Police said the hour-long firefight began when the suspects lobbed a grenade at the police raiders, killing PO1 Joselito Esguerra and wounding four other lawmen.
Central Luzon police director Chief Superintendent Vidal Querol said four alleged gang members, including their leader Roberto Yap, were killed in the firefight. The arrested suspects, one identified only as "Aling" Abad and another as Vida Nicdao, were taken in by the police for questioning.
The raiding lawmen who were wounded in the firefight were identified as Angeles City police chief Senior Superintendent Jimmy Restua, who sustained 79 shrapnel wounds, and POs2 Juan Carlos Bustos, Emmet Nunag and Florentino de la Cruz.
President Arroyo announced the clash in a nationally televised address to advertising executives in Baguio City.
Police on Tuesday found the body of Sy, 32, wrapped in a blanket and stuffed in a garbage bag near the sea front in Parañaque City, a day after she was seized by unidentified armed men in Quezon City.
Mrs. Arroyo said police traced the whereabouts of the suspects in the Sy kidnapping after the supposed getaway driver of the group, Romeo Vallano, surrendered to police late Tuesday.
Vallano led lawmen at their supposed hideout in Trece Martires City in Cavite which led to the arrest of three other suspects.Querol, however, said they are still investigating if Yap and his group were involved in the kidnap-slaying of Sy.
Initial reports also could not confirm if the group was behind the abduction and killing of Sy but the police operation in Bataan yesterday was carried out in close-coordination with the Police Anti-Crime Emergency Response (Pacer) and the National Anti-Kidnapping Task Force of former defense secretary Angelo Reyes.
Reyes arrived at the scene and visited the wounded police officers at the James L. Gordon Memorial Hospital in Olongapo City.
Reyes also vowed to look into the possible involvement of Yaps group in the abduction and killing of Sy.
He said a background check on Yap revealed he was a physician and a former sugar trader.
Philippine National Police (PNP) police-community relations chief Director Ricardo de Leon said the neutralization of the kidnapping syndicate reduced to five the number of kidnapping gangs in the country.
De Leon said the group was responsible for the abduction of Gonzalo Go last Aug. 12 in Tondo, Manila; Baby Ongson last May 17 along Taft Avenue in Pasay City; Evaristo Go last April 18 in Pasig City, and Pilar Pilagio last Nov. 5 in Angeles City.
Querol, for his part, added the group has been under surveillance after they were identified as those behind the kidnapping of a pawnshop cashier in Angeles City recently.
He said a combined police raiding team was formed from the Angeles City and Olongapo City police forces to effect the arrest of the suspects.
The raiding policemen led by Restua said the suspects were about to board their vehicles in front of their suspected hideout in Barangay Bangkal near the national highway when the firefight ensued.
"They had powerful firearms, including M-16, M-79, and M-203. I think we were hit by shrapnel from an M-79," he said while being treated for his wounds at a hospital in Olongapo City.
Restua said they were about to serve the warrants of arrest against Yap and his group when the firefight occurred.
Olongapo City police director Senior Superintendent Orlando Madela described Yaps group as the most notorious kidnap-for-ransom group operating nationwide. "Its the group that Teresita Ang-See (of the Citizens Action Against Crime) wants pinned down for its involvement in the kidnapping of Filipino-Chinese in Metro Manila," Madela said.
Bataan police director Senior Superintendent Sajiron Salem also described the Yap group as "the most notorious."
Salem said Yap and his group immediately attacked Restuas team with automatic gunfire and grenades as they positioned themselves behind their vehicle in front of the apartment.
He said Yap and another suspect were killed after the car in front of them exploded when its fuel tank was hit by gunfire from the raiding lawmen. The explosion almost overturned the car. With reports from Bebot Sison Jr., Marichu Villanueva, Ric Sapnu, Christina Mendez, Nikko Dizon, Cecille Suerte Felipe, Evelyn Macairan, Ann Corvera, AP, AFP