Duterte's unprecedented crackdown has worsened severe congestion in Philippine jails, with AFP photographs of Quezon City Jail in July exposing how inmates in one of the nation's most overcrowded detention facilities took turns to sleep on an open-air basketball court and a staircase.
Duterte has credited China for supporting his crime war, which the United States and the United Nations have criticised over alleged extrajudicial killings. Beijing has provided funding for rehabilitation and offered weapons for the campaign that has left more than 5,000 people dead.
"It's meant to help the anti-crime campaign of our president. It's really for jails," prison director Serafin Barretto told AFP.
"We feel happy because this will be a big help to address the lack of resources."
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Barretto added that his agency decided to use the money to fund the construction of a new Quezon City Jail, which was built six decades ago for 800 inmates but now houses almost 3,000.
The spike in arrests has packed an underfunded and overwhelmed penal system, with the population in Quezon City Jail soaring to 4,100 in August.
The number had since gone down after a local court agreed to temporarily admit new inmates to other jails in Manila with more space, warden Randel Latoza told AFP.
City and jail officials said the AFP report fast-tracked the transfer of land for a new facility that could house 6,000 inmates by 2019 but finances remained a challenge.
Officials collaborated with the International Committee of the Red Cross to present a new jail design by January.
"We hope to build a first of its kind jail in the Philippines, in Asia, that really factors in the needs of inmates," Latoza said.