Short answer. No. Article 1729 gives laborers and material suppliers a direct action against the owner up to what the owner still owes the contractor. And it expressly provides that payments the owner made to the contractor before they were due shall not prejudice those workers and suppliers.
What the law says
the following shall not prejudice the laborers, employees and furnishers of materials: (1) Payments made by the owner to the contractor before they are due
Civil Code, Article 1729 — Direct Action of Laborers and Materialmen. Read the full provision →
The direct action against the owner
Ordinarily workers and suppliers deal with the contractor, not the owner, so if the contractor fails to pay them they would have no one else to pursue. Article 1729 changes that. Those who put their labor upon or furnish materials for a piece of work undertaken by the contractor have an action against the owner up to the amount owing from the latter to the contractor at the time the claim is made. This gives the people who actually built the work a direct claim against the owner, but only up to what the owner still owes the contractor. It is a ceiling tied to the owner's remaining debt.
Early payment does not shrink that claim
An owner might think that by paying the contractor ahead of schedule the debt is gone, leaving nothing for the workers to reach. The article forecloses that. It provides that the following shall not prejudice the laborers, employees and furnishers of materials: (1) Payments made by the owner to the contractor before they are due. So payments made ahead of time are, in effect, disregarded when the workers' claim is measured. The owner cannot defeat the direct action by rushing money to the contractor early; as against the laborers and suppliers, that amount is still treated as owing.
Renunciation by the contractor is also ignored
The provision names a second manoeuvre that will not work against the workers: Renunciation by the contractor of any amount due him from the owner. If the contractor simply waives or forgives what the owner owes, that waiver does not bind the laborers and suppliers either. Between them, these two rules block the obvious ways an owner and contractor might arrange things — early payment or a convenient waiver — to leave the people who did the work with an empty claim. Their protected amount is measured as if neither the early payment nor the renunciation had happened.
The limits of this protection
The protection is real but not unlimited. The direct action reaches only up to the amount owing from the owner to the contractor — measured without the early payments and renunciations the article disregards. If the owner has genuinely and fully paid everything properly due, there may be nothing left to reach through this route. The article also ends by stating that it is subject to the provisions of special laws. So other statutes, such as labor legislation, can add to or affect a worker's remedies beyond what this Civil Code provision alone provides.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Grandspan Development Corporation vs. Franklin Baker, Inc. and Advance Engineering Corporation, G.R. No. 251463, August 2, 2023 — read the decision on LawPhil →
- JL Investment & Devt., Inc. vs. Tendon Phil., Inc., et al, G.R. No. 148596, January 22, 2007 — read the decision on LawPhil →
- Del Monte Philippines., Inc, vs. Napoleon N. Aragones, G.R. No. 153033, June 23, 2005 — read the decision on LawPhil →
- Noell Whessoe vs. Independent Testing Consultants, Inc. Petrotech Systems, Inc. and Liquigaz Philippines Corp, G.R. No. 199851, November 7, 2018 — read the decision on LawPhil →