MANILA, Philippines -- While her presidency had been occasionally threatened by disgruntled military officers for the past eight years, President Macapagal-Arroyo opted, on Thursday, to honor the ``great Filipino soldiers'' for their feats on the battlefield and for their dedication to the "chain of command."

In her last appearance as Commander-in-Chief at the Armed Forces of the Philippines? 74th anniversary, Ms Arroyo said, ``On this anniversary, our anniversary, I thank the great Filipino soldier, once again for your professionalism, courage and dedication to duty and chain of command.''

Ms Arroyo is stepping down in June 2010 after a tumultuous nine-year stint marked by the July 2003 ``Oakwood mutiny," the February 2006 ``Marines stand-off'' and the November 2007 ``Peninsula Hotel takeover.''

In between, she had to deal with the July 2005 ``Hello Garci'' scandal that spawned charges of vote-rigging in the 2004 presidential vote that favored her, and that involved ranking military officials.

With the backing of the military and police top brass, led by handpicked officials, she managed to head these challenges off.

Ms Arroyo, clad in a light blue pantsuit, praised the officers and men for decimating the ranks of rebels and terrorists, but also for helping rescue calamity victims and restore normalcy in restive Maguindanao.

``During my administration, we have several important captures. The elimination of key figures of the Abu Sayyaf group and Jemaah Islamiya terrorists. You, the great Filipino soldier, have hit them hard,'' she said.

Quoting AFP Chief of Staff Victor Ibrado, she said that the strength of the Abu Sayyaf, a bandit group notorious for kidnapping foreigners and locals since a decade ago, ``has been significantly reduced.''

``But there is more to be done if we are to attain long-lasting peace,'' she added.

Likewise, the strength of the communist New People's Army has been ``declining'' since 2006 because of the soldiers' employment of ``hard and soft power strategy,'' Ms Arroyo said.

``Indeed they go together, peace and development go together,'' she said.

Then she added: ``But also witness that nationally, there is no question about the crucial role that AFP has played in keeping the peace that has brought us an unprecedented growth for 34 quarters.''

Ms Arroyo likewise commended the soldiers who helped rescue calamity victims and rehabilitate their homes in the aftermath of storm ``Ondoy'' and typhoon ``Pepeng," and secure residents around the restive Mayon Volcano in Albay.

``Their participation... showed our people the meaning of courage and sacrifice outside the battle field,'' she said. ``Thank you from a grateful nation.''

Ms Arroyo said she was proud to have presided not only over the modernization of the Armed Forces, but the ``modernization of benefits'' of the officers and men in the past years.

The government approved a key legislation making the soldiers' pay equivalent to that of the teachers. And with economic gains and fiscal reforms in place, soldiers have had ``three more increases in basic pay and subsistence allowance,'' she said.

On top of these were expanded housing programs, and other benefits such as scholarships for soldiers' children, and retirement benefits, she added.

``I'm even more proud that we have started to modernize and continue to modernize the benefits for the great Filipino soldier,'' she said. ``We don't thank you by mere words.''

To prepare for the challenges ahead, Ms Arroyo pressed the military to go ahead with its modernization program.

``I'm happy to spend the eve of Christmas with you. You gave a wonderful Christmas to our country,'' she said.