Real Property Tax on Cemeteries and Memorial Parks Philippines

A legal overview

I. Introduction

Real Property Tax (RPT) is a major revenue source for provinces, cities, municipalities within Metro Manila, and, through their share, barangays. Naturally, private land-intensive developments like cemeteries and memorial parks attract close attention from local assessors.

The key legal questions that often arise are:

  • Are cemeteries and memorial parks exempt from real property tax?
  • What is the difference in treatment between non-profit cemeteries and commercial memorial parks?
  • How do mixed-use and income-generating portions of cemetery land affect tax exemption?

This article walks through the Philippine legal framework, focusing on cemeteries and memorial parks under the Local Government Code (LGC) and related doctrines.

II. Legal Framework for Real Property Tax

1. Constitutional basis

The 1987 Constitution:

  • Grants local autonomy and revenue-raising power to local government units (LGUs).

  • Provides for certain tax exemptions, including for:

    • Charitable institutions,
    • Churches, parsonages or convents appurtenant thereto, mosques,
    • Non-profit cemeteries, and
    • Lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable, or educational purposes.

These exemptions apply to taxation in general, which includes local real property taxes.

2. Statutory basis – Local Government Code (RA 7160)

Under the LGC:

  • Provinces, cities, and municipalities within Metro Manila may levy RPT on real property such as land, buildings, machinery, and other improvements.

  • The Code sets:

    • Taxing power and maximum rates,
    • Rules on assessment and valuation,
    • Exemptions from real property tax.

Section 234 of the LGC (on exemptions) is crucial. In substance, it exempts:

  • Property owned by the Republic or its subdivisions (subject to conditions),
  • Property of charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, and non-profit or religious cemeteries and their lands,
  • And other specific properties, provided they are actually, directly, and exclusively used for their exempt purposes.

This statutory exemption reflects and implements the constitutional tax exemptions.

III. What Counts as “Cemeteries” and “Memorial Parks”?

1. Traditional cemeteries vs. memorial parks

In practice, we distinguish:

  1. Public cemeteries

    • Owned and operated by LGUs or the national government (e.g., public cemetery run by the city).
    • Often exempt as government property, unless leased to private entities.

  2. Private non-profit cemeteries

    • Operated by religious organizations or charitable institutions, usually not-for-profit.
    • Common examples: parish cemeteries, church-owned burial grounds.

  3. Private commercial cemeteries / memorial parks

    • Operated by corporations or partnerships for profit.
    • Sell lots, vaults, columbary niches, or perpetual care.
    • Examples: lawn-type memorial parks, park-like cemeteries, private columbaria.

  4. Columbaria and crematoria

    • May be part of a cemetery, memorial park, or stand-alone facility.
    • Real property elements (land, buildings, columbary structures) can be subject to RPT; the services are separate and subject to other taxes (VAT, local business tax, etc.).

2. “Memorial park” as a legal concept

Philippine statutes and regulations (like HLURB/HSUD guidelines) sometimes define memorial parks as private cemeteries of park or lawn type, usually under corporate ownership, where lots are sold to the public.

For real property tax purposes, the key issues are:

  • Is the entity non-stock, non-profit or for-profit?
  • Is the land actually, directly, and exclusively used as a cemetery or for related non-profit purposes?
  • Are some parts income-generating or commercial (e.g., flower shops, resto, boutiques inside)?

These factors determine exemption or taxability.

IV. Real Property Tax Exemptions for Cemeteries

1. Constitutional & statutory exemption for non-profit cemeteries

The Constitution and the Local Government Code both exempt non-profit cemeteries from taxation, subject to the usual actual, direct, and exclusive use test.

Key points:

  • The property must be:

    • A cemetery (or its land), and
    • Non-profit or religious in character.

  • “Non-profit” generally means:

    • No distribution of profits to members, trustees, or officers;
    • Any surplus is plowed back to the operation, maintenance, or expansion of the cemetery or religious/charitable activities.

