The self-described assassin told a Senate hearing that he and a group of policemen and ex-communist rebels killed about 1,000 people over 25 years on Duterte's orders - one of them fed alive to a crocodile.
Many of the others were garroted, burned, quartered and then buried at a quarry owned by a police officer who was a member of the death squad. Others were dumped at sea to be eaten by fish.
The then head of the Commission on Human Rights, Senator Leila de Lima, told the inquiry Matobato had surrendered to the investigatory body in 2009 and had until recently been in a witness protection scheme.
Duterte's spokesman said the allegations had already been investigated without charges being filed while his son, Paolo Duterte, called the testimony "mere hearsay" of "a madman".
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Matobato said that in 1993, he and other members of the death squad were on a mission when they approached a road blocked by the vehicle of an agent from the justice department's National Bureau of Investigation.
"Mayor Duterte was the one who finished him off. Jamisola (the justice department official) was still alive when he (Duterte) arrived. He emptied two Uzi magazines on him."
His testimony fleshed out in gruesome detail for the first time long-running allegations Duterte was behind a death squad that killed more than a thousand people in Davao, where he was mayor for most of the past two decades.
"Our job was to kill criminals, rapists, pushers, and snatchers. That's what we did. We killed people almost on a daily basis," said Matobato.
Duterte's spokesman, Martin Andanar, said he doubted that the then mayor could have ordered the killing of 1,000 people.
"I don't think he's capable of giving a directive like that. The Commission on Human Rights already investigated this a long time ago and no charges were filed," he said.
Another spokesman, Ernesto Abella, said the allegations needed to be properly scrutinised.
"Whatever testimonies, statements that the chairperson (of the Senate committee) are saying, we will have to have a proper investigation regarding that.