P. v. Aguayo CA2/7

Filed 5/29/13 P. v. Aguayo CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

THE PEOPLE, B236827

Plaintiff and Respondent, (Los Angeles County
Super. Ct. Nos. BA382793/BA327051)
v.

JESUS DURAN AGUAYO, et al.,

Defendants and Appellants.

APPEAL from judgments of the Superior Court of Los Angeles County.
Larry P. Fidler, Judge. Affirmed as modified.

Robert Derham, under appointment by the Court of Appeal, for Defendant
and Appellant Jesus Duran Aguayo.

Marilee Marshall, under appointment by the Court of Appeal, for
Defendant and Appellant Sofia Aguayo.

Kamala D. Harris, Attorney General, Dane R. Gillette, Chief Assistant
Attorney General, Lance E. Winters, Senior Assistant Attorney General, Steven D.
Matthews and Herbert S. Tetef, Deputy Attorneys General, for Plaintiff and Respondent.

__________________________________
 Jesus Duran Aguayo and Sofia Aguayo appeal from the judgments upon their
respective multiple convictions and sentences for filing false tax returns, conspiracy to
file false tax returns, filing 19 Preliminary Change of Ownership Reports (“PCOR”)
containing false information in Los Angeles County Recorder’s Office in violation of
Penal Code1 section 115 and conspiracy to file false documents. Specifically they assert
that their convictions on the counts alleging a violation of section 115 must be reversed
as a matter of law because a PCOR does not constitute an “instrument” subject to section
115. In addition, they claim that the trial court imposed unauthorized sentences when it
ordered them to surrender their real estate licenses and to refrain from obtaining real
property through adverse possession. As we shall explain, a PCOR constitutes an
instrument under section 115 because the information contained in a PCOR is used by
public agencies to determine the appropriate property tax to assess to real property
transfers and thus the reliability of the information disclosed in a PCOR affects the
integrity of the public tax rolls. Nonetheless, Aguayos’ contention about their sentences
has merit. Accordingly, we modify their sentences and affirm the judgment in all other
respects.

FACTUAL AND PROCEDURAL BACKGROUND2
Appellants’ Real Estate Business
Since the late 1980s appellants, who are also married, worked as licensed real
estate agents. Mr. Aguayo was also a real estate broker. Their business consisted of
acquiring distressed properties, usually through adverse possession. Some of the
properties they acquired they would fix and sell and others they kept as rental properties;
appellants managed over 100 rental properties between 1992 and 2006.

