The gang had demanded a P20-million ransom for businessman Willie Chua before police raided their hideout, said Superintendent Napoleon Cuaton, Caloocan police investigation chief.
Police recovered from the slain gang members two caliber .38 revolvers, a caliber .45 automatic, a submachine gun and a hand grenade.
Caloocan police chief Senior Superintendent Leo Garra identified two of those killed as Ronnie Alcabal and Niño Canonizado.
The three others have not yet been identified, Garra said.
Cuaton said the five, believed to be members of the "Calvin Lagada Waray-Waray Gang," abducted Chua in front of his shop in Novaliches, Quezon City at 2:55 p.m. last Friday.
After the kidnapping, the gang fled with Chua in a silver L-300 van and a silver Toyota Corolla, toward Kaybiga in Caloocan, Cuaton said.
He said Caloocan police and the Police Anti-Crime Emergency Response (PACER) raided the gang’s hideout in Mary Homes Subdivision in Camarin after receiving a tip from suspicious neighbors.
The gang had been staying at a rented house on Sapphire street for the past eight days, he added, quoting neighbors.
Neighbors told police Alcabal rented the place from a certain Aling Adelia, caretaker of the house reportedly owned by a Filipino working in Dubai in the United Arab Emirates.
Alcabal supposedly intended to bring his wife and children to the house, neighbors added.
Adelia told police Alcabal introduced himself as Antonio Andaya and paid two months’ rent in advance before moving into the house.
She said she had no knowledge of Alcabal’s illegal activities, adding she was not part of the gang.
Deputy Director General Oscar Calderon, PACER chief, said the shootout took place at around 11:40 a.m. yesterday in front of a bungalow at Block 13, Lot 44, Mary Homes, Barangay Urduja in north Caloocan City.
The gang was responsible for a series of robberies in Manila and Angeles City, including one at a Caltex gas station in Paliparan, Dasmariñas, Cavite, an internet café in Angeles City, and a house in Sta. Ana, Manila, Calderon said.
Interior and Local Government Secretary Angelo Reyes, National Anti-Crime Task Force commander, and Philippine National Police chief Director General Arturo Lomibao went to the crime scene to assess the operation.
Chief Superintendent Raul Gonzales, Northern Police District director, said the suspects rented the house for P7,000 a month starting Oct. 2.
Residents in the area, however, noticed something unusual about their new neighbors prompting them to report the matter to the police, he added.
Police are trying to determine whether gang leader Calvin Lagada was one of those killed.
The PACER agents were led by Superintendents Ronald Oliver Lee and Allan Nobleza. — With reports from Cecille Suerte Felipe, Pete Laude