DAVAO (AFP, REUTERS) - Philippine dictator Ferdinand Marcos will finally be allowed a hero's burial, the nation's controversial incoming president said Monday (May 23), in what would be a huge win for the late strongman's family as it pursues a return to power.

Rodrigo Duterte also said he would pardon ex-president Gloria Arroyo, who is being detained at a military hospital while on trial for graft and vote fraud.

The announcements by Duterte, who takes office on June 30, are sure to enrage critics who warned ahead of his landslide election win on May 9 that he was a dictator in the making with no regard for the rule of law.

Speaking in his hometown of Davao, Duterte said he was prepared to risk nationwide unrest on the flashpoint issues surrounding two of the nation's most controversial figures.

"I will allow protests," Duterte said when asked about the expected reaction.

Duterte said he would grant the long-standing wish of the Marcos family to have the patriarch buried at a Manila cemetery for some of the nation's most revered war heroes.

"I will allow the burial of Marcos in the Heroes' Cemetery, not because he was a hero but because he was a Filipino soldier," Duterte told reporters.

Marcos and his family fled to US exile in 1986 after millions took to the streets in a famous "People Power" revolution.

Marcos, who was accused of overseeing massive widespread human rights abuses and plundering US$10 billion (S$13.8 billion) from state coffers, died three years later in exile in Hawaii.

His embalmed body is now stored in a crypt at the family home in the northern Philippines.

The government has recovered less than US$5 billion in cash, stocks, real estate, artworks and jewellery from the Marcoses and their cronies.

Marcos's son and namesake has led a remarkable political comeback for the family, rising to become a senator in 2010 and running for the vice presidency in the latest elections.

Marcos' son and namesake ran for vice president in the May 9 election and was trailing by 200,000 to 300,000 votes in an unofficial vote count to administration candidate Leni Robredo, a congresswoman from the central Philippines.

However, at 58, he is still young enough to achieve his goal of becoming president.

The Marcos clan has insisted the late ruler deserves to be buried at the cemetery, arguing he was a World War II hero for resisting the Japanese occupiers.

However American and local historians have disputed his military credentials.

Duterte said allowing Marcos to be buried at the cemetery did not necessarily make him a hero, pointing out other soldiers without gloried reputations were also there.

But current President Benigno Aquino, whose parents led the democracy movement against Marcos, did not allow the burial, arguing it would be the "height of injustice".

Earl Parreno, analyst at the Institute of Political and Electoral Reforms, said Duterte's decision would be divisive.

"It's a wrong move to spend political capital this early when he should be consolidating support," he told Reuters, adding the decision could fuel protests.

Duterte could also anger Filipinos if he frees former president Gloria Arroyo, who has been under detention in hospital for five years on corruption charges.

"She should also be released," Duterte has said, noting the former leader's co-accused had been out on bail.

Arroyo, president from 2001 to 2010, was re-elected for third and last time as member of the lower house of Congress.