MANILA, Philippines—Her illness may have saved Myra Dizon from putting more money, and losing it, in the Legacy Group.
Having just come out of a hospital confinement, Dizon was excited to personally deposit her P5,000 in her account in the San Jose Rural Bank in San Jose, Batangas, anticipating that her money would grow fast in the coming months.
A loyal customer of the bank since she was an elementary 
The money in her account reached P50,000 at one point. But with Dizon’s chronic illness which often required hospitalization, most of that had to be withdrawn until only about P5,000 was left.
After she was discharged from hospital, Dizon thought of immediately replenishing her account with P5,000, plus another P15,000 from her husband.
“My excitement turned into disappointment when I learned from my co-depositors that the bank had closed,” she said.
The San Jose Rural Bank declared a bank holiday on Dec. 8, following the lead of other rural banks in the Legacy group of companies that have since been placed under receivership by the Bangko Sentral ng Pilipinas.
Dizon had reason to be thankful that she had not recovered from her illness sooner or the family would have lost P20,000, in addition to the P5,000 left in her account, which she still hopes she can recover.
Feelings of anger, anxiety and disappointment overcame countless unsuspecting depositors the day the Legacy chain—the Rural Bank of Parañaque, PRBank, Rural Bank of Bais, Rural Bank of San Jose, Bank of East Asia, First Interstate Rural Bank, Philippine Countryside Rural Bank, Dynamic Rural Bank, Nation Bank, Rural Bank of Carmen, Rural Bank of DARBCI, Bicol Development Bank and San Pablo City Development Bank—shut their doors on them.
Double-your-money scheme
In Tagbilaran City, a depositor of another Legacy-owned bank, the Pilipino Rural Bank (PRBank), fumed as he railed at the bank’s offering a high-interest deposit scheme and not being able to make good on it.
“I hope PRBank officials and owners will be held accountable for this,” said engineer Abdon Añora.
In Argao, Cebu, barangay chair Fedlemido Albero had just deposited P45,000 in his checking account at the PRBank branch in his town three days before it closed.
That money was meant to pay a supplier of his food-supplement business, Albero said.
Albero’s family also had a trust fund in the bank earning a monthly interest of P8,000 under a double-your-money scheme. He said the trust account supported part of the family’s monthly expenses.
Word about the Legacy group’s “double your money” scheme spread like wildfire among overseas recruitment agencies in Metro Manila, and about “300 to 400” of them signed up as investors, according to two victims of the scheme.
Analisa Soto and Romeo Escobar, owners of recruitment agencies in Makati and Taguig, respectively, invested in a “double your money” scheme at the Legacy group’s Asiatrust Bank.
Soto’s P1 million deposit, which was supposed to be held in escrow, went down the drain with the closure of Legacy’s Banco Parañaque, where the money was invested by Asiatrust.
“The money in escrow should have been invested in more secure financial instruments or products,” said Soto.
Stand-by fund gone
The Philippine Overseas Employment Administration requires job recruitment agencies to set aside P1 million as a standby fund to be used to pay for awards and damages in case of conflict between the workers and the agencies. The job firms have to deposit the P1 million in escrow with a bank.
Soto and Escobar said they were enticed by the promise of the high interest earnings. According to Soto, since the bank which previously held her P1 million in escrow did not pay interest on the deposit, she decided to move the deposit to Asiatrust.
According to Escobar, he was enticed by the prospect that his P1 million would earn double while held in escrow by Asiatrust. After two meetings with a Legacy agent, whom he identified as Victor Fortuna, Escobar decided to move his funds to Asiatrust in 2006.
Soto said Fortuna was also the Legacy agent who convinced her to place her money in Asiatrust.
With his deposit dissolving in thin air, Escobar is now afraid for his business as he would have to raise another P1 million for the standby fund to be able to renew his license.
“Given that I might get P250,000 from the insurance, I still have to put up another P750,000 to meet the requirement. This might be tough to raise since our deployment today is weak,” he said.
Second time around
To those “gullible enough to be fooled by high interest offers,” Añora has this advice: “If it’s too good to be true, it must be a scam.”
He said the PRBank’s clients include two big-time financiers of “Swertres,” a numbers game in Bohol, a prominent politician, businessmen, retirees and overseas Filipino workers.
Some depositors, however, do not believe it was a scam or feel embittered against the erring banks.
Retired midwife Cecinia Vallejera said she still trusts the country’s banking system, recalling a similar experience in the early 1980s when Banco Filipino declared a bank holiday and was eventually shut down. She recalled having been unable to get her deposits for two months.
“I am confident that I can also get back my money the second time around,” said Vallejera, a depositor of First Interstate Rural Bank in Palo, Leyte.
UPLB professors
Lourdes Redoloza, 65, a retired professor of the University of the Philippines Los Baños, is optimistic that she can still recover her time deposit. “It’s not a scam, and definitely not deceitful,” she said.
At the urging of a friend, she initially deposited P100,000 of her retirement money in 2006, which stayed with Legacy for five years.
“I was encouraged then since I was already retired. I was technically jobless,” she said. The Legacy agent had promised to double her investment.
She invested another P250,000, which she would have been able to withdraw after three years. But before the maturation date arrived, Legacy filed for corporate dissolution.
Still Redoloza remains hopeful that she can get back her money. She said many UPLB professors and retirees were investors in the company, some putting in millions of pesos.
“Mine was not that big compared to the amount they invested. And I know I will still get the amount,” she said.
“Other people think that the terms were too good to be true, but there was nothing wrong with what the company offered its investors. The terms were just like ordinary time deposits in other banks,” Redoloza said.
Claim forms
The Philippine Deposit Insurance Corp. (PDIC) may start issuing claim forms to all Legacy depositors in the first week of February, according to Eden Reyes, of the agency’s depositors’ assistance bureau.
The PDIC has asked an external audit firm, KPMG Manabat Sanagustin & Co., to fast-track the pre-settlement examination of deposit accounts in the 13 Legacy-owned banks placed under receivership by the Monetary Board.
“Our priority is to service the claims of small depositors with deposits of P100,000 and below because the PDIC’s mandate is to protect the small, unsophisticated depositors. These depositors represent about 62 percent of the total deposit accounts in these 12 closed banks,” said PDIC president Jose Nograles.
But Jose Torralba, a former mayor of Tagbilaran, Bohol, and a big Legacy depositor, is apprehensive. He has asked Bohol Gov. Erico Aumentado to arrange a meeting with PDIC officials on how to get the depositors’ claims fast.
The same anxiety is felt by small depositors, like Myra Dizon of San Jose, Batangas. For a sickly woman with three children in school and a husband planning to work overseas, recovering her P5,000 immediately would be a great help. Reports from Kit Bagaipo, Jhunnex Napallacan, Carla P. Gomez and Joey A. Gabieta, Inquirer Visayas; Marrah Erika Lesaba and Karen Lapitan, Inquirer Southern LuzonF
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