President Gloria Arroyo said she would not declare a state of emergency where and Philippine troops are to hold wargames in southern Philippines.

"We have the upper hand. We are going to have American technology," said Arroyo, adding, "This is the last mile for the Abu Sayyaf group. From thousands, there are hundreds of them now. From 40 hostages, they have only three," said Arroyo.

Armed Forces of the Phili-ppines spokesman Brig. Gen. Edilberto Adan said there was no truth to reports that the military had called for the declaration of a state of emergency in Mindanao to neutralise the Abu Sayyaf militant group.

"We don't think the situation is worsening. The Abu Sayyaf has suffered numerous casualties. Several hundred firearms have been recovered from them," Adan said.

Arroyo had declared a state of emergency in Metro Manila when followers of former president Joseph Estrada attempted to attack the presidential palace on May 1, following Estrada's arrest for plunder.

The president also said she was sure the Supreme Court would declare the holding of the war games as constitutional. "We are doing the right thing. The Supreme Court is on record for upholding the right thing," said Arroyo.

The Supreme Court (SC) meanwhile refused to issue a temporary restraining order (TRO) against the ongoing Philippine-U.S. war games in Zamboanga and Basilan.

Instead, the high tribunal asked Defence Secretary Angelo Reyes and Executive Secretary Alberto Romulo to respond to the petition of lawyers Arthur Lim and Paulino Ersando that the wargames should be stopped and declared unconstitutional.

Allowing foreign troops to join combat patrols against the Abu Sayyaf Group in Basilan fall outside of the Visiting Forces Agreement (VFA, which was ratified in 1999) and the Mutual Defence Treaty (MDT) of 1951, the lawyers said.

The exercises will include a component called Freedom Eagle which allows U.S. troops to join Filipino soldiers in combat patrols in Basilan. The main body of the U.S. forces that will be taking part in the wargames is expected to arrive in Zamboanga City two weeks from now.

After a reconciliation with estranged Vice President and Foreign Secretary Teofisto Guingona, Arroyo has decided to sign the terms of reference (TOR) governing the Philippine-U.S. war games.

"To emphasise the fact that she is responsible for this, she might sign it," said presidential spokes-man Rigoberto Tiglao.

The presidential palace will soon release the final draft of the guidelines. The guidelines stated that U.S. troops would be allo-wed to join Philippine combat patrols in Basilan where the Abu Sayyaf Group is holding one Filipina nurse and two American missionaries hostage, sources said.

The document defines the role to be played by the 660 U.S. military personnel, of whom 160 Green Berets will be joining local troops to hunt down the Abu Sayyaf in Basilan.

Filipino soldiers were tasked to train American servicemen in 'culture sensitivity'. The U.S. soldiers are training Filipinos fighting the Abu Sayyaf Group, on high-tech weaponry.

"This will give our American friends a chance to know the sensitivities of our people, particularly those with whom they will be in contact," said Armed Forces southern command spokesman Lt. Col. Danilo Servando.

The Department of Social Welfare and Development (DSWD) and local Muslim religious leaders will conduct the culture sensitivity training, Servando said.

Side by side, Philippine and U.S. forces will implement the government's 'Gentlewind' programme, which includes medical, dental and community-based civic missions in Basilan island.