By Eileen A. Mencias

THE financially troubled Legacy Group gave its depositors bad advice when it told them to split their funds into several accounts under P250,000 so they could recover their money from insurance after the bank collapsed.

At a press conference yesterday, Philippine Deposit Insurance Corp. president Jose Nograles said that under current regulations, individual depositors were covered only up to P250,000 regardless of the number and type of accounts they had with one bank.

Before they collapsed, the rural banks under the Legacy Group had encouraged depositors to split their accounts into chunks of P250,000 to ensure deposit insurance.

But Nograles said that would have done them no good, since the effective insurance coverage for single depositor accounts could not exceed P250,000 even if the depositor had three different types of accounts?savings, checking and time deposits.

Joint deposit accounts were also limited to a maximum coverage of P250,000, with the insurance being split among the owners of the account, he added.

Moreover, Legacy Group depositors were likely to have to wait longer to get their money back because the insurance authorities must verify accounts that are classified as doubtful, Nograles said.

He said insurance claims covering P13.62 billion in deposits in the 12 closed rural banks under the Legacy Group were not likely to be paid soon after an audit of the banks? books showed that the accounts were doubtful.

Nograles said the PDIC had paid P138.5 million of the claims from depositors in the rural banks, and that it would pay another P242.5 million soon.

?The story really is in the amounts,? Nograles said.

The 12 rural banks had 134,000 accounts with total deposits reaching P14 billion. But 60,664 accounts representing P7.57 billion of the deposits needed further verification.

And of the 73,989 accounts with P6.46 billion in deposits that had been verified, 31,103 accounts worth P6.05 billion in deposits were classified as doubtful accounts.

Nograles said 42,886 of the accounts were validated and identified as legitimate claims amounting to P381 million.

He said the PDIC charter required them to establish that funds really went into the bank as deposits.

For the PDIC to establish that, it needed to examine six documents: the bank copy of the official receipt, the bank?s general ledger, the subsidiary ledger or the bank copy of the certificate of time deposit, the original deposit slips, the debit or credit ticket and the proof sheet.

In the absence of these documents, the PDIC would need to look at the cashiers? and the tellers? blotters as secondary documents.

Nograles said the value of the assets in the 12 rural banks of the Legacy group amounted to only P83.5 million when the PDIC came in for receivership.

Based on the central bank?s report of examination, the 12 banks had P8.7 billion in assets as of the end of September 2008, with liabilities amounting to P8.5 billion and deposits amounting to P15.8 billion.

But the books of the banks reported P22.5 billion in assets, P24 billion in liabilities, and P16.8 billion in deposits with a cash or near cash at hand of P983.42 million.

Nograles said the PDIC was considering tapping the services of a third party again to help it evaluate the accounts that needed further verification. The agency tapped KMPG for the initial audit of the books to speed up the payment of claims.

The challenge was to segregate valid deposit claims and to determine the victims from perpetrators [of the fraud],? Nograles said.

Of the 12 rural banks, the Rural Bank of Para?aque was the biggest with close to P5 billion in deposits, followed by the Pilipino Rural Bank in Cebu with P1.86 billion.

The PDIC appealed to former employees and officers of the rural banks under the Legacy Group to surrender documents to the office of Senator Manuel Roxas II to help facilitate the verification of the accounts and the payment of the claims.

Cases of syndicated estafa has been filed against Legacy group owner Celso de los Angeles, his son Martin Nicolo de los Angeles, and 19 others at the Justice Department for siphoning funds out of the Rural Bank of Carmen in Cebu.

At the House, Albay Rep. Edcel Lagman urged the Justice Department to speed up the resolution of the charges against De los Angeles so an airtight case could be filed against him.

PDIC general counsel Romeo Mendoza Jr. said the before De los Angeles could be jailed, the Justice Department must find sufficient basis for the charge so an arrest warrant could be issued against him.

He said more cases would be filed against De los Angeles and other officials of the Legacy group.

The cases involve the alleged creation of 39 fictitious loans in the Rural Bank of Carmen amounting to P16.85 million that were allegedly transferred to his son, Martin Nicolo, and to other Legacy-related companies such as Legacy Motors Inc., Fusion Capital Corp., and Edifice Realty and Development Corp.

PDIC officials said De los Angeles owned 98.94 percent of resource Providers and Manpower Services Inc., which in turn owned 99 percent of Edifice Realty and Development Corp.

They said De los Angeles erased 39 fictitious loans from the PDIC books by purchasing the loans from the Rural Bank of Carmen using the 9.8-hectare Calanggaman island in Leyte as payment.

One month later, the Rural Bank of Carmen sold the island to Edifice Realty and Development Corp. for P32 million on installment over a 15-year period.

The PDIC said the amortization payments by Edifice for the island were funded by the accounts of Legacy Motors and Fusion Capital Corp., both of which are under the Legacy Group, and that the accounts were fictitious. With Roy Pelovello