting that they had agreed to a ceasefire with the government. With AFP report