Our neighbours were cat mad, they had at least 10 our garden was totally over run all the time not to mention the mess and fleas. We had 2 cats one if which was so nervous of their cars always being in our garden that we sent him to live with my mum he's now his happy relaxed self. The girl cat was a bit more able to handle herself but also spent much more time inside than him so stayed with us, was perfectly happy. Then she just disappeared we were worried but hoped she would come back. After talking with the next dour husband we said we hoped she was okay somewhere. He looked confused and said she's fine, settled in well! I said have you got our cat and he suddenly back tracked. What can we do!? I'm mostly relieved she's okay but how bloody cheeky.
A lot of people don't realise, but taking a cat does count as theft. How long was she missing? Did you make any effort to look for her? It could be that your neighbour thought you knew and just weren't bothered. Have you told your neighbour that you want the cat back?
I don't think a microchip is legal proof of ownership but presumably you've got loads of other evidence like vet records, photos etc. I would think that once your neighbours realise that you want the cat back and are willing to take legal action that they'll just hand her back.
There have been a couple of threads like this lately if you want to see how others have done it.