Short answer. This rule applies specifically to property relations between spouses. Philippine law ordinarily governs those relations wherever the marriage happened. But if the contract was entered into in the Philippines and affects property in a foreign country whose law requires different execution formalities, that foreign law controls the contract's extrinsic validity instead.
What the law says
In the absence of a contrary stipulation in a marriage settlement, the property relations of the spouses shall be governed by Philippine laws, regardless of the place of the celebration of the marriage and their residence.
Family Code, Article 80 — Governing Law for Property Relations. Read the full provision →
What the law says
With respect to the extrinsic validity of contracts entered into in the Philippines but affecting property situated in a foreign country whose laws require different formalities for its extrinsic validity.
Family Code, Article 80 — Governing Law for Property Relations. Read the full provision →
The default: Philippine law governs spousal property relations
This provision addresses one specific question: which country's law governs the property relations between spouses. Its default answer is Philippine law, applied without regard to where the marriage was celebrated or where the spouses actually live. That default can be changed by the spouses themselves, but only through a contrary stipulation written into a marriage settlement — an agreement on the property regime made before the marriage. Absent such a stipulation, Philippine law is the fallback for the couple's property arrangement no matter where in the world they married or reside.
Why this is narrower than 'any contract affecting property'
It matters that this rule is about spousal property relations specifically, not about contracts in general. A person's individual dealings with property they own — a sale, a lease, a mortgage — are not automatically pulled into this framework just because the person happens to be married. The rule is aimed at the marital property regime itself: what belongs to the community or partnership, and how contracts touching that regime are treated. A contract that has nothing to do with the spouses' property relations sits outside what this provision decides.
The carve-out for property abroad
Within that framework, the law recognizes that Philippine law cannot sensibly govern every formality question no matter where the property sits. One listed exception covers exactly your situation: a contract entered into in the Philippines but affecting property located in a foreign country, where that country's law requires different formalities for the contract's extrinsic validity. In that specific case, the default rule pointing to Philippine law does not apply, and the foreign country's formal requirements take over for that question.
What 'extrinsic validity' means here
Extrinsic validity concerns the form a contract must take to be valid — how it is signed, witnessed, acknowledged, or notarized — as distinct from the substance of what the parties actually agreed to. The carve-out speaks only to that formal question. It exists because a foreign country will usually insist on its own formalities for anything affecting land or property physically within its borders, and a contract that ignores those formalities may not be recognized there no matter how properly it was signed in the Philippines. Whether the underlying agreement itself is valid is a separate matter from whether it was executed in the right form.