Louis Sanzo, the New York labor union president accused of taking a $2,000 payoff in 1977 from Secretary of Labor Raymond J. Donovan's construction company, testified under orders yesterday to a federal grand jury, and reportedly swore that the incident never took place.

Sanzo underwent about three hours of questioning at the U.S. Courthouse in Brooklyn after District Judge Charles P. Sifton directed him to testify under a grant of immunity.

The stocky union president, who heads Laborers Local 29 in New York City, has been accused of taking an envelope containing $2,000 in cash from an executive of Schiavone Construction Co., Donovan's company, during a 1977 luncheon at a Long Island City restaurant.

The key witness in the investigation, Mario Montuoro, former secretary-treasurer of Local 29, has testified that Donovan, then executive vice president of Schaivone, was present at the table when another Schiavone official handed Sanzo the "token of appreciation."

Sanzo initially denied Montuoro's account as untrue and denounced his former colleague as "sick, sick, sick."

The members of Local 29, which is also known as the Blasters' Union, have been working for years on New York subway projects for Schaivone Construction and allied contractors.

Sanzo was convicted last year of income tax evasion and conspiracy to evade taxes in connection with some $200,000 worth of payoffs from another contractor, unrelated to Schiavone Construction. He was sentenced to three years in prison last August following a hearing at which government prosecutors charged that Sanzo was a willing "front" for the Lucchese family of the Mafia and that the Lucchese family actually controlled Local 29.

Currently free on a $20,000 personal recognizance bond, Sanzo is appealing his conviction.

Sanzo's lawyer, Jeffrey Weisenfeld, said his client would have no comment on his grand jury appearance yesterday. Weisenfeld described it as "the first and hopefully the only appearance" Sanzo would make.