RPT – LGC

G.R. No. 144104, June 29, 2004 [Constitutional Law -

Article VI: Legislative Department; Taxation ]

FACTS:
Petitioner is a non-stock, non-profit entity established by
virtue of PD No. 1823, seeks exemption from real property
taxes when the City Assessor issued Tax Declarations for
the land and the hospital building. Petitioner predicted on
its claim that it is a charitable institution. The request was
denied, and a petition hereafter filed before the Local
Board of Assessment Appeals of Quezon City (QC-LBAA)
for reversal of the resolution of the City Assessor.
Petitioner alleged that as a charitable institution, it is
exempted from real property taxes under Sec 28(3) Art VI
of the Constitution. QC-LBAA dismissed the petition and
the decision was likewise affirmed on appeal by the
Central Board of Assessment Appeals of Quezon City.
The Court of Appeals affirmed the judgment of the CBAA.

ISSUE:
1. Whether or not petitioner is a charitable institution within
the context of PD 1823 and the 1973 and 1987
Constitution and Section 234(b) of RA 7160.

2. Whether or not petitioner is exempted from real property

taxes.
RULING:
1. Yes. The Court hold that the petitioner is a charitable
institution within the context of the 1973 and 1987
Constitution. Under PD 1823, the petitioner is a non-profit
and non-stock corporation which, subject to the provisions
of the decree, is to be administered by the Office of the
President with the Ministry of Health and the Ministry of
Human Settlements. The purpose for which it was created
was to render medical services to the public in general
including those who are poor and also the rich, and
become a subject of charity. Under PD 1823, petitioner is
entitled to receive donations, even if the gift or donation is
in the form of subsidies granted by the government.

2. Partly No. Under PD 1823, the lung center does not

enjoy any property tax exemption privileges for its real
properties as well as the building constructed thereon.
The property tax exemption under Sec. 28(3), Art. VI of
the Constitution of the property taxes only. This provision
was implanted by Sec.243 (b) of RA 7160.which provides
that in order to be entitled to the exemption, the lung
center must be able to prove that: it is a charitable
institution and; its real properties are actually, directly and
exclusively used for charitable purpose. Accordingly, the
portions occupied by the hospital used for its patients are
exempt from real property taxes while those leased to
private entities are not exempt from such taxes.
Lung Center of the Philippines vs. Quezon City and
Constantino Rosas
G.R. No. 144104 June 29, 2004

FACTS:

The Petitioner is a non-stock, non-profit entity which owns a parcel of land in Quezon City. Erected in the
middle of the aforesaid lot is a hospital known as the Lung Center of the Philippines. The ground floor is
being leased to a canteen, medical professionals whom use the same as their private clinics, as well as to
other private parties. The right portion of the lot is being leased for commercial purposes to the Elliptical
Orchids and Garden Center. The petitioner accepts paying and non-paying patients. It also renders medical
services to out-patients, both paying and non-paying. Aside from its income from paying patients, the
petitioner receives annual subsidies from the government.

Petitioner filed a Claim for Exemption from realty taxes amounting to about Php4.5 million, predicating its
claim as a charitable institution. The city assessor denied the Claim. When appealed to the QC-Local Board
of Assessment, the same was dismissed. The decision of the QC-LBAA was affirmed by the Central Board
of Assessment Appeals, despite the Petitioners claim that 60% of its hospital beds are used exclusively for
charity.

ISSUE:
Whether or not the Petitioner is entitled to exemption from realty taxes notwithstanding the fact that it
admits paying clients and leases out a portion of its property for commercial purposes.

HELD:

The Court held that the petitioner is indeed a charitable institution based on its charter and articles of
incorporation. As a general principle, a charitable institution does not lose its character as such and its
exemption from taxes simply because it derives income from paying patients, whether out-patient or
confined in the hospital, or receives subsidies from the government, so long as the money received is
devoted or used altogether to the charitable object which it is intended to achieve; and no money inures to
the private benefit of the persons managing or operating the institution.

