The city of Marawi, home to some 200,000 people, has been under siege by IS-linked militants since a government raid Tuesday night on a suspected hideout of Isnilon Hapilon, who is on Washington's list of most-wanted terrorists.
The raid went awry and gunmen swept through the streets, fending off government forces and taking over large parts of the city. Duterte imposed martial law on the southern third of the nation earlier this week as the battles continued.
Duterte told soldiers in Iligan, a city near Marawi, that he had long feared that "contamination by ISIS" loomed in the country's future, using the acronym for the Islamic State group. "You can say that ISIS is here already," he said.
He gave his troops a free hand to wrest control of Marawi.
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"You can arrest any person, search any house without warrant," said Duterte, who has allowed extrajudicial killings of thousands of people in his crackdown on illegal drugs.
"We can still talk about it," Duterte said. "But those who are out-and-out terrorists, and you cannot be convinced to stop fighting, so be it. Let us fight."
Hapilon is still hiding out in the city under the protection of gunmen who are desperately trying to find a way to "extricate" him, the country's military chief said.
"Right now, he is still inside (the city)," Gen Eduardo Ano told The Associated Press. "We cannot just pinpoint the particular spot."
He said Hapilon suffered a stroke after a government airstrike wounded him in January.
"We will make this their cemetery," he said. "We have to finish this."
In a sign that the long-standing problem of militancy in the south could be expanding, Solicitor General Jose Calida said foreigners were fighting alongside the gunmen in Marawi, including Indonesians and Malaysians.
Ano also said foreign fighters were believed to be inside, but he was more cautious. "We suspect that but we're still validating," he said.
With much of Marawi a no-go zone, confusion reigned. One local police chief told the AP on Friday that he was fine - two days after Duterte announced he had been beheaded by militants.
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