FACTS:

Alfredo B. Lao was an employee of San Miguel Corporation (SMC) as a materials planner. In December 1995, security personnel received information that some deliveries of cullets (raw materials used by SMC) were being misdeclared. Surveillance work conducted by the security personnel revealed an attempt by Four Sisters, the company's supplier of cullets, to divert three truckloads of unwashed cullets. On January 19, 1996, three trucks loaded with cullets arrived at SMC's Manila Glass Plant, but instead of being sent to Marilao, Bulacan for washing purposes, the cullets were brought to Cabuyao, Laguna. Upon investigation by the Cabuyao Police, Alfredo Lao and the owner of Four Sisters Bottle dealer arrived and interceded for the release of the cullets and the drivers. SMC subsequently terminated Lao's employment for violation of the rule prohibiting the removal of company property without proper authorization. Lao filed a complaint for illegal dismissal, claiming that he interceded for the release only after being assured by the owner of Four Sisters that he would take the matter up with SMC. The labor arbiter dismissed the complaint, but the NLRC ordered SMC to pay Lao retirement benefits or separation pay. The Court of Appeals affirmed the NLRC's ruling, holding that management discretion in implementing the retirement plan cannot be exercised arbitrarily or capriciously. SMC filed a petition before the Supreme Court assailing the decision to award retirement benefits to Lao.

ISSUES:

RULING:

PRINCIPLES:

• Employees have an enforceable vested interest in the retirement fund upon acceptance of employment.

• Management discretion in implementing the retirement plan cannot be exercised arbitrarily or capriciously.

• Termination for cause does not automatically disqualify an employee from receiving retirement benefits.