If an English team's playing in Europe, especially if they're your rivals, you don't have to support them. That would be ridiculous. I would have supported Real Madrid for this match because it's funny seeing Man City fail. Because you know, they're our rivals.
It doesn't make sense to suddenly support them when they're playing in Europe.
I think it only applies to English neutrals, who "should" probably veer on the English team's side (but which then doesn't make them completely neutral). And Spanish neutrals who "should" probably veer on the Spanish team's side, etc.
But if my rival's playing then screw them, they're not getting my support.