Manchester Legends beat their counterparts 5-4 on penalties after regulation time had ended in a 2-2 draw in a friendly match played at Ellis Park on Saturday.
Pirates scored their goals through Andries Sebola and Jerry Sikhosana while the Red Devils replied through two goals from Louis Saha.
Palacios praised his team for a great performance but expressed his unhappiness about the Manchester team fielding local players.
"We played well. We controlled the game from the start until the end of the game. We were only let down by a few mistakes that contributed to them scoring those two goals," Palacios tells KickOff.com website.
"However, I am still not happy about Manchester fielding both Brian Baloyi and Zane Moosa. We came to play against Manchester legends and not local players. I think they deserved to respect the game and the the 17 000 people that came to watch their heroes.
"Liverpool came here before to play against Kaizer Chiefs and they fielded their own legends. I don't have any problem with Brian Baloyi or Zane Moosa but the public deserved to respected and the criteria used to play such games," adds 'Njenje'.