As the Christmas season is approaching, Carol has gone overboard with decorating the Malibu house. Along with the decorations, she proposes a "Secret Santa" gift exchange. After drawing names, Phil convinces Erica to let Phil (II) move back into the mansion, which she