Phi-2 shield : Phi-2 shield | LiuDr Electronic Solutions LLC Official Blog
Does this Phi-2 shield have I2C pull-up resistors ?
The total pull-up impedance should be 4k7 for the best results.
MCP23017 : http://www.microchip.com/wwwproducts/Devices.aspx?dDocName=en023499
If you only use that MCP23017, is that working ?
Do you use 100nF on the +5V at the MCP23017 ?
Wires of 12cm should be okay, but are they seperated wires (good) or tied together (bad).
Are the transistors and relays pulling to much current ?
My guess is some voltage spike or too much current drawn which makes the MCP13017 go wrong.