1
All references to statute are to the Penal Code unless otherwise indicated.

2
The facts and background described here relate only to those convictions that
appellants have challenged on appeal.
2
 Background on the Purpose and Function of PCORs
In connection with obtaining the properties through adverse possession, appellants
filed a quitclaim deed along with a PCOR with the Los Angeles County Recorder’s office
for each property. Pursuant to Revenue and Taxation Code section 480, a change of
ownership statement must be filed whenever there is a change of ownership of real
property. (Rev. & Tax. Code, § 480.)
Under Revenue and Taxation Code section 480.3 a PCOR may be submitted to the
recorder’s office with a deed when a deed is recorded: “Each county assessor and
recorder shall make available, without charge and upon request, a form entitled
‘Preliminary Change of Ownership Report,’ which transferees of real property shall
complete and may file with the recorder concurrent with the recordation of any document
effecting a change in ownership. The form shall be signed by the transferee or an officer
of the transferee certifying that the information provided on the form is, to the best of his
or her knowledge and belief, true, correct, and complete.” (Rev. & Tax. Code, § 480.3,
subd. (a).)
The purpose of the change of ownership statement, and more specifically the
PCOR is to aid the county assessor in carrying out the assessor’s statutory function under
Revenue and Taxation Code section 75.10 to appraise the value of property changing
ownership. In fact, according to the legislative history of Revenue and Taxation Code
section 480.3, in enacting the PCOR, the Legislature declared: “It is the intent of the
Legislature, in enacting Sections 1 and 2 of this act, to establish an additional aid to each
assessor in expediting compliance with Section 75.10 of the Revenue and Taxation Code
with respect to real property which changes ownership, thereby improving cash flows and
increasing revenues for local governments and providing the assessor with timely
information which is needed to ascertain if a change of ownership of real property has
occurred and, if so, to determine the full cash value of that property on the date of the
change in ownership.” (See Rev. & Tax. Code, § 480.3.) To that end, the PCOR and the
change of ownership statement require the party completing the form to disclose specific
information relative to the transfer: “The information shall include, but not be limited to,
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a description of the property, the parties to the transaction, the date of acquisition, the
amount, if any, of the consideration paid for the property, whether paid in money or
otherwise, and the terms of the transaction. The preliminary change in ownership report
shall not include any question that is not germane to the assessment function.” (See Rev.
& Tax. Code, § 480.4; see also Rev. & Tax. Code, § 480.)
A PCOR is not a public document; it is not open for public inspection, and absent
certain limited circumstances described under Revenue and Taxation Code section 480 in
which disclosure is permitted, the information contained in the PCOR is kept
confidential. (See Gov. Code, § 27280, subd. (b).) If the document evidencing the
change in ownership (i.e., the deed) is presented to the recorder for recordation without
the concurrent filing of the PCOR, the recorder may charge an additional recording fee of
twenty dollars, and a change of ownership statement must be filed pursuant to Revenue
and Taxation Code section 480 within 90 days from the date the change of ownership
occurs.3 (Rev. & Tax. Code, § 480.3, subds. (b)& (e) & § 480.)
When it is filed with the recorder’s office the PCOR receives a document number
stamp and a date stamp to indicate that it has been filed. A PCOR is used by the
recorder’s office to determine whether to collect a “transfer tax.” The PCOR is then
separated from the deed and forwarded to the county assessor’s office to determine
whether the change of ownership warrants a re-assessment of the property. A PCOR is
retained for two years in the county assessor’s office after it is received from the county
recorder’s office.

3
Pursuant to Revenue and Taxation Code section 480, “[t]he failure to file a change
in ownership statement within 90 days from the date a written request is mailed by the
assessor results in a penalty of either: (1) one hundred dollars ($100), or (2) 10 percent of
the taxes applicable to the new base year value reflecting the change in ownership of the
real property or manufactured home, whichever is greater, but not to exceed five
thousand dollars ($5,000) if the property is eligible for the homeowners’ exemption or
twenty thousand dollars ($20,000) if the property is not eligible for the homeowners’
exemption if that failure to file was not willful. This penalty will be added to the
assessment roll and shall be collected like any other delinquent property taxes, and be
subject to the same penalties for nonpayment.” (Rev. & Tax. Code, § 480, subd. (c).)

4
 A property appraiser from the Los Angeles County Assessor’s Office testified in
this case about the use of a PCOR by the assessor’s office. The appraiser testified that
the ownership department of the assessor’s office examines PCORs to determine whether
the transfer of property is a reappraisable event. If it is, then the PCOR is sent to an
appraiser for evaluation. The appraiser examines the purchase price disclosed in the
PCOR to determine whether that price represents the fair market value of the property.
The appraiser also uses other data on sales of comparable property to aid in the
determination. The appraiser testified that the benefit of the doubt as to value is given to
the purchase price listed in the PCOR, but also noted that the transaction will receive
additional scrutiny if that price does not reflect fair market value as it relates to other
comparable properties. If the purchase price in the PCOR is accepted as to the value, that
amount is entered in the tax roll, which is then used to determine the property taxes for
the property.
Charges and Evidence Against Appellants
Among the 31 counts filed against appellants,4 they were charged with 19 counts
of filing a false instrument in violation of section 115 and one count of conspiracy to file
a false document based on appellants filing 19 PCORs in the Los Angeles County
Recorder’s Office with false information in them.
A representative of the Los Angeles County Recorder’s Office, Brenda Winston,
testified at trial that between 2001 and 2006 appellants presented PCORs for 19 separate
properties that had been presented to the county recorder’s office along with quitclaim
deeds for those properties. According to Winston, in each PCOR, “Jesus Duran” was
listed as the seller or transferor of the property and “Sofia Aguayo” was listed as the

