The song was originally released in 1958 by The Crests:
So why why did the Jackson 5 ever record such a hokey, dated song? Well, we may have a couple of clues in the song itself. Jermaine sings the lead vocals, and he changes the lyrics in a significant way. Instead of singing what The Crests did:
Sixteen candles make a lovely light
But not as bright as your eyes tonight
But not as bright as your eyes tonight
Jermaine sings:
Sixteen candles make a lovely sight
But not as bright as your hazel eyes
But not as bright as your hazel eyes

It's all speculation, of course, but the pieces do all fit together.
In Holland and Sweden, where "How Funky Is Your Chicken" was released as a single, "Sixteen Candles" was used as the B-side.

Whether is was an album cut or a single, it was never a popular song among fans, except for those young female fans about to turn 16. They all knew exactly who Jermaine was singing to.