The Philippines government said foreign fighters (including Malaysians and Indonesians) have joined an Islamic State-linked militant group occupying a southern Philippine city.
The authorities said two civilians were also killed inside a hospital that the gunmen had occupied on Tuesday.The military was investigating reports that nine people had been murdered at a checkpoint the militants had set up. The militants responded to the raid by storming the city, burning down buildings, including a university and Catholic churches, and taking hostages, including a priest.
Manila has deployed Special Forces, armored vehicle battalions and attack choppers following Duterte's declaration of martial law earlier in the week.
He said: "The government in the Philippines is acknowledging perhaps for the first time that foreign jihadists have been involved in this because some of those killed are including fighters from Indonesia and Malaysia".
The Philippine army has been trying to flush out rebels of the Islamic State-linked Maute group from the island. "And if you can not be convinced to stop fighting, so be it. Let's just fight".
"We're confronting maybe 30 to 40 remaining from the local terrorist group", said First Infantry Regiment spokesman Jo-Ar Herrera.
After receiving intelligence reports that Hapilon was hiding in Marawi city, security forces went to arrest him on Tuesday but were taken by surprise when they met massive resistance from Maute gunmen protecting him.
"Right now, he is still inside (the city)", General Eduardo Ano said.
"I'll imprison you myself", he said, referring to any soldiers who commit violations, then he joked: "If you had raped three, I will admit it, that's on me".
He said government launched air strikes to stop the terrorist rampage, which could have led to a high death toll.
The fighting erupted after a raid on the alleged hideout of Isnilon Hapilon, a head of Abu Sayyaf, another rebel group on Mindanao. In 2005, the US Treasury Department seized Hapilon's assets for suspected terrorist activities and association with Al Qaeda and Osama bin Laden.
Much of Marawi remains a no-go zone, but disturbing details have emerged.
While up to 90 percent of Marawi's people have fled amid the fighting, many who were trapped or refused to leave their homes have impeded military assaults, officials said.
"Before it is just a local terrorist group, but now there is an ideology; they have subscribed to the ideology of the ISIS and they have pledged allegiance to flag of ISIS".
The United States listed one of the world's most risky terrorists and has offered a bounty of US$5 million (S$6.9 million) for his capture. The black flags of the IS group were planted atop buildings and flown from commandeered vehicles, including a government ambulance and an armoured auto, said Mr Mamintal Alonto Adiong Jr, vice governor of Lanao del Sur province, of which Marawi is the capital.
The southern Philippine region has always been a hotbed of fundamentalist activity, including terror groups like Abu Sayyaf.
Duterte's use of martial law has raised concerns among human rights groups, who have accused him of ordering security forces to kill thousands of people as part of his crackdown on illicit drugs.
Armed fighters working with criminals and corrupt politicians is common across Mindanao, where a Muslim separatist rebellion has claimed more than 120,000 lives since the 1970s.