4
In January 2010, the Los Angeles District Attorney filed a 31-count Information,
alleging that appellants committed: three counts in violation of Penal Code section 182,
subdivision (a), subsection (3) (Counts 1 through 3), three counts in violation of Revenue
and Taxation Code section 19705, subdivision (a), subsection (1) (Counts 4 through 6),
four counts in violation of Penal Code section 182, subdivision (a), subsection (1)
(Counts 7 through 9, and 29), 19 counts in violation of Penal Code section 115 (Counts
10 through 28), and two counts in violation of Penal Code section 132 (Counts 30 and
31).
5
buyer or transferee of the property. In each document, the box next to the question
whether the transfer was between a husband and wife was marked “no.” Each document
indicated that the transfer was a purchase of property directly from the seller. The
documents did not indicate the transfers were gifts or were from a family member. The
property in each document listed a selling price. The selling prices were between $4,000
and $60,000. Each PCOR was signed at the bottom by Sofia Aguayo where it said, “I
certify that the foregoing is true, correct, and complete to the best of my knowledge and
belief.”
With respect to each PCOR, Winston stated that she searched for the name “Jesus
Duran” in the chain of title, but could not find it. Thereafter a letter was sent to Sofia
Aguayo (listed as the buyer) notifying her that the deed was not in the chain of title.
When a deed is not in the chain of title, as in the case of the 19 PCORs in this case, no
action is taken to reassess the property, and the PCOR is placed into a “discard” folder in
the county recorder’s computer system rather than forwarded to the assessor’s office.
During the trial, Mr. Aguayo conceded that he prepared the 19 PCORs subject to
the charges in this case and that his wife, Mrs. Aguayo, signed them. With respect to the
transactions reflected in each PCOR, Mr. Aguayo was the transferor and Mrs. Aguayo
was the transferee. He testified that in each PCOR, next to the question whether the
transfer was between a husband and wife, the document stated in parenthesis “addition of
a spouse, death of a spouse, divorce settlement, et cetera.” Mr. Aguayo marked “no” to
the question because he thought it was not applicable. Mr. Aguayo admitted that he
wrote on each PCOR that his name was “Jesus Duran” even though his entire name was
“Jesus Duran Aguayo.” He claimed that he was not trying to mislead anyone by omitting
his entire name. Although no money was exchanged between Mr. and Mrs. Aguayo for
the properties, Mr. Aguayo indicated on the PCORs that the exchanges were purchases
because there was a transfer of property. Mr. Aguayo admitted that the PCORs included
a box that said “other” which he could have checked, but he “never looked that far” on
the PCORs. When Mr. Aguayo indicated on one of the PCORs that the purchase price
for the property was $20,000, he claimed that he was merely indicating the amount he
6
had invested in the property. One of the PCORs indicated that there was a trust deed in
the amount of $30,000 to be paid over 15 years at 10 percent interest with payments of
$322.30. Mr. Aguayo testified that those numbers represented a loan he was trying to
secure to improve the property.
Mrs. Aguayo also testified during the trial. She admitted that she signed the
PCORs but also claimed she did not prepare the documents or review them before
signing them.
Appellants’ Convictions and Sentences
After a jury trial, appellants were convicted of three counts of filing a false tax
return (Rev. & Tax Code, § 19705, subd. (a)(1); counts 4-6), three counts of conspiracy
to file a false tax return (Pen. Code § 182, subd. (a)(1); counts 7-9), 19 counts of filing a
false document (§ 115; counts 10-28), and one count of conspiracy to file a false
document (§ 182, subd. (a)(1); count 29.)
The trial court sentenced appellants in count 7 to the upper term of three years in
county jail (§ 1170, subd. (h)) and ran the remaining counts concurrently. During
sentencing, the prosecution requested that appellants “surrender all real estate and
contractor’s licenses and refrain from taking properties via adverse possession from this
day forward.” The court granted the request and entered the order, noting the appellants
“can, I’m sure, reapply for licensing at the appropriate time, but at this point they have to
give up their licensing.”
Appellants appeal from the judgments.