Despite this, the Court held that the portions of real property that are leased to private entities
are not exempt from real property taxes as these are not actually, directly and exclusively
used for charitable purposes. (strictissimi juris) Moreover, P.D. No. 1823 only speaks of tax
exemptions as regards to:
 income and gift taxes for all donations, contributions, endowments and equipment and
supplies to be imported by authorized entities or persons and by the Board of Trustees of the Lung Center
of the Philippines for the actual use and benefit of the Lung Center; and
 taxes, charges and fees imposed by the Government or any political subdivision or
instrumentality thereof with respect to equipment purchases (expression unius est exclusion
alterius/expressium facit cessare tacitum).
Mactan Cebu International Airport Authority
v. Marcos 261 SCRA 667 (1996)
Oct 23
Facts:
Petitioner Mactan Cebu International Airport Authority was created by virtue of R.A. 6958, mandated to
principally undertake the economical, efficient, and effective control, management, and supervision of the
Mactan International Airport and Lahug Airport, and such other airports as may be established in Cebu.

Since the time of its creation, petitioner MCIAA enjoyed the privilege of exemption from payment of realty
taxes in accordance with Section 14 of its charter. However, on October 11, 1994, Mr. Eustaquio B. Cesa,
Officer in Charge, Office of the Treasurer of the City of Cebu, demanded payment from realty taxes in the total
amount of P2229078.79. Petitioner objected to such demand for payment as baseless and unjustified claiming
in its favor the afore cited Section 14 of R.A. 6958. It was also asserted that it is an instrumentality of the
government performing governmental functions, citing Section 133 of the Local Government Code of 1991.

Section 133. Common limitations on the Taxing Powers of Local Government Units.

The exercise of the taxing powers of the provinces, cities, barangays, municipalities shall not extend to the levi of
the following:

xxx Taxes, fees or charges of any kind in the National Government, its agencies and instrumentalities, and LGU’s.
xxx

Respondent City refused to cancel and set aside petitioner’s realty tax account, insisting that the MCIAA is a
government-controlled corporation whose tax exemption privilege has been withdrawn by virtue of Sections
193 and 234 of Local Government Code that took effect on January 1, 1992.

Issue:
Whether or not the petitioner is a “taxable person”

Rulings:

Taxation is the rule and exemption is the exception. MCIAA’s exemption from payment of taxes is withdrawn
by virtue of Sections 193 and 234 of Local Government Code. Statutes granting tax exemptions shall be
strictly construed against the taxpayer and liberally construed in favor of the taxing authority.

The petitioner cannot claim that it was never a “taxable person” under its Charter. It was only exempted from
the payment of realty taxes. The grant of the privilege only in respect of this tax is conclusive proof of the
legislative intent to make it a taxable person subject to all taxes, except real property tax.

