The gang extorted money from foreigners by threatening to upload videos of them performing sexual acts, Gilbert Sosa, head of the police anti-cyber crime group, said.
"Today, we smashed a gang led by a woman who used children to lure foreigners to engage in sexual activities and later blackmail them on threats their sex videos will be uploaded on the internet," Sosa said.
Police found also five minors during the raids in two towns in Bulacan, north of the capital, Manila. The children said they were paid about 70,000 pesos ($1,600) for three days' work, chatting with foreigners and luring them to perform sexual acts.
Sosa said police had received dozens of complaints from Hong Kong and Singapore, including the IP addresses and other information about the extortion ring.
Earlier this year, a 17-year-old Irish national killed himself after falling prey to the gang's activities, police said.