Father Nelson Silvela, parish priest of the town of San Joaquin in the central island of Panay, vanished after the arrest of 10 men he allegedly hired to dig up the chapel known as the 'Camposanto', said Mayor Eduardo Servidad.
"We consider the Camposanto a holy place and we did not expect a priest like him to do a thing like this," he told AFP.
The men had dug a hole about 18 metres long which had weakened the structure of the chapel located at the centre of the cemetery built in 1892, the mayor said.
The 10 men, armed with tools, a metal detector and a water pump, were arrested on February 24 and later identified the priest as having hired them to dig for an unspecified treasure, Servidad said.
The local archbishop, Angel Lagdameo, told AFP he had suspended the priest and would support any criminal charges against him.
He said Father Silvela's act was "a big violation" that had deeply hurt the people of his parish.
The Philippines is a largely Catholic country and churches and other holy places are usually treated reverently.
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