Villarreal triumphed with the Jersey Boys of Giuseppe Rossi and Jozy Altidore at forward, with Rossi opening the scoring in a 2-1 first-round victory over Brugge on Thursday night.
Rossi, who was born in Teaneck and grew up in Clifton, scored in the 41st minute for the Yellow Submarine when he poked in a cross from Joan Capdevila.
Altidore, born in Livingston, had an open left-footed shot in fourth minute that goalkeeper Diego Lopez stopped with a slide save. Altidore had another open shot in the 18th that he sent straight at Lopez.
Rossi plays for Italy's national team — his parents are Italian — and Altidore started for the U.S. at the World Cup.
Ryan Donk tied the score in first-half injury time, and Gonzalo Javier Rodriguez put Villarreal back ahead in the 56th.
Brugge was a man short following Ronald Vargas' 25th-minute ejection.
Elsewhere, Liverpool's woes followed it all the way to the Netherlands and a 0-0 tie with Utrecht, and Manchester City tied 1-1 at home against Juventus.
A disjointed Liverpool display relied on goalkeeper Pepe Reina's saves to secure a point. The Reds remain top of Group K after Napoli's 3-3 draw at Steaua Bucharest.
"I thought it was a good point," Liverpool manager Roy Hodgson said. "Utrecht did well, they were determined, aggressive and committed, so we knew we had to be at our best defensively to keep them out and fortunately we did."
With captain Steven Gerrard missing, Liverpool lacked creativity in midfield. Utrecht had the ball in the net in the 25th minute when Jan Wuytens' shot powered past Reina, but the referee disallowed it for a foul.
Among Reina's many saves, he dived to keep out Edouard Duplan's powerful shot from close range and used his legs to block Dries Mertens' effort at the far post.
The best of Liverpool's chances saw defender Martin Skrtel head against the post midway through the second half.
Juventus is still winless in Group A after Adam Johnson's 36th-minute goal for Manchester City canceled out Vincenzo Iaquinta's early goal.
Atletico Madrid earned the first point of its title defense by tying 1-1 with Group B leader Bayer Leverkusen.
Stuttgart, last in the Bundesliga with just three points from its first six games, leads Group H with a perfect record after beating Odense 2-1.
CSKA Moscow, Zenit St. Petersburg, Paris St. Germain, Porto and Besiktas also recorded second successive wins.