DISCUSSION

I. A PCOR is an instrument under Section 115 of the Penal Code

Appellants contend insufficient evidence supports their 19 convictions in counts
10-28 for violating section 115. Specifically, they argue the evidence is insufficient as a

7
matter of law to show that a PCOR is an “instrument” within the meaning of section
115.5 As we shall explain, we disagree.
A. Section 115: Offering a False Instrument for Filing in a Public Office
Section 115, subdivision (a) provides: “Every person who knowingly procures or
offers any false or forged instrument to be filed, registered, or recorded in any public
office within this state, which instrument, if genuine, might be filed, registered, or
recorded under any law of this state or of the United States, is guilty of a felony.”
Before this court there is no dispute that appellants “filed” the 19 PCORs for the
purposes of section 115 nor do they dispute that the county recorder’s office qualifies as a
“public office.” Likewise they are not specifically challenging the sufficiency of the
evidence with respect to the falsity of the information contained in the PCORs at issue.
Rather the dispute here centers on whether a PCOR qualifies as an “instrument” under
section 115.
Section 115 “punishes offering a false instrument for filing.” (People v. Tate
(1997) 55 Cal.App.4th 663, 664; see also People v. Gangemi (1993) 13 Cal.App.4th
1790, 1795.) “‘The core purpose of Penal Code section 115 is to protect the integrity and
reliability of public records.’ [Citations.] This purpose is served by an interpretation that
prohibits any knowing falsification of public records.” (People v. Feinberg (1997) 51
Cal.App.4th 1566, 1579; People v. Parks (1992) 7 Cal.App.4th 883, 887 [Section 115
was enacted in 1872 to protect the integrity of the judicial process and public records].)
The term “instrument” in section 115 is not defined by statute. Instead, our courts
have applied various case-specific definitions to the term over the years. Our Supreme
Court had an opportunity to review the evolution of the definition of the term recently in
People v. Murphy (2011) 52 Cal.4th 81, 89:

5
Although she filed a separate appellate brief in this matter, Mrs. Aguayo has
joined in all of the arguments presented in Mr. Aguayo’s brief.
8
 There currently is no precise, generally accepted definition of the
term “instrument” for purposes of Penal Code section 115. Early
decisions interpreted the term narrowly. People v. Fraser (1913) 23
Cal.App. 82, 85, 137 P. 276 (Fraser), defined an instrument, as used
in section 115, as a written and signed agreement, “delivered by one
person to another, transferring the title to or creating a lien on real
property, or giving a right to a debt or duty.” Cases following
Fraser concluded that a variety of documents not meeting this
definition were not “instruments” within the meaning of section
115. (See, e.g., People v. Fox (1977) 73 Cal.App.3d 178, 180-182,
140 Cal.Rptr. 615 [affidavit of voter registration]; People v. Olf
(1961) 195 Cal.App.2d 97, 101, 15 Cal.Rptr. 390 [application for a
permit to issue securities]; see also People v. Wood (1958) 161
Cal.App.2d 24, 28–29, 325 P.2d 1014 [questioning whether
documents containing false information filed with the Department
of Motor Vehicles were instruments under § 115, but holding that
even if they were, prosecution under § 115 was precluded by special
Veh. Code section making the filing of such documents a
misdemeanor].)
More recent cases construing Penal Code section 115, however,
have rejected Fraser‘s definition and have expanded the meaning of
“instrument” to include a broader range of documents that are filed
or registered with a public entity. (See, e.g., People v. Hassan
(2008) 168 Cal.App.4th 1306, 1315–1316, 86 Cal.Rptr.3d 314
[confidential marriage certificates]; [People v. Powers (2004)] 117
Cal.App.4th [291], 294–295, 11 Cal.Rptr.3d 619 [fishing activity
records filed with Dept. of Fish & Game]; People v. Tate (1997) 55
Cal.App.4th 663, 667, 64 Cal.Rptr.2d 206 [work referral forms
documenting hours worked by probationer on community service
project]; People v. Parks[, supra,] 7 Cal.App.4th at p. 885, 9
Cal.Rptr.2d 450 [temporary restraining order]; Generes v. Justice
Court (1980) 106 Cal.App.3d 678, 682, 165 Cal.Rptr. 222 [deed
filed by defendant, purporting to convey an easement to herself].)
(People v. Murphy, supra, 52 Cal.4th at pp. 89-93.)

