Arroyo's political opponents have criticized the court ruling, claiming it could be part of plans to keep her in power beyond the end of her term on June 30 or to ensure she maintains a lot of political influence.
Legal experts said the chief justice could be influential after the May 10 elections if the court has to make rulings in the event of problems with automated voting systems, which are being used for the first time, or if there is no clear winner.
"The chief justice will decide if there is a need to convene the Supreme Court en banc to tackle such issues," Marvic Leonen, dean of the College of Law at the University of the Philippines, said, noting the chief justice was also head of the presidential election tribunal.
An economist at a local brokerage, who did not want to be identified, said markets were watching developments because of concerns about the risk of an election failure.
"It's a concern," said the economist. "Any development that points to a grand scheme of extending the political power of the president could lead to instability and political uncertainty." In January 2001, the court legitimized Arroyo's takeover from President Joseph Estrada, who was forced out of office.
The current chief justice is due to retire on May 17, one week after the presidential elections are held. Arroyo is not eligible to stand for president again, but is running for a seat in the lower house of Congress that she is expected to win.
"Mrs. Arroyo has not expressed any desire to remain in office beyond her term," presidential spokesman Gary Olivar told reporters when asked whether the court ruling could be part of a plan to extend her term beyond June 30.
"Definitely not," Olivar said.
There is a law banning political appointments during an election period, but the judges ruled that law covered executive and not judicial positions.
"I think the Supreme Court misread the constitutional provision and twisted its rationale to provide justification," opposition lawmaker Aquilino Pimentel said in a statement, describing it as "a big blow against the rule of law.”
The protesters, mostly in black shirts and carrying placards and banners calling for the defense of judicial independence, were blocked outside the Supreme Court by barricades and anti-riot police.
They burned effigies of the president and the justices.
Protest leaders promised more rallies to maintain the pressure on the 15-member high tribunal to reverse its ruling.
Silvestre Bello, a former cabinet secretary for Arroyo and a Senate candidate in the elections, said the issue could be put to rest if the president left the appointment to her successor.
