Appeal on pure questions of law from the decision of the Court of First Instance of Pangasirian dismissing plaintiff's coirplaint for the refund of P87.60 paid under protest by it as real estate taxes to the City of Dagupan.

The only issue raised here and in the court a quo is whether or not certain parcels of land situated in Dagupan City, otherwise known as Cadastral Lots Nos. 8942, 8713, 3212, 358, 357, 4193, 6369, and 6444, owned by the Manila Railroad Company and leased by it to private individuals, are exempt from the payment of real estate taxes to defendant city in view oi' plaintiff company's charter (Act No. 1510), the pertinent portions of which read:

"12. In consideration of the premises, and of the granting of his concession or franchise, there shall be paid by the grantee to the Philippine Government, annually, for the period of thirty (30) years from the dale hereof an amount equal to one half of one (½%) per cent of the gross, earnings of the grantee in respect of lines covered hereby for the preceding year; after Baid period of thirty (30) years, and for fifty (50) years thereafter, the amount so to be "paid annually shall be an amount equal to one and one-half (1-½%) per cent of such gross earnings for the preceding year; and after such period of eighty (80) years the percentage and amount so to be paid annually by the grantee shall be fixed hy the Philippine Government.

"Such annual payments, when promptly and fully made by the grantee, shall be in lieu of all taxes of every name and nature municipal, provincial, or central upon its capital stock, franchise, right of way, earnings, and all other property owned or operated by the grantee under this concession or franchise."

In its appeal from the lower court's verdict of dismissal, plaintiff company insists that the foregoing text of its charter confers unqualifiedly a tax exemption on all properties owned by it. We do not think so. The phrase "under -this concession or franchise" qualifying" both terms "owned" and "operated" indicates that mere ownership is not enough, but that the exemption is limited only to such activities pursued, or properties held, for the proper accomplishment of the stated purposes of the corporation, i. e., "to locate, construct, equip, maintain, and operate certain railways * * * (see Sec. 1, Act 1510). That the charter did not envision the acquisition or holding of private lands by the appellant for purposes foreign to its ends and, therefore, did not likewise contemplate a tax exemption thereon is apparent from the other provisions of the enabling act, thus:

"The grantee shall also have the right to acquire from corporations, or private individuals, by purchase, contract, lease, grant, or donation, any lands which may be necessary or useful for the construction, maintenance, and operation of the said lines of railway, or any of them.

The grantee shall also have the right to acquire by condemnation the lands necessary for the right of way, for bridges, for terminals, Including wharves ami docks at harbor points and elsewhere, for hidings, stations, engine hcuses, water stations, and other appropriate buildings and structures for the proper and convenient construction, operation, and maintenance of the lines of railway herein authorized: * * *." (Sec. 1, No. 2, fourth and fifth pars., Act No. 1510). (Italics supplied)

The above conclusion accords with the general view in American law:

"The general rule is that the exemption of the property of a railroad company includes the road and such property as is necessary and is used for the operation of the road, and grain elevators, warehouses and docks used in the transportation of the railroad's freight or to store the same for a reasonably short time while awaiting delivery to the consignee. But the exemption does not include grain elevators and other structures which have been leased by a railroad company to private parties, or dwelling houses for the occupancy of workmen, hotels designed primarily for the accommodation of travelers upon the railroad, or timbeilands acquired for sleepers and ties." (51 Am. Jur., p. 571). (Italics supplied)

In this case, there is not the slightest showing that the lots here involved are owned and held by the company pursuant to its authorized business; on the contrary, it is made to appear that said parcels of land are being rented to private individuals thus failing to establish, even remotely, a purpose useful or necessary to the proper accomplishment and operation of its enfranchised undertakings. We do not believe that the tax exemption in plaintiffs franchise was intended to enable it to accumulate tax free assets and profits without devoting them to the extension of its lines and the improvement of its services.

Wherefore, the judgment of the lower court appealed from is affirmed, with costs against appellant Manila Railroad Company.

Bengzon, Acting C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, and Dizon, JJ., concur.