Apache's PHP handlers

For the past week I've been trying to get to the bottom of an exploit, but
googling hasn't been much help so far, nor has my service provider.
Basically a file was uploaded with the filename xxx.php.pgif which contained
nasty php code, and then the file was run directly from a browser. The
upload script used to upload this file checks that the upload filename
doesn't have a .php extension, which in this case it doesn't, so let it
through. I was under the impression apache would serve any file with an
extension not listed in its handlers directly back to the browser, but
instead it sent it to the php handler. Is this normal behaviour or is there
a problem with my service provider's apache configuration? Trying this on my
localhost returns the file contents directly to the browser as expected and
doesn't run the php code.

 

Cheers

Arno