Facts:
Petitioner Mactan Cebu International Airport Authority (MCIAA)
Since the time of its creation,... enjoyed the privilege of exemption from payment of realty
taxes in accordance with Section 14 of its Charter
Office of the Treasurer of the City of Cebu, demanded payment for realty taxes on several
parcels of land belonging to the petitioner
Petitioner objected to such demand for payment as baseless and unjustified, claiming in its
favor the aforecited Section 14 of RA 6958 which exempts it from payment of realty
taxes. It was also asserted that it is an instrumentality of the government performing...
governmental functions, citing Section 133 of the Local Government Code of 1991 which
puts limitations on the taxing powers of local government units
Section 133. Common Limitations on the Taxing Powers of Local Government Units. --
Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the... following:
Taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities, and local government units. (underscoring supplied)
Respondent City refused to cancel and set aside petitioner's realty tax account, insisting
that the MCIAA is a government-controlled corporation whose tax exemption privilege has
been withdrawn by virtue of Sections 193 and 234 of the Local Government Code...
petitioner... was compelled to pay its tax account "under protest" and thereafter filed a
Petition for Declaratory Relief with the Regional Trial Court of Cebu
MCIAA basically contended that the taxing powers of local government units do not extend
to the levy of taxes or fees of any kind on an instrumentality of the national government.
Petitioner insisted that while it is indeed a government-owned corporation, it... nonetheless
stands on the same footing as an agency or instrumentality of the national government by
the very nature of its powers and functions.
trial court dismissed the petition... infer and state that the tax exemption provided for in RA
6958 creating petitioner had been expressly repealed by the provisions of the New Local
Government Code of 1991.
So that petitioner in this case has to pay the assessed realty tax of its properties effective
after January 1, 1992 until the present.
Issues:
respondent City of Cebu has no power nor authority to impose realty taxes upon it...
whether the petitioner is a "taxable person."
Ruling:
Considering its task "not merely to efficiently operate and manage the Mactan-Cebu
International Airport, but more importantly, to carry out the Government... policies of
promoting and developing the Central Visayas and Mindanao regions as centers of
international trade and tourism, and accelerating the development of the means of
transportation and communication in the country,"... and that it is an attached... agency of
the Department of Transportation and Communication (DOTC),... the petitioner "may stand
in [sic] the same footing as an agency or instrumentality of the national
government." Hence, its tax exemption privilege under Section 14 of its Charter
"cannot be considered withdrawn with the passage of the Local Government Code of 1991
(hereinafter LGC) because Section 133 thereof specifically states that the `taxing powers of
local government units shall not extend to the levy of taxes or fees or charges of any kind
on the... national government, its agencies and instrumentalities.'"
There can be no question that under Section 14 of R.A. No. 6958 the petitioner is exempt
from the payment of realty taxes imposed by the National Government or any of its political
subdivisions, agencies, and instrumentalities. Nevertheless, since taxation is the rule and...
exemption therefrom the exception, the exemption may thus be withdrawn at the pleasure
of the taxing authority. The only exception to this rule is where the exemption was granted
to private parties based on material consideration of a mutual nature, which then becomes...
contractual and is thus covered by the non-impairment clause of the Constitution.
we conclude that as a general rule, as laid down in Section 133, the taxing powers of local
government units cannot extend to the levy of, inter alia, "taxes, fees and charges of any
kind on the National
Government, its agencies and instrumentalities, and local government units"; however,
pursuant to Section 232, provinces, cities, and municipalities in the Metropolitan Manila
Area may impose the real property tax except on, inter alia, "real property owned by the
Republic of... the Philippines or any of its political subdivisions except when the beneficial
use thereof has been granted, for consideration or otherwise, to a taxable person," as
provided in item (a) of the first paragraph of Section 234.
upon the effectivity of the LGC, exemptions from payment of real property taxes granted to
natural or juridical persons, including government-owned or controlled corporations, except
as provided in the said section,... and the petitioner is, undoubtedly, a government-owned
corporation, it necessarily follows that its exemption from such tax granted it in Section 14 of
its Charter, R.A. No. 6958, has been withdrawn.
In short, the petitioner can no longer invoke the general rule in Section 133 that the taxing
powers of the local government units cannot extend to the levy of:
(o) taxes, fees or charges of any kind on the National Government, its agencies or
instrumentalities, and local government units.
the petitioner cannot claim that it was never a "taxable person" under its Charter. It was
only exempted from the payment of real property taxes. The grant of the privilege only in
respect of this tax is conclusive proof of the legislative intent to... make it a taxable person
subject to all taxes, except real property tax.
Finally, even if the petitioner was originally not a taxable person for purposes of real
property tax, in light of the foregoing disquisitions, it had already become, even if it be
conceded to be an "agency" or "instrumentality" of the Government, a taxable person for
such... purpose in view of the withdrawal in the last paragraph of Section 234 of exemptions
from the payment of real property taxes, which, as earlier adverted to, applies to the
petitioner.
Accordingly, the position taken by the petitioner is untenable.
nothing can prevent Congress from decreeing that even instrumentalities or agencies of the
Government performing governmental functions may be subject to tax. Where it is done
precisely to fulfill a constitutional mandate and national policy, no one can doubt its wisdom.
Public Dominion

Facts:

MIAA received Final Notices of Real Estate Tax Delinquency from the City of Parañaque for the
taxable years 1992 to 2001. MIAA’s real estate tax delinquency was estimated at P624 million. The
City of Parañaque, through its City Treasurer, issued notices of levy and warrants of levy on the
Airport Lands and Buildings. The Mayor of the City of Parañaque threatened to sell at public auction
the Airport Lands and Buildings should MIAA fail to pay the real estate tax delinquency.

MIAA filed a petition sought to restrain the City of Parañaque from imposing real estate tax on,
levying against, and auctioning for public sale the Airport Lands and Buildings.

