Retired Gen. Angelo Reyes, 65, was pronounced dead on arrival at a Manila hospital from a single gunshot wound in the chest, Health Secretary Enrique Ona said in a news conference broadcast nationwide.
Reyes, who headed the military from 2001 to 2003, was at the center of a congressional probe into one of the biggest corruption scandals to have hit the Philippine armed forces.
Corruption, entrenched in the Philippine society, is an especially explosive issue in the inadequately equipped and poorly paid 120,000-strong military that has sparked several insurrections in the last two decades by disgruntled soldiers.
Witness Feliciano Recorba, a cemetery worker, said he saw Reyes standing near his mother's grave as his two sons and bodyguards waited in their parked car. He then saw Reyes holding a pistol close to his chest with his left hand moments before the shot rang out.
"It appears from the statement of the witness, it was self-inflicted," Metropolitan Manila police chief Nicanor Bartolome said.
Health Secretary Ona said he would await autopsy results before commenting.
The military expressed shock at Reyes' death, flying flags at half-staff in camps nationwide and urging Congress to expedite its probe into military corruption. President Benigno Aquino III, elected last year on the promise to prosecute corrupt officials, sent his condolences.
Though corruption is rampant, the magnitude of the accusations against Reyes and two other retired military chiefs shocked many in this Southeast Asian nation, which has grappled with government corruption scandals for decades but produced few convictions.
In startling testimony last month, retired military budget officer Lt. Col. George Rabusa claimed that huge amounts of money had been diverted from key military units into a kitty for all kinds of illegal payoffs.
Among the recipients of the unaudited payoffs, Rabusa said, were three ex-military chiefs of staff who each month collected millions of pesos (tens of thousands of dollars) for personal use plus huge "send-off" payments when they retired.
Rabusa alleged that Reyes was among the recipients of the payoffs, including more than $1 million when he stepped down that had to be converted into dollars because the peso equivalent was too bulky.
At the time, a stunned Reyes denied pocketing funds but also declared, "I'm not a saint." He later filed charges against Rabusa and a senator he accused of conspiring to malign him.
Emotions ran high when Reyes tried to confront Rabusa at the Jan. 27 hearing but was restrained by senators.
"I'm just trying to protect my reputation here," Reyes said during the hearing in what would be his last public appearance. "I have served this government for 48 years."
In addition to pointing the finger at the ex-military chiefs and two comptrollers, Rabusa testified that their wives also used military payoffs to purchase U.S. real estate and finance foreign trips, shopping sprees and parties. He said the money was illegally taken by cutting into Congress-approved funds, including those for troop salaries, ammunition and a military hospital.
Rabusa has acknowledged pocketing some of the funds himself. He has been working on a detailed statement that authorities hope could be used to file criminal complaints against others implicated in the scandal.
His family has been devastated by the accusations and has requested that people who maligned and humiliated Reyes not come to pay their respects, said their spokeswoman Patricia Daza.
"As we pray for the eternal repose of his soul, we ask that we be allowed to find the privacy to understand and find meaning in his tragedy," she read from a statement. "Words do not do justice to what we are feeling right now; words after all contributed vastly to our having lost our beloved Angie."
Reyes was among the country's most prominent generals. He led counterinsurgency battles and was in charge of the departments of defense, environment, energy, interior and local government affairs and other top posts under several presidents. He was known for his temper but revealed a lighter side, too, as part of a three-member soprano group in which the macho general sang and danced in charity shows.
Associated Press writer Hrvoje Hranjski contributed to this report.