"We tried to be friends with everybody but we have to maintain our jurisdiction now, at least the areas under our control. And I have ordered the armed forces to occupy all these," he said during a visit to a military camp on the Philippines island of Palawan.
Duterte said he may raise the Philippines flag on Pagasa Island, also known as Thitu Island, on the country's independence day on June 12.
Thitu is in the Spratly island chain, parts of which are claimed by the Philippines, China, Taiwan, Malaysia, Brunei and Vietnam.
The Philippines has traditionally been a forceful claimant in the territorial disputes in the South China Sea.
Under Duterte's predecessor, Benigno Aquino, Manila won a landmark case at an international tribunal in the Hague
, which ruled China had no legal basis for the bulk of its claims in the waters.
Duterte's administration has been cozying up to Beijing since his election last year, and territorial disputes have been pushed to the background
In a visit to the Chinese capital in October, Duterte said to Chinese President Xi Jinping
that "America has lost now. I've realigned myself in your ideological flow."
Following his visit, Beijing agreed to allow Philippines fishing ships access to China-controlled territory.
"By cozying up to China and trash-talking America, Duterte has achieved something that Washington couldn't deliver: a peaceful resolution to the Scarborough Shoal standoff," Ashley Townsend, a regional expert at the University of Sydney, wrote for CNN Opinion at the time
Duterte's latest comments seem to mark a departure from his previous policy, and suggests a desire to pursue the type of militarization Beijing has been accused of bringing to the region.
"Even those, those vacant (islands) that are considered ours, let's live there," Duterte said.
"It's like we're all competing to take these islands. And what's ours now at least, let's take it and make a strong point there that this is ours."
He said the Philippines should "fortify" its territory: "(We) must build bunkers or houses there and make provisions for habitation."
Duterte has a history of making wild claims
he does not necessarily follow up on. In December, he had to walk back a story he told about throwing someone out of a helicopter
While relations between Manila and Beijing may have improved, tensions in the South China Sea -- which is both resource rich and a crucial shipping route
-- have remained high.
China has continued militarizing and building up the territories it controls
, reclaiming land to turn sandbars into islands, and equipping them with airfields, ports and weapons systems.
US Secretary of State Rex Tillerson has taken a firm line on Beijing's expansionism, saying in his confirmation that the Trump administration would "send China a clear signal."
"Building islands and then putting military assets on those islands is akin to Russia's taking of Crimea. Its taking of territory that others lay claim to," Tillerson said.
During a visit to Beijing however, Tillerson's tone was considerably softer
, and he echoed Chinese language on the need to "expand cooperative areas and achieve win-win results."
Trump meets with Xi Thursday at his Mar-a-Lago estate in Florida, though it is unclear whether the South China Sea issue will come up