The City of Parañaque contended that Section 193 of the Local Government Code expressly
withdrew the tax exemption privileges of “government-owned and-controlled corporations” upon the
effectivity of the Local Government Code. Thus, MIAA cannot claim that the Airport Lands and
Buildings are exempt from real estate tax.

MIAA argued that Airport Lands and Buildings are owned by the Republic. The government cannot
tax itself. The reason for tax exemption of public property is that its taxation would not inure to any
public advantage, since in such a case the tax debtor is also the tax creditor.

Issue:

Whether or not the City of Parañaque can impose real tax, levy against and auction for public sale
the Airport Lands and Buildings.

Held:

MIAA is Not a Government-Owned or Controlled Corporation. The Airport Lands and Buildings of
MIAA are property of public dominion and therefore owned by the State or the Republic of the
Philippines. No one can dispute that properties of public dominion mentioned in Article 420 of the
Civil Code, like “roads, canals, rivers, torrents, ports and bridges constructed by the State,” are
owned by the State. The term “ports” includes seaports and airports. The MIAA Airport Lands and
Buildings constitute a “port” constructed by the State.

Under Article 420 of the Civil Code, the MIAA Airport Lands and Buildings are properties of public
dominion and thus owned by the State or the Republic of the Philippines. The Airport Lands and
Buildings are devoted to public use because they are used by the public for international and
domestic travel and transportation. The fact that the MIAA collects terminal fees and other charges
from the public does not remove the character of the Airport Lands and Buildings as properties for
public use. The charging of fees to the public does not determine the character of the property
whether it is of public dominion or not. Article 420 of the Civil Code defines property of public
dominion as one “intended for public use.”

The Court has also ruled that property of public dominion, being outside the commerce of man,
cannot be the subject of an auction sale. Properties of public dominion, being for public use, are not
subject to levy, encumbrance or disposition through public or private sale. Any encumbrance, levy
on execution or auction sale of any property of public dominion is void for being contrary to public
policy. Essential public services will stop if properties of public dominion are subject to
encumbrances, foreclosures and auction sale. This will happen if the City of Parañaque can
foreclose and compel the auction sale of the 600-hectare runway of the MIAA for non-payment of
real estate tax.

Facts:
Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino
International Airport (NAIA)
As operator of the international airport, MIAA administers the land, improvements and
equipment within the NAIA Complex. The MIAA Charter transferred to MIAA approximately
600 hectares of land,... The MIAA Charter further provides that no portion of the land
transferred to MIAA shall be disposed of through sale or any other mode unless specifically
approved by the President of the
Philippines.
The OGCC opined that the Local Government Code of 1991 withdrew the exemption from
real estate tax granted to MIAA under Section 21 of the MIAA Charter. Thus, MIAA
negotiated with... respondent City of Parañaque to pay the real estate tax imposed by the
City. MIAA then paid some of the real estate tax already due.
MIAA received Final Notices of Real Estate Tax Delinquency from the City of Parañaque
The Mayor of the City of Parañaque threatened to sell at public auction the Airport Lands
and Buildings should MIAA fail to pay the... real estate tax delinquency.
MIAA filed with the Court of Appeals an original petition for prohibition and injunction
The petition sought to restrain the City of Parañaque from imposing real estate tax on,
levying... against, and auctioning for public sale the Airport Lands and Buildings.
Court of Appeals dismissed the petition because MIAA filed it beyond the 60-day
reglementary period.
Court of Appeals also denied... motion for reconsideration... the present petition for review.
MIAA insists that it is... exempt from real estate tax under Section 234 of the Local
Government Code because the Airport Lands and Buildings are owned by... the Republic.
To justify the exemption, MIAA invokes the principle that the government cannot tax itself.
Respondents invoke Section 193 of the Local Government Code, which expressly withdrew
the tax exemption privileges of "government-owned and-controlled corporations" upon the
effectivity of the Local Government Code.
Issues:
whether the Airport Lands and Buildings of MIAA are exempt from real estate tax under
existing laws.
Ruling:
We rule that MIAA's Airport Lands and Buildings are exempt from real estate tax imposed
by local governments.
First, MIAA is not a government-owned or controlled corporation but an instrumentality of
the National Government and thus exempt from local taxation. Second, the real properties
of MIAA are owned by the Republic of the Philippines and thus... exempt from real estate
tax.
There is no dispute that a government-owned or controlled corporation is not exempt from
real estate tax. However, MIAA is not a government-owned or controlled corporation.
Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a
government-owned or controlled corporation.
MIAA is a government instrumentality vested with corporate powers to perform efficiently its
governmental functions. MIAA is like any other government instrumentality, the only
difference is that MIAA is vested with corporate powers.
When the law vests in a government instrumentality corporate powers, the instrumentality
does not become a corporation. Unless the government instrumentality is organized as a
stock or non-stock corporation, it remains a government instrumentality exercising not
only... governmental but also corporate powers. Thus, MIAA exercises the governmental
powers of eminent domain,... police authority... and the levying of fees and charges.
At the same time, MIAA exercises "all the... powers of a corporation under the Corporation
Law, insofar as these powers are not inconsistent with the provisions of this Executive
Order."
When local governments invoke the power to tax on national government instrumentalities,
such power is construed strictly against local governments. The rule is that a tax is never
presumed and there must be clear language in the law imposing the tax. Any doubt whether
a person,... article or activity is taxable is resolved against taxation. This rule applies with
greater force when local governments seek to tax national government instrumentalities.
Another rule is that a tax exemption is strictly construed against the taxpayer claiming the
exemption. However, when Congress grants an exemption to a national government
instrumentality from local taxation, such exemption is construed liberally in favor of the
national... government instrumentality.
There must be express language in the law empowering local governments to tax national
government instrumentalities. Any doubt whether such power exists is resolved against
local... governments.