The Murphy court further observed that the more recent cases have rejected
Fraser's restrictive definition of “instrument” without attempting to create an alternative,
comprehensive definition of that term. (See, e.g., People v. Parks, supra, 7 Cal.App.4th
at p. 887 [“Whatever else may be meant by the word ‘instrument,’ on these facts we find

9
that protection of judicial and public records such as the documents in this case was
clearly within the legislative intent of section 115.”].) In People v. Powers, supra, 117
Cal.App.4th at page 297, the court endorsed the view that a document is an instrument if
“‘the information contained in the document is of such a nature that the government is
required or permitted by law, statute or valid regulation to act in reliance thereon; or . . .
the information contained in the document materially affects significant rights or duties
of third persons, when this effect is reasonably contemplated by the express or implied
intent of the statute or valid regulation which requires the filing, registration, or recording
of the document.’ [Citation.]” Thus, in deciding whether section 115 applies, the more
recent cases have focused on the purpose of the statute, which is the “protection of
judicial and public records.” (People v. Parks, supra, 7 Cal.App.4th at p. 887, see also
People v. Tate, supra, 55 Cal.App.4th at p. 667.)

Although the Murphy court expressly did not adopt a definition of the term
instrument, the Court analyzed this issue before it by looking at how the document in
question—a vehicle theft report—and the information disclosed in it is used by the public
agency where it was filed. (See People v. Murphy, supra, 52 Cal.4th at p. 94.) Likewise,
in People v. Powers, supra, 117 Cal.App.4th at page 297, the court concluded the fishing
records at issue were instruments within the meaning of section 115 because (1) the
Department of Fish and Game relied on the records to set fishing limits, which materially
affect commercial fishing enterprises and recreational anglers; and (2) the management of
fisheries demanded accurate information. In People v. Hassan, supra, 168 Cal.App.4th at
page 1316, the court concluded that confidential marriage certificates are instruments
“given the requirement that they be recorded, their importance, and the vast legal
consequences that flow from them.” With these principles in mind, we turn to appellants’
contentions.

10
 B. Analysis

Appellants argue that the PCOR is not an instrument under section 115 because:
(1) PCORs do not “compromise” the integrity of judicial or public records; (2) PCORs
are not “public documents”; (3) filing a PCOR is optional; and (4) it is not a legally
significant document – no legal consequences result from its submission. Appellants’
contentions lack support in both law and fact.

Pursuant to statute and practice, the PCOR requires the disclosure of certain
information about the transfer of the property that is used by the county recorder to
determine whether a transfer tax should be collected for the transfer. In addition the
assessor’s office relies on the information disclosed in the PCOR to assist in the
determination of whether the transfer of property is a re-appraisable event and also as an
aid in determining the fair market value of the property. According to the appraiser who
testified at trial, deference may be given to the purchase price listed in the PCOR and if
the purchase price in the PCOR is accepted as to the value, that amount is entered in the
tax roll, which is then used to determine the property taxes for the property. That the
assessor may also refer to other information to confirm the value of the property does not
undermine the fact that appraisers routinely use and rely on PCORs to assist them in
performing legally mandated property assessment duties. Thus, in our view, the
information contained in a PCOR has significant consequences for public tax records.

For these reasons, we conclude that a PCOR is an instrument within the meaning
of section 115 because the information contained in a PCOR is used by public agencies to
determine the appropriate property tax to assess to real property transfers. The reliability
of the information disclosed in a PCOR affects the integrity of the public tax rolls. The
central purpose of section 115 is to protect the integrity and reliability of public records,
and this purpose is served by an interpretation of section115 that prohibits any knowing
falsification of information disclosed in a PCOR.

