It was Pacquiao's first victory inside the distance since 2009 and improves the eight-division world champion's record to 60-7-2.
"I hope all Filipinos will watch the fight", said the 39-year-old Pacquiao on the eve of his WBA welterweight title fight against champion Lucas Matthysse, a fringe boxer known for his strong punches and propensity to fight moving forward.
When a right-left combination thudded home to send Matthysse crashing down for a third time in the seventh round referee Kenny Bayless stepped in to save him from further punishment.
Pacquiao had hinted strongly that the Kuala Lumpur duel could be his last if he failed to fire as he did last time out against Horn.
He has lost two of his previous four fights, including a shocking unanimous decision defeat past year at the hands of Australian Jeff Horn, who didn't hesitate to use his height and heft to rough Pacquiao up.
"Not because he can not win or lose, but I'd like to see my friend rest on his laurels at this time and enjoy life".
"Let's see after this fight if Manny Pacquiao can still continue to fight or just focus as a public servant", said Pacquiao, who is on his first term as senator. First I would like to rest and go back home. We were not pushing hard, we controlled our pace and ourselves. Thanks to all the Filipino people.
Duterte, in a statement, congratulated Pacquiao for uniting and giving the Filipino people pride in the boxing arena.
"We have a good president", Pacquiao said amid "Duterte" chants from his supporters who joined him on the boxing ring, including Bureau of Corrections chief Ronald Dela Rosa. I lost, but I walk away with my head raised.
On a great morning in Malaysia for fighters for the Philippines, Jhack Tepora earlier stopped Mexico's Edivaldo Ortega to win the interim World Boxing Association featherweight title.