Senior Superintendent Cleve Taboso said the gang snatched Rolando del Torchio, 56, in the sleepy city of Dipolog on Wednesday, in a swift raid that shocked the dinnertime crowd at his pizzeria.
Taboso, who is spokesman for the team trying to recover del Torchio, said they had identified the gang's boss, known as "Commander Red Eye", and four of his relatives based on closed-circuit TV footage of the abduction.
The policeman said he did not believe the gang had taken him to the extremist stronghold of Jolo island where any rescue would be more difficult.
The footage shows armed men shoving their captive as well as several restaurant patrons out of the pizzeria's door as they flee the scene.
He said Red Eye had been arrested for another abduction in 2014 but managed to post bail.
The group is still believed to be in the southern peninsula of Zamboanga despite earlier fears they had fled to Jolo island, the stronghold of the Muslim extremists Abu Sayyaf, who are blamed for the worst terror attacks in the Philippines, Taboso added.
Many smaller kidnapping groups have often taken their hostages to the thickly-forested island of Jolo, located about 400km from Dipolog, to hand them over to the Abu Sayyaf who ransom them off for huge sums.