Duterte considers martial law across Philippines 02:28
Sporadic gunfire erupted throughout the day as helicopters flew over the city, a witness told CNN.
Families last week packed belongings into cars and sat in long lines of traffic as they sought to escape the ISIS-backed fighters, residents told CNN at the time.
Reports suggested the Maute fighters were defending Isnilon Hapilon, a longstanding terrorist leader designated by ISIS as the group's emir for Southeast Asia, after he was cornered by Philippines police and military forces.
More than 80 militants had been killed since fighting began, while 17 soldiers and three police officers had died, Armed Forces of the Philippines spokesman Joar Herrara told CNN.
Duterte declared martial law over the island of Mindanao last week after the crisis began.
"If this martial law lasts and you want to help us fight for the republic, ... I will use you as soldiers, with the same pay, privileges, and I will build houses for you," Duterte said in a message to the Moro Islamic Liberation Front and the Moro National Liberation Front.
Militants had executed more than a dozen people, and numerous others had been taken hostage, the Department of National Defense said.
The surviving hostages said they had seen one of their companions beheaded in front of them and were warned they would meet the same fate if the government did not meet the group's demands.
Duterte has suggested he might extend martial law until the end of the year or impose it nationwide, a possibility that has alarmed critics of the government and survivors of the dictatorship of President Ferdinand Marcos.
The resolution said the Maute group had committed acts which constitute "the crime of rebellion" and added that imposing martial law on the region was "satisfactory, constitutional and in accordance with the law."
CNN's Yuli Yang contributed reporting.