46 paid, which led to the factory being embargoed.142 In addition, the seized factory was leased to a private individual, an action that not only disregards the Regulations for the application of the NDPSA,143 but also was not accompanied by the inspection and monitoring of the work of the lessee. The Court underscores that the said lease contract included the obligation of monthly supervision;144 however, no evidence was provided that this occurred. The lease contract also provides evidence of the deterioration of the property.145 213. In his testimony before the Court, Mr. Chaparro stated that when the factory was returned no “type of maintenance could be observed during the whole time [it had been seized and in deposit]. None of the molding equipment was in working order […] all the equipment was damaged, […] the lessee had neither maintained the equipment nor responded for the damage.”146 According to Mr. Chaparro, the damage to the machinery and the failure to return certain property prevented the company from starting up production after it had been returned. The State did not dispute the foregoing. 214. The Court considers that the State is responsible for this damage, because the property was in its custody. Consequently, it declares that the State violated the right to property established in Article 21(1) of the American Convention, in relation to Article 1(1) thereof, to the detriment of Mr. Chaparro, because, as a result of the unsatisfactory administration of the factory and the deterioration in it, Mr. Chaparro was deprived such as the CPUs, were incomplete inside” (Cf. report No. 001-DBD-JRL-CONSEP-02 of February 18, 2002, issued by the #2 Custodian, CONSEP Guayas (file of appendixes to the application, appendix 3, volume II, folios 648 and 649). 142 Owing to failure to comply with tax obligations, on April 1, 2003, the Regional Directorate of the Southern Littoral Internal Revenue Service closed the company. Cf. non-filers closure decision No. 922003340002328 issued on April 1, 2003, by the Regional Director of the Southern Littoral Internal Revenue Service (file of appendixes to the application, appendix 3, volume II, folio 445). This sanction was lifted on May 2, 2003. When lifting the sanction, it was indicated that “the obligations on which the closure were based are the responsibility of the National Council of Narcotic Drugs and Psychotropic Substances.” Cf. decision to lift closure No. 109012003RGTR002494 issued on May 2, 2003, by the Regional Director of the Southern Littoral Internal Revenue Service (file of appendixes to the application, appendix 3, volume II, folio 450). In addition, the company was embargoed by a bank and a supplier of raw material because several debts were not paid. Cf. communication of April 16, 2003, addressed by Juan Carlos Chaparro Álvarez to the Regional Directorate of the Internal Revenue Service (file of appendixes to the application, appendix 3, volume II, folio 447; judicial decision issued on October 5, 1998, by the Fifth Civil Court of Guayaquil (file of appendixes to the application, appendix 3, volume II, folio 424); official communication No. 70 issued on March 4, 1999, by the Guayaquil Second Civil Court (judicial case file, volume 78, folio 10186); judicial decision issued on May 12, 2003, by the Second Enforcement Court of the Municipality of Guayaquil (file of appendixes to the application, appendix 3, volume II, folio 460). 143 Article 109 of the NDPSA, regarding the disposal of property, establishes that the: “CONSEP Administrative Council may provisionally deliver property that has been seized or confiscated to the public institutions it determines, so that this property may be used under its responsibility.” Also, Article 12 of the Regulations for the application of the NDPSA indicates that the Administrative Council has the powers “to deliver, provisionally, the property seized or confiscated that has been given in deposit to CONSEP to public institutions, following a report by the Executive Secretariat.” Cf. Regulation No. 2145-A for the Application of the NDPSA, published in the official record of the Government of Ecuador on March 7, 1981 (file of appendixes to the application, appendix 35, folio 1172). 144 The lease contract contained a clause establishing that CONSEP would supervise “on a monthly basis, the functioning of the factory facilities and the use of the equipment and immovables that were the object of the contract.” Cf. lease contract, supra note 118 (folio 590). 145 The third clause of the contract indicated that: “[g]iven that there has been a flood in the factory, which has affected the machinery and equipment, and also the structure of the building, so that there are leaks, the lessor grants a three-month grace period to the lessee so that, during this period, the repairs of the machinery, equipment and building can be carried out so as to make the said factory ready to operate.” Cf. lease contract, supra note 118 (folio 587). 146 Cf. testimony of Mr. Chaparro at the public hearing, supra note 95.