Thank you for your replies. I think we have found the root cause. We have
found below:

When you are using variables in a proxy_pass directive, nginx will use
runtime resolving except if :
    the target server is declared as an IP address
    the target server name is part of an upstream server group
    the target server name has already been resolved (e.g. it matches a
server name in another server block)

In our case we have one server block, with default set. Apache is sending
server name as legacy.domain.com and nginx also proxying to
legacy.domain.com, so I belive  because both server name and proxy host is
same, nginx not trying to re-resolve the ip address.

Posted at Nginx Forum: 
https://forum.nginx.org/read.php?2,277101,277164#msg-277164

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