The last quarter of 2000 up to the first week of January 2001 was a period of political and economic uncertainty for the Philippines. On January 16, 2001, the impeachment trial has also taken a new direction. Private prosecutors walked out of the trial when pro-Estrada senators prevented the opening of an evidence (a brown envelope) containing bank records allegedly owned by President Estrada. With the walk out, the impeachment trial was not completed and the Filipinos eventually took to the street to continue the clamor for President Estrada's resignation.
From January 17 to 20, 2001, hundreds of thousands of Filipinos gathered at Epifanio de los Santos Avenue (EDSA), the site of the original People Power Revolution. The clamor for a change in the presidency gained momentum as various sectors of Philippine society – professionals, students, artists, politicians, leftist and rightist groups – joined what became known as EDSA II. Officials of the administration, the Armed Forces of the Philippines (AFP), and the Philippine National Police (PNP) also withdrew their support for President Estrada.
Days after leaving Malacañang Palace, President Estrada's lawyers questioned the legitimacy of Arroyo's presidency before the Supreme Court. He reiterated that he did not resign as president and that at most, Arroyo was just serving in an acting capacity. The high court, however, voted unanimously in upholding the legitimacy of Arroyo's succession. As a consequence, Estrada no longer enjoys immunity from charges being filed against him.
In the last week of April 2001, the Sandiganbayan ordered the arrest of Estrada and his son, Senator Jinggoy Estrada, for plunder charges. A few days later, Estrada supporters protested his arrest, gathered at the EDSA Shrine, and staged what they called, EDSA III – comparing their actions to the People Power revolution of 1986 and January 2001.
Thousands of protesters demanded the release of Estrada. Eventually, they also called for the ouster of Arroyo and the reinstatement of the former. On May 1, 2001, they marched towards Malacañang to force Arroyo to give in to their demands. Violence erupted when the protesters attempted to storm the presidential palace and the military and police were forced to use their arms to drive them back. Arroyo declared a state of rebellion because of the violence and prominent political personalities affiliated with Estrada were charged and arrested. The so-called EDSA III was the first serious political challenge to the Arroyo presidency.