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UPDATE 6-Puerto Rico governor swears in hand-picked successor; Senate leader outraged

outraged@ (Recasts with Pierluisi sworn in and Senate leader comment)

SAN JUAN, Aug 2 (Reuters) - Disgraced Puerto Rico Governor Ricardo Rosselló swore in the lawyer he hand-picked as his successor on Friday as he resigned after weeks of protests, while the U.S. territory's Senate leader blasted the succession choice as "unethical and illegal."

The governor's office said in a statement that lawyer Pedro Pierluisi, who advised the unpopular federal panel overseeing the island's bankruptcy, was sworn in as governor after Rosselló stepped down.

Hundreds of people, many waving the Puerto Rican flag, chanted and rang bells outside the governor's mansion in the historic center of San Juan, as they awaited the governor's resignation. Protesters had filled the same street for 12 nights demanding his exit.

Although Puerto Rico's House of Representatives earlier on Friday voted to approve Pierluisi as secretary of state, an appointment which would make him next in line as governor, the island's Senate has yet to vote.

And until an appointment was confirmed by both chambers, Senate President Thomas Rivera Schatz and other senators had said the next in line for governor, under law, was Justice Secretary Wanda Vázquez

"He did not respect the wishes of the people. In fact, he mocked them using new accomplices," Schatz said in a tweet after Rosselló announced that he planned to swear in Pierluisi. "The disrespect, the lying the unethical and illegal behavior went viral."

Puerto Rican constitutional expert Julio Fontanet said the territory's law clearly stated the justice secretary should be next in line for governor under current circumstances.

"This is a grossly irresponsible act," Fontanet said in a television interview. "This constitutes a completely unnecessary constitutional crisis, the fruit of the irresponsibility and immaturity of Ricardo Rosselló."

Anger has been building for years in Puerto Rico over a series of crises including the island's bankruptcy filing, ineffective recovery efforts after a 2017 hurricane killed more than 3,000 people and corruption scandals linked to governors.

The House voted 26 in favor of Pierluisi's nomination and 21 against, with one abstention. Schatz had delayed a Senate vote until next Wednesday.

Protesters and ruling party leaders including Schatz have rejected Pierluisi as the islands next governor, saying his work as an attorney for the fiscal control board created conflicts of interest.

José Julián Alvarez, constitutional law professor at the University of Puerto Rico Law School, said Pierluisi's nomination as secretary of state must be confirmed by both Puerto Rico's House and Senate before he could become governor.

Federal officials and investors are keenly watching the island's uncertain political transition. Puerto Rico has $42.5 billion in federal disaster funding allocated to it, and its bankruptcy is the biggest ever in the U.S. municipal bond market. (Reporting by Luis Valentin Ortiz in San Juan additional reporting by Karen Pierog in Chicago writing by Andrew Hay; editing by Scott Malone and Leslie Adler)