  • “Religious cemeteries” include cemeteries owned by a church or religious order for burial of their members or parishioners, typically with minimal or purely cost-recovery charges.

2. The “use” test vs. ownership test

Philippine tax jurisprudence consistently emphasizes use over ownership:

  • Ownership by a religious or charitable institution is not enough.
  • The property must be actually, directly, and exclusively used for the exempt purpose (here, as a non-profit cemetery or for religious/charitable purposes).

Implications:

  • If a church owns land but leases a portion to a private operator for a commercial memorial park, that leased portion is generally taxable.
  • If part of the cemetery is converted to purely commercial use (shops, restaurants, etc.), that portion loses its exemption.

The exemption can be partial: only the parts of the property that satisfy the use test remain RPT-exempt.

3. Burden of proof and strict interpretation

  • Tax exemptions are construed strictly against the taxpayer.

  • The entity claiming exemption (e.g., religious congregation operating a cemetery) bears the burden of proving:

    • Its non-profit or religious character, and
    • That the property is actually, directly, and exclusively used for the exempt purpose.

Typical evidence:

  • Articles of incorporation and by-laws (non-profit/non-stock).
  • SEC registration or relevant religious/charitable registration.
  • Maps and plans showing the use of the land (burial lots, pathways, chapels, etc.).
  • Financial statements showing that fees, if any, are merely cost-recovery or incidental.

If in doubt, local assessors and the courts tend to favor taxability over exemption.

V. Tax Treatment of Commercial Memorial Parks

1. Basic rule: memorial parks are taxable

Commercial memorial parks—usually owned by corporations for profit—are not covered by the constitutional or LGC exemption for non-profit cemeteries.

Thus, as a general rule:

  • The land used as a commercial memorial park is subject to RPT.
  • Structures and improvements (roads, chapels, columbaria, parking areas, offices, landscaping) are likewise subject to RPT, unless some very specific exemption applies (rare in practice).

2. Classification for assessment

Local assessors classify real property into:

  • Residential
  • Agricultural
  • Commercial
  • Industrial
  • Mineral
  • Timberland
  • Special classes (such as cultural, scientific, hospital, etc. — depending on local ordinances and national rules)

Commercial memorial parks are most commonly classified as:

  • Commercial – because the primary use is profit-oriented; or
  • Special – in certain LGUs that create a special category for cemeteries and memorial parks for zoning and assessment purposes.

The classification affects:

  • The assessment level (percentage of fair market value used as the taxable assessed value).
  • The applicable tax rate (imposed by ordinance, within LGC caps).

3. Valuation of land and improvements

For commercial memorial parks, the assessor typically:

  • Determines the fair market value (FMV) of the land based on the schedule of market values (SMV).

  • Applies the relevant assessment level for the property class (commercial/special).

  • Assess improvements such as:

    • Chapels
    • Columbaria
    • Cremation facilities
    • Administrative buildings
    • Roads, pavements, landscaped areas (if treated as improvements, depending on local practice)

The RPT is then computed by applying the tax rate to the assessed value.

4. Who is the “taxpayer”: corporation vs. lot owners?

In many memorial park schemes:

  • The corporation or developer owns the entire tract of land.

  • Buyers acquire:

    • A memorial lot (often a form of right to use or bury), or
    • A condominium-type interest in a columbary niche.

Despite this, it is usually the corporation or registered landowner who:

  • Is listed on the tax declaration, and
  • Is primarily liable for RPT.

Lot buyers usually do not receive separate tax declarations for their tiny burial spaces; instead, the cost of RPT may be reflected in:

  • Association dues,
  • Perpetual care fees, or
  • Other charges built into the business model.

However, if the land is subdivided and titled separately (e.g., lot titles issued individually), the situation may differ, and RPT liability can be apportioned per titled lot.

