In an initial decision in October, the ICC pre-trial chamber sided with the prosecution, ruling that the investigation into Duterte began before the Philippines’ withdrawal.
The appeals court threw out the defence team’s challenge to that decision.
The court “has rejected all four grounds of appeal”, said presiding judge Luz del Carmen Ibanez Carranza.
“Having rejected the entire appeal, the appeal chamber considers that the defence request for the immediate and unconditional release of Mr Duterte is moot,” she added.
Duterte’s defence lawyer Nicholas Kaufman said he was not surprised by the verdict given the fact that the Duterte trial is the one remaining high-profile case at the ICC.
“Allowing the appeal would have practically emptied the Court’s docket,” he said in a statement to AFP.
In a separate procedure, judges are weighing whether to confirm the charges against Duterte, the final step before a trial, which would be the first against a former head of state from Asia.
At hearings in February, the prosecution alleged that Duterte was responsible for thousands of deaths during his war on drugs.
His defence said there was no “smoking gun” directly linking Duterte’s fiery rhetoric and threats against drug users and actual murders.
In any case, Duterte is unlikely to appear in court.
The court granted his request not to appear for the hearings in February, with his defence saying he was not mentally fit.
The only time he has been seen since his arrest and transfer to The Hague was at an initial appearance via videolink, at which he came across as confused and exhausted.
He did not appear at Thursday’s reading of the decision.