Principles:
 Quezon City vs. Bayantel G.R. No. 162015
March 6, 2006 Local Taxation
NOVEMBER 9, 2017

FACTS:

BAYANTEL is a legislative franchise holder under RA 3259 to establish and operate radio
stations for domestic telecommunications, radiophone, broadcasting and telecasting. On January
1, 2992, RA 7160 of the “Local Government Code of 1991” took effect. Section 232 of the Code
grants local government units within the Metro Manila area the power to levy tax on real
properties. Section 234 of the same Code withdrew any exemption from realty tax granted to all
persons, natural or juridical.

On July 20, 1992, few months after the LGC took effect, Congress enacted RA 7633, amending
Bayantel’s original franchise. In 1993, the Quezon City government enacted the Quezon City
Revenue Code imposing real property tax on all real properties in Quezon City.

ISSUE:

What is the extent of the Power of Local Taxation?

RULING:

The power to tax is primarily vested in the Congress; however, it may be exercised by local
legislative bodies pursuant to direct authority conferred by Section 5, Article X of the
Constitution. Under the latter, the exercise of the power may be subject to such guidelines and
limitations as Congress may provide.

Since RA 7633 amended Bayantel’s original franchise and granted it real property tax exemption
from its real properties that is directly used in its operations, the Quezon City government cannot
levy real property taxes on the real properties of Bayantel that are in Quezon City area.

For sure, in Philippine Long Distance Telephone Company, Inc. (PLDT) vs. City of Davao, this
Court has upheld the power of Congress to grant exemptions over the power of local government
units to impose taxes. There, the Court wrote:
Indeed, the grant of taxing powers to local government units under the Constitution and the
LGC does not affect the power of Congress to grant exemptions to certain persons, pursuant
to a declared national policy. The legal effect of the constitutional grant to local governments
simply means that in interpreting statutory provisions on municipal taxing powers, doubts must
be resolved in favor of municipal corporations.

