FIBA - world basketball's governing body - suspended 10 Philippines players and two coaches over the incident, which saw playing staff and supporters exchanging punches and flying kicks at the clash in the city of Bocaue on 2 July.
"We simply do not have the time and chance to send an optimal team for the Asian Games and will instead focus on building up to the next round of world qualification," said Al Panlilio, president of the Philippine basketball federation (SBP).
"We will file an appeal on the FIBA decision and clarify important aspects of the decision," added Panlilio, who has yet to elaborate on the appeal details.
The SBP is still reeling from this month's qualifying incident, which left the Australian party with fears for their safety - prompting the squad to utilise embassy assistance in order to fast track their departure from the Philippines.
The SBP's decision to pull out of the Asian Games is a surprising one, given that basketball is one of the most popular sports in the Philippines.
The multi-sporting event is one of the biggest in the world behind the Olympic games. This year Indonesia will host 45 Asian nations from 18 August to 2 September.
Switzerland-based FIBA has hit the SBP with a fine of 215,000 euros.