
No it's definitely not true that a microchip proves ownership. Trevor Cooper the dog law solicitor goes into all of this at his dog law seminars. I've been to one, I know MsTemeraire has been to one, probably other CD members as well.
However, there may well have been other circumstances in the case you mention. If a dog is seen to have been abandoned, for instance, then the owner loses ownership of it. Trevor Cooper used as examples that if somebody ties a dog up outside a shop, goes in for the shopping and later comes back out again, then the dog is legally still theirs. However if they tie a dog up outside a shop and leave it there for many hours despite having finished the shopping and left the shop, then it has been abandoned. If somebody leaves a dog with a friend and asks them to look after it for a specified period, say 2 weeks, then do not come back for it for 2 months, then again they have abandoned the dog and have lost ownership. So this could have something to do with it, also the state of the dog could have been used as evidence in court that the owner was not suitable to keep a dog.