The typhoon, locally named Tino, has weakened since making landfall early on Tuesday, but has continued to bring winds of more than 80mph (130km/h).
It is forecast to move across the Visayas islands region and out over the South China Sea by Wednesday.
"The situation in Cebu is really unprecedented," provincial governor Pamela Baricuatro said in a Facebook post.
"We were expecting the winds to be the dangerous part, but... the water is what's truly putting our people at risk," she said.
"The floodwaters are just devastating."
Don del Rosario, 28, was among those in Cebu City who sought refuge on an upper floor as the storm raged.
"I've been here for 28 years, and this is by far the worst we've experienced," he told the AFP news agency.
In a statement, the PAF said a rescue helicopter went down near Agusan del Sur on Mindanao island.
"Communication with the helicopter was lost, which immediately prompted the launch of a search and rescue operation," it said, adding that further details will be released "as they become verified".
In total, almost 400,000 people were moved from the typhoon's path, Rafaelito Alejandro, deputy administrator at the Office of Civil Defence, told a news conference.