VI. Mixed-Use Properties and Partial Exemptions

It is common for cemeteries and memorial parks—whether non-profit or commercial—to host additional facilities:

  • Flower shops, candle shops
  • Food kiosks or restaurants
  • Mini-marts
  • Administrative offices
  • Leasing of spaces for vendors
  • Parking lots with fees

1. Non-profit cemeteries with income-generating portions

Even for religious or non-profit cemeteries, the exempt status does not extend to:

  • Areas leased for commercial operations;
  • Areas used for activities not reasonably necessary to the cemetery’s religious or non-profit function;
  • Portions clearly used for profit-making enterprises, even if the income is used to support religious or charitable work.

Under the “actual, direct, exclusive use” doctrine:

  • The cemetery land used purely as burial grounds may remain RPT-exempt.
  • Shops, restaurants, and other commercial establishments within the property are RPT-taxable.

Assessors may require separate tax declarations for taxable and non-taxable portions.

2. Commercial memorial parks with partly non-commercial use

In a commercial memorial park, the entire property is generally taxable. However, special circumstances can arise:

  • If a part is donated to the LGU for a public cemetery, that donated portion may become exempt as LGU property, subject to its actual use.
  • If a portion is assigned exclusively for religious worship (e.g., a chapel legally donated or dedicated and operated by a religious institution on a non-profit basis), that area could potentially be exempt, provided the strict requirements are met.

Again, partial exemption may apply, depending on:

  • Ownership (government, religious, charitable), and
  • Actual use (non-profit religious, charitable, public use).

VII. Government-Owned Cemeteries

1. Basic exemption for government property

Real property owned by the Republic, provinces, cities, municipalities, and barangays is generally exempt from RPT, except:

  • When the property is leased to a private entity; or
  • When it is otherwise devoted to a commercial or proprietary purpose.

For example:

  • A public cemetery entirely owned and maintained by a city and used solely as such is RPT-exempt.
  • If the city leases a portion inside the public cemetery to a private memorial park operator, that leased portion is typically subject to RPT (with the lessee considered the taxable party for that portion).

2. Interplay between public cemeteries and memorial parks

In some LGUs:

  • Public cemeteries coexist with nearby private memorial parks.
  • Public cemeteries are generally exempt.
  • Private memorial parks are fully taxable (unless they somehow qualify as non-profit or charitable, which is rare).

VIII. Procedures: Assessment, Exemption Claims, and Appeals

1. Declaration of real property

Owners or administrators of cemeteries and memorial parks must:

  • File a sworn declaration of real property with the local assessor:

    • Upon acquisition of property,
    • Upon completion or substantial change of improvements,
    • When required by ordinance or by the assessor.

Failure to declare does not prevent assessment; the assessor may list the property motu proprio, but penalties may apply.

2. Claiming exemption

To claim exemption (e.g., for a non-profit cemetery):

  • The owner or administrator must formally apply with the assessor's office, typically with:

    • Corporate documents proving non-profit or religious status,
    • Documents showing actual, direct, exclusive use as a cemetery (maps, photographs, etc.),
    • Possibly board resolutions, certifications, or SEC papers.

The assessor evaluates the application and may:

  • Grant full exemption for the entire property;
  • Grant partial exemption (only for portions used as non-profit cemetery), with separate tax declarations for taxable portions; or
  • Deny exemption, in whole or in part.

3. Appeals process

If the owner disagrees with the assessment (classification, valuation, or denial of exemption), the remedies usually are:

  1. Appeal to the Local Board of Assessment Appeals (LBAA) within the prescribed period.
  2. If still aggrieved, appeal to the Central Board of Assessment Appeals (CBAA).
  3. Further judicial recourse (e.g., to the Court of Tax Appeals) in accordance with the law.

Failure to appeal within the period generally makes the assessment final, executory, and demandable.

IX. Collection, Penalties, and Remedies

1. Basic RPT and additional SEF tax

Once assessed, real property in memorial parks is subject to:

  • The basic RPT—up to a certain percentage of the assessed value (as allowed by LGC and ordinance); and
  • The additional 1% Special Education Fund (SEF) tax, earmarked for local education purposes.