11
 Furthermore, the fact that a PCOR is a confidential document that is not open for
public inspection does not change the analysis. Section 115 applies to documents
submitted for filing in a public office, but its protection has never been limited only to
those instruments available and open for direct public inspection. (People v. Powers,
supra, 117 Cal.App.4th at p. 297 [section 115 applied to confidential records]; People v.
Garfield (1985) 40 Cal.3d 192, 195 [it is a violation of section 115 to knowingly offer a
false will for probate even if the will is not itself a public document and does not deceive
the public].)
Finally, in reaching this conclusion we reject appellant’s contention that a PCOR
lacks legal significance, and thus is not an instrument because a $20 fee may be
submitted in lieu of filing a PCOR and thus filing a PCOR is “optional.” First, the
contention that the PCOR lacks legal import is belied by evidence in this case that both
the county recorder and assessor use and rely on the information in the PCOR to perform
their respective statutory functions. Indeed the information sought in the PCOR must be
disclosed at some point after the transfer of the property, either at the time of recording
the deed or within 90 days of the change of ownership. Thus, although filing a PCOR
may be technically “optional,” that circumstance does not undermine the purpose or
usefulness of a PCOR when it is filed. Based on the record in this case the information
contained in the PCOR is of such a nature that the government is permitted by statute to
act in reliance upon it.

Second, appellants have no authority for the proposition that section 115 applies
only to mandatory (rather than optional) filings. “Section 115, by its terms, limits
prosecution for filing false or forged instruments to those instruments which, ‘if genuine,
might be filed, registered, or recorded’ under state or federal law. Recording a false or
forged instrument is not actionable under section 115 if the instrument was not legally
entitled to be recorded. [Citation.] (Italics added.)” (People v. Powers, supra, 117
Cal.App.4th at p.295.) The test is whether a law authorizes the recording of the
instrument, not whether the law mandates the recording or filing of the instrument.

12
(People v. Harrold (1890) 84 Cal. 567, 569-570 [no law allows for the recording of an
assignment of interest in letters of patent in the office of the county recorder, therefore
section 115 is inapplicable since even if the instrument were genuine, it would not be
entitled to be recorded under the law of the state].) This requirement is met here, where
the law authorizes the filing of a PCOR. (See Rev. & Tax. Code, § 480.3.)

In view of all of the foregoing, sufficient evidence supports appellants’ 19
convictions for violating section 115 based on filing PCORs containing false information.

II. The Sentences Imposed that Required Appellants to Surrender Their Real
Estate Licenses and Refrain From Obtaining Property Through Adverse
Possession Are Unauthorized
The authority to designate the punishment for crimes is vested exclusively in the
legislature. (People v. Tanner (1979) 24 Cal.3d 519, 519.) The power of the trial court
to sentence a criminal defendant is granted and limited by statute; the duty of the court is
“to determine and impose the punishment prescribed.” (§ 12.) Thus, the sentencing
court cannot impose a sentence that is not authorized by statute and “has no inherent
authority to devise ad hoc penalties for crimes.” (People v. Montano (1992) 6
Cal.App.4th 118, 123 [holding court exceeded its authority in ordering defendant to pay
probation costs], superseded by statute, People v. Orozco (2011) 199 Cal. App.4th 189,
191, 131.)
Appellants contend, and the Attorney General properly concedes, that the trial
court’s orders requiring appellants to surrender their real estate licenses and refrain from
taking properties through adverse possession were not authorized sentences pursuant to
sections 115, 182 or Revenue and Taxation Code section 19705 under which appellants
were charged and convicted. Indeed, by statute the authority to bar a convicted felon
from practicing as a real estate agent, broker or salesperson is vested in the Department of
Real Estate. (Bus. & Prof. Code, §§ 10003, 10071.)

13
 The California Supreme Court has held that an unauthorized sentence may be
corrected at any time even if there was no objection in the trial court. (In re Sheena K.
(2007) 40 Cal.4th 875, 886; People v. Smith (2001) 24 Cal.4th 849, 854.) Such an
unauthorized sentence may be corrected even where, as here, it is raised for the first time
on appeal. (People v. Smith, supra, 24 Cal.4th at p. 854.) We therefore strike the trial
court’s orders requiring appellants to surrender their real estate licenses and refrain from
taking properties through adverse possession.

DISPOSITION
The judgments are hereby modified to strike the orders requiring appellants to
surrender their real estate licenses and refrain from taking properties through adverse
possession. Upon remittitur issuance, the clerk of the superior court is directed to prepare
amended abstracts of judgment for each appellant reflecting these modifications and to
forward copies to the California Department of Corrections and Rehabilitation. The
judgments are affirmed in all other respects.

WOODS, J.

We concur:

PERLUSS, P. J.

ZELON, J.
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