In the Philippine jurisdiction, the taxation of real property is governed primarily by the 1987 Constitution and Republic Act No. 7160, otherwise known as the Local Government Code (LGC) of 1991. The question of whether a memorial park or cemetery is exempt from Real Property Tax (RPT) hinges on its legal classification, its ownership, and the nature of its operations.
I. The Constitutional Foundation
The bedrock of tax exemption for burial grounds is found in Article VI, Section 28(3) of the 1987 Philippine Constitution, which states:
"Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation."
This constitutional provision establishes a "self-executing" exemption, but it is specifically qualified by the term "non-profit."
II. Statutory Implementation: The Local Government Code
The LGC mirrors this constitutional mandate. Under Section 234(b), the following are exempted from payment of the real property tax:
"Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit or religious cemeteries and all lands, buildings and improvements actually, directly, and exclusively used for religious, charitable or educational purposes."
The "Actual, Direct, and Exclusive" (ADE) Rule
For any real property to claim exemption, it must satisfy the ADE Rule. This means the property must be used for the exempt purpose. In the context of cemeteries, the land must be dedicated to the burial of the dead. However, for cemeteries, the LGC adds a secondary layer of qualification: the entity must be non-profit or religious.
III. Commercial vs. Non-Profit Memorial Parks
The distinction between a "Commercial Memorial Park" and a "Non-Profit Cemetery" is the most critical factor in determining tax liability.
1. Commercial Memorial Parks
Commercial memorial parks are typically owned by for-profit corporations. Because these entities are organized for profit and distribute dividends to stockholders, they do not fall under the "non-profit" category mentioned in the Constitution or the LGC.
- Taxability: Lands held by commercial developers for sale as memorial lots are generally subject to RPT.
- Inventory Status: Even if the land is intended for future burials, as long as it is part of the inventory of a for-profit enterprise, it remains taxable.
2. Non-Profit and Religious Cemeteries
These are typically owned by the government (municipal cemeteries) or religious denominations (parish cemeteries).
- Scope of Exemption: The exemption covers the burial ground itself. However, if a portion of the cemetery is used for a commercial purpose—such as a leased flower shop, a commercial crematorium, or a cafeteria—that specific portion may lose its exempt status under the "exclusive use" doctrine.
IV. Jurisprudential Interpretations and Doctrine
Philippine jurisprudence, including rulings by the Supreme Court and the Central Board of Assessment Appeals (CBAA), has consistently held that the tax exemption for "cemeteries" is not absolute.
The Profit Motive Test
If a cemetery is operated for profit, it is stripped of its exempt status. The courts look at the Articles of Incorporation and the actual operations of the entity. If the "net income" or "proceeds" from the sale of lots are distributed to owners rather than being plowed back into the maintenance of the park or used for charitable purposes, the entity is deemed commercial.
Ownership of Sold Lots
A unique legal question arises regarding lots already sold to individual "owners" within a commercial park. In most memorial park contracts, the buyer does not receive "fee simple" ownership of the land but rather an "interment right." Consequently, the developer often remains the owner of record in the Assessor’s Office.
- Liability: Since the developer retains ownership of the underlying land, the local government unit (LGU) usually holds the developer liable for the RPT on the entire unsubdivided or subdivided tract, unless the individual lots have been separately titled and transferred.
V. Special Levies and Assessments
Even if a cemetery qualifies for RPT exemption under Section 234, it may still be subject to:
- Special Education Fund (SEF): Generally, if the property is exempt from the basic RPT, it is also exempt from the additional 1% SEF levy.
- Special Assessments: Property owners (including non-profit cemeteries) may be liable for special assessments if their property is specifically benefitted by public works projects (e.g., new roads or drainage systems), as these are not technically "taxes" but a reimbursement for capital improvements.
VI. Summary of Taxable vs. Exempt Elements
| Property Type | RPT Status | Rationale |
|---|---|---|
| Public/Municipal Cemetery | Exempt | Government-owned and non-profit. |
| Parish/Church Cemetery | Exempt | Religious and non-profit; ADE rule applied. |
| Commercial Memorial Park | Taxable | For-profit nature; fails the "non-profit" requirement. |
| Cemetery Office/Admin Bldgs | Taxable/Exempt | Depends on whether the primary cemetery is non-profit. |
| Incidental Commercial Space | Taxable | Fails the "exclusive" use test. |
Conclusion
In the Philippine context, commercial memorial parks do not enjoy the real property tax exemptions afforded to non-profit or religious burial grounds. While the Constitution protects "cemeteries," the statutory and judicial framework clarifies that this protection is reserved for entities devoid of the profit motive. Developers of commercial parks must account for RPT as a standard operating expense, which is typically factored into the pricing of interment rights sold to the public.