For exempt non-profit cemeteries, both basic RPT and SEF do not apply to the exempt portions.

2. Surcharges, interest, and remedies for nonpayment

If RPT is not paid on time:

  • Surcharges and monthly interest accrue as set by the LGC and local ordinance.

  • LGUs can enforce collection through:

    • Administrative remedies such as levy on real property and public auction; and
    • Judicial action to collect the tax.

Operators of memorial parks must take RPT obligations seriously, as penalties can accumulate quickly and may affect:

  • The marketability of lots,
  • Corporate finances,
  • Relations with LGUs.

X. Special Issues

1. Idle lands

Some parts of a memorial park may remain unused for many years as “reserve” sections. LGUs may have special rules on idle land tax, but:

  • Whether a reserved portion of a memorial park is “idle” can be controversial.
  • Often, long-term planning and regulatory requirements (e.g., environmental, health) justify maintaining undeveloped areas, which may support the argument that the land is not “idle” in the sense intended by idle land tax provisions.

2. Special assessments (special levy)

LGUs may impose a special levy on lands benefited by public works (roads, drainage, etc.). Memorial parks located in such benefited areas may be subject to:

  • A special assessment proportionate to the increase in property value due to the public improvement.

This is separate from the regular RPT and can apply even to some otherwise exempt properties, depending on the nature of the special levy and the law/ordinance.

3. Overlap with other taxes

While the focus here is RPT, remember:

  • Transfer of memorial lots may be subject to:

    • Documentary stamp tax (national),
    • Transfer tax (local, on transfers of real property or real rights).

  • Services offered by memorial parks (interment, cremation, chapel use) may be subject to:

    • VAT or percentage tax (national),
    • Local business tax, mayor’s permit fees, regulatory fees.

These do not affect the basic issue of RPT on land and improvements but matter for overall tax planning.

XI. Practical Takeaways

For religious/non-profit cemetery operators

  1. Document your non-profit status and your actual use of the property.

  2. Apply formally for RPT exemption, and be prepared to show:

    • That any fees collected are incidental or cost-recovery, not profit distribution.

  3. Segregate commercial portions, if any, and accept that those may be taxable.

  4. Keep updated tax declarations and cooperate with the assessor’s mapping and inspection.

For commercial memorial park operators

  1. Assume that RPT applies in full to your land and improvements.

  2. Work with the assessor to ensure:

    • Proper classification (commercial or special class),
    • Fair and accurate valuation.

  3. If you donate or set aside portions for public or purely religious/non-profit use, clarify the separate tax treatment of those areas.

  4. Monitor RPT payments, SEF, and any special levies to avoid penalties.

For LGUs and assessors

  1. Apply the use test consistently:

    • Exempt only non-profit cemeteries and only to the extent of actual, direct, exclusive use.

  2. Use partial exemption where appropriate (mixed-use properties).

  3. Ensure that memorial parks are properly declared, classified, and valued, recognizing their revenue potential but also observing fairness and legal limits.

  4. Be prepared to defend assessments before the LBAA/CBAA and courts by maintaining clear records and maps.

XII. Conclusion

In Philippine law, cemeteries are not automatically exempt from real property tax. The key distinction lies between:

  • Non-profit or religious cemeteries, which may be exempt (wholly or partly) if actually, directly, and exclusively used for that purpose; and
  • Commercial memorial parks, which are generally subject to RPT as commercial or special-class real property.

Ownership, actual use, and profit motive all matter, and exemptions are strictly construed. Anyone involved in developing, operating, or regulating cemeteries and memorial parks should pay close attention to:

  • The Local Government Code’s provisions on RPT and exemptions,
  • Constitutional principles on tax exemption,
  • And the practical realities of mixed use, commercial operations, and local assessment practices.

Understanding these rules helps avoid disputes, penalties, and invalid assumptions about “automatic” tax exemption for cemetery lands.

Disclaimer: This content is not legal advice and may involve AI assistance. Information may be inaccurate.

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