The consortium of China Communications Construction Co (CCCC) and Philippine firm MacroAsia Corp was the only bidder in the 2019 auction to help the Cavite provincial government upgrade Sangley airport, in what would have been one of the country's most expensive infrastructure projects.
Cavite's governor Juanito Victor Remulla told Reuters on Wednesday the consortium's documentation was "deficient in three or four items".
"We saw it as a sign they were not fully committed," Remulla said.
MacroAsia made the announcement on Wednesday. It said earlier that coronavirus travel curbs had prevented the consortium from providing necessary documents.
Its shares closed up 0.36% having earlier fallen as much as 19% over the cancellation.
China's CCCC did not respond to a request for comment.
Remulla said the decision was not related to a U.S. sanctioning of CCCC and other Chinese state firms in August.
The United States has blacklisted numerous Chinese companies over their roles in building military installations on submerged reefs in disputed areas of the South China Sea, including one within missile range of the Philippines.
The Philippine foreign minister had recommend projects involving those firms be terminated. Duterte's office, however, rejected that arguing their completion was in the national interest.
The collapse of the airport deal will be a setback for Duterte, whose opponents say he has gambled with sovereignty and bet heavily on China transforming the Philippines' outdated infrastructure with billions of dollars of investment that has largely not materialised.
Duterte, whose six-year term ends next year, has seen dozens of projects under his "build, build, build" programme delayed, cancelled or downsized.
He has been criticised for threatening to cut ties with old ally the United States while heaping praise on China's leadership and refusing to confront it over the conduct of its navy and coastguard in the South China Sea.
His spokesman, Harry Roque, declined to comment on the airport deal or the president's China policy.
The Sangley airport was one of two multi-billion airport projects intended to take pressure off Manila airport.
Governor Remulla said in a Facebook post that Cavite would start new negotiations for a private sector partner.
Chinese foreign ministry spokesman Zhao Lijian was not aware of the issue but said the government supported legal operations of Chinese firms in the Philippines.
"We hope the Philippines can provide a conducive business environment for Chinese companies," he said.
(Reporting by Neil Jerome Morales and Karen Lema in Manila; Additional Reporting by Brenda Goh and Lun Tian in Beijing; Editing by Stephen Coates, Martin Petty)
By Neil Jerome Morales and Karen Lema