Taxes levied by the Philippines on alcoholic drinks from the European Union and United States are illegal under global trade rules, the world's trade dispute body ruled on Monday, according to sources close to the case.

In a confidential report circulated to the parties involved in the dispute, a legal panel at the World Trade Organization ruled the Philippines' spirits taxes discriminate against brands such as Jack Daniel's and Jim Beam as well as Spain's Brandy de Jerez, while favouring domestic producers catering for the Asian archipelago's $3 billion spirits market, the sources said.

The ruling will be made public in August. (Reuters)