Real Madrid slumped to their first defeat in nine matches after Racing Santander came from a goal down to win 2-1 with two controversial second-half penalties from defender Ezequiel Garay on Saturday.
Visiting Real looked like they might take their chance to move top of the Spanish Primera Liga when captain Raul netted 12 minutes before the break after a mistake by Garay.
But the Argentine atoned for his error midway through the second half when he converted a penalty after Lionel Scaloni appeared to dive in the area.
Garay snatched the win for Racing with his second spot kick a minute from time after another fiercely disputed penalty given when Fabio Cannavaro laid a hand on striker Nikola Zigic as they challenged for the ball.
Real ended the game with nine men following the dismissals of defenders Ivan Helguera and Alvaro Mejia for challenges on Racing forward Pedro Munitis in the dying minutes.
The defeat meant Real remained third in the table, a point behind Sevilla and two adrift of leaders Barcelona who both play on Sunday.
Racing, who have now gone eight matches since their last defeat, moved up to seventh, level on points with Atletico Madrid.
"Neither of their two goals were penalties," Real's sporting director Predrag Mijatovic told reporters. "The second one was a complete joke...some odd things are happening and we are all very angry about it."
POWERFUL SHOT
Real's only clear chance of the first half hour came when midfielder Mahamadou Diarra unleashed a powerful shot from 20 metres but Racing managed to scramble the ball off the line.
The visitors were gifted the lead, however, when Raul fired under keeper Tono after Garay had scuffed the ball to Real striker Gonzalo Higuain as he tried to play it out of defence.
Racing were given a break when Garay scored a dubious penalty given when Scaloni went to ground in the area after Diarra looked to have won the ball cleanly.
Real suffered another setback when Helguera was harshly dismissed for a high challenge on Munitis two minutes from time.
Things went from bad to worse when Cannavaro conceded another penalty and Garay ensured Racing made off with the points with another perfect spot kick.
Elsewhere, Real Sociedad boosted hopes of avoiding the drop by notching their first away win of the season with a 1-0 victory at Real Betis. Midfielder Javier Garrido was on target for the visitors with a 25-metre shot in the 32nd minute.
Sociedad are still five points adrift of safety with all their immediate rivals yet to play this weekend.