Facts:
Respondent Bayan Telecommunications, Inc.
(Bayantel) is a legislative franchise holder under Republic Act (Rep. Act) No. 3259... to
establish and operate radio stations for domestic telecommunications, radiophone,
broadcasting and... telecasting.
Rep. Act No. 7160, otherwise known as the "Local Government Code of 1991" (LGC), took
effect. Section 232 of the Code grants local government units within the Metro Manila Area
the power to levy tax on real properties... the same Code... withdrew any exemption from
realty tax heretofore granted to or enjoyed by all persons, natural or juridica... barely few
months after the LGC took effect, Congress enacted Rep. Act No. 7633, amending
Bayantel's original franchise.
contained the following tax provision:
SEC. 11. The grantee, its successors or assigns shall be liable to pay the same taxes on
their real estate, buildings and personal property, exclusive of this franchise, as other
persons or corporations are now or hereafter may be required by law to pay.
In addition thereto, the grantee, its successors or assigns shall pay a franchise tax
equivalent to three percent (3%) of all gross receipts of the telephone or other
telecommunications businesses transacted under this franchise by the grantee, its
successors or assigns and the... said percentage shall be in lieu of all taxes on this
franchise or earnings thereof. Provided, That the grantee, its successors or assigns shall
continue to be liable for income taxes payable under Title II of the National Internal
Revenue Code .... xxx. [Emphasis... supplied]
It is undisputed that within the territorial boundary of Quezon City, Bayantel owned several
real properties on which it maintained various telecommunications facilities.
government of Quezon City,... enacted City Ordinance... imposing... a real property tax on
all real properties in Quezon City, and, reiterating in its Section 6, the withdrawal of
exemption from real... property tax under Section 234 of the LGC
Bayantel wrote the office of the City Assessor seeking the exclusion of its real properties in
the city from the roll of taxable real properties. With its request having been denied,
Bayantel interposed an appeal with the Local Board of Assessment Appeals
(LBAA). And, evidently on its firm belief of its exempt status, Bayantel did not pay the real
property taxes assessed against it by the Quezon City government.
Quezon City Treasurer sent out notices of delinquency... followed by the issuance of
several warrants of levy against Bayantel's properties preparatory to their sale at a public
auction
Bayantel... filed with the RTC of Quezon City a petition for prohibition with an urgent
application for a temporary restraining order (TRO)
Issues:
[I]n declaring the real properties of respondent exempt from real property taxes
notwithstanding the fact that the tax exemption granted to Bayantel in its original franchise
had been withdrawn by the [LGC]
Whether or not Bayantel's real properties in Quezon City are exempt from real property
taxes under its legislative f... ranchise;
Bayantel's franchise being national in character, the "exemption" thus granted under
Section 14 of Rep. Act No. 3259 applies to all its real or personal properties found
anywhere within the Philippine archipelago.
Ruling:
real properties of Bayantel, save those exclusive of its franchise, are subject to realty taxes.
Ultimately, therefore, the inevitable result was that all realties which are actually,... directly
and exclusively used in the operation of its franchise are "exempted" from any property tax.
Bayantel's franchise being national in character, the "exemption" thus granted under
Section 14 of Rep. Act No. 3259 applies to all its real or personal properties found
anywhere within the Philippine archipelago.
However, with the LGC's taking effect... the realty tax exemption... heretofore enjoyed by
Bayantel under its original franchise, but subsequently withdrawn by force of Section 234 of
the LGC, has been restored by Section 14 of Rep. Act No. 7633.
Bayantel... is only "liable to pay the same taxes, as any other persons or corporations on all
its real or personal properties, exclusive of its franchise."... there can really be no dispute
that the power of the Quezon City Government to tax is limited by Section 232 of the LGC
which expressly provides that "a province or city or municipality within the Metropolitan
Manila Area may levy an annual... ad valorem tax on real property such as land, building,
machinery, and other improvement not hereinafter specifically exempted." Under this law,
the Legislature highlighted its power to thereafter exempt certain realties from the taxing
power of local... government units. An interpretation denying Congress such power to
exempt would reduce the phrase "not hereinafter specifically exempted" as a pure jargon,
without meaning whatsoever. Needless to state, such absurd situation is unacceptable.
dmittedly, Rep. Act No. 7633 was enacted subsequent to the LGC. Perfectly aware that the
LGC has already withdrawn Bayantel's former exemption from realty taxes, Congress opted
to pass Rep. Act No. 7633 using... exactly the same defining phrase
"exclusive of this franchise" which was the basis for Bayantel's exemption from realty taxes
prior to the LGC.
In plain language, Section 11 of Rep. Act No. 7633 states that "the grantee, its successors
or assigns shall be liable to pay the same taxes on their real... estate, buildings and
personal property, exclusive of this franchise, as other persons or corporations are now or
hereafter may be required by law to pay." The Court views this subsequent piece of
legislation as an express and real intention on the part of Congress to once... again remove
from the LGC's delegated taxing power, all of the franchisee's (Bayantel's) properties that
are actually, directly and exclusively used in the pursuit of its franchise.