What happens first? .htaccess or php code?

When a request is made to the URI affected by the .htaccess file, then Apache will handle any rewrite rules before any of your PHP code executes.

The .htaccess will kick in first. If you look at the Apache request cycle:

PHP is a response handler. mod_rewrite runs at URI translation, except for rewrite rules in .htaccess and <Directory> or <Location> blocks which run in the fixup phase. This is because Apache doesn't know which directory it's in (and thus which <Directory> or .htaccess to read) until after URI translation.

In response to to gabriel1836's question about the image, I grabbed it from the second slide of this presentation but it's originally from the book: Writing Apache Modules in Perl and C which I highly recommend.