The Abu Sayyaf later reportedly demanded a two-million-peso ($42,000) ransom, which his relatives refused to pay.
"We shall make them pay for the enormity of this savagery"
Philippine presidential spokesman
The Abu Sayyaf is listed as a terrorist group by the Philippine and US governments, both of whom suspect it has ties to al-Qaeda.
It is thought to have about 400 fighters based on Jolo and nearby Basilan Island.
The group has become notorious for a string of kidnappings for ransom, beheadings, and deadly bomb attacks, including the 2004 bombing of a ferry in Manila Bay which killed 100 people.
Recent months have seen the Abu Sayyaf step up its attacks, despite an intense campaign against them by the Philippines military supported by advisors from the US.
Following the discovery of Canizares' severed head on Monday, Gloria Macapagal Arroyo, the Philippines president, ordered the military and police to put an end to the Abu Sayyaf's "heinous and inhumane atrocities".
"We shall make them pay for the enormity of this savagery," her spokeswoman Lorelei Fajardo said.