(Adds Puerto Rico's statement that it will appeal and percentage jump of Doral's stock price.)
SAN JUAN, Puerto Rico, Oct 10 (Reuters) - A Puerto Rico judge ruled in favor of Doral late on Friday in its $229 million tax dispute with the Puerto Rico Treasury Department, which said it would appeal.
"The court finds that the State failed to prove that relevant facts were falsified," Puerto Rico Superior Court Judge Laureana Perez said in her 48-page ruling.
Following the ruling, Doral's shares jumped more than 30 percent in after-hours trading to $7.25 from $5.29.
Puerto Rico's Treasury Secretary said it would pursue "all legal options available" to appeal the ruling, noting that it "sets a dangerous precedent."
Last May, the Treasury Department voided a 2012 agreement that set a $229 million tax refund for Doral resulting from a restatement of inflated earnings during a six-year period from 1998 to 2004. Doral asked for the payment after U.S. regulators said earlier this year it could no longer include the money as cash on its balance sheet.
Treasury Secretary Melba Acosta said the agency voided the deal because it was never recognized in government accounting books and because the statute of limitations had run out on the refund. Officials also cited discrepancies in Doral financial documents and said the agreement was reached through fraud.
In response to the ruling, Doral's Chief Legal Counsel Matthew McGill of Gibson, Dunn & Crutcher, said in a statement that it was "a great day not just for Doral but also for the rule of law in Puerto Rico. Doral stands ready to work with Hacienda to put this litigation behind us all and to move forward serving the people of Puerto Rico."
Puerto Rico's Treasury Department said the refund payment of over $200 million would need to be repaid in five installments over a five year period and would "remain contested by the Commonwealth of Puerto Rico until appeal processes within the judiciary system are resolved."
The department also noted that the applicable law allows for longer payment plans for payment of judgments. (Reporting by Reuters in San Juan; Editing by Chris Reese and Ken Wills)