The slain village official, Rolando Cabaitan, ranked 17th in the police order of battle and faced a string of criminal cases.
Two policemen, SPO4s Ulysses Teves and Dionisio Famat, were also killed in the exchange of gunfire.
Cabaitan triggered the shootout when he fired at elements of the 911th Police Mobile Group and Criminal Investigation and Detection Group who had closed in on his house in Barangay Tabid here.
After several minutes of firefight, the wounded Cabaitan grabbed his mother-in-law and a child and held them hostage while he sought cover in a comfort room.
It was at this instance when Teves and Famat were fatally shot by unknown men believed to be Cabaitans cohorts.
Cabaitan died before reaching a hospital here.
His alleged cohort, a certain Aylon Parojinog, another suspect in the PCIB robbery, was able to flee at the height of the firefight.
But he was later arrested by Mayor Reynaldo Parojinog, assisted by the police and the Media Practitioners Society, led by its president, Expedita Roxas.
The mayors father founded the notorious Kuratong Baleleng to help the military fight communist rebels. The groups membership eventually grew, and the recruits later got involved in criminal activities.
In an earlier interview, the mayor said he and his brother Renato, who died in an ambush in Manila some two years ago, had pledged to rid this city and Misamis Occidental of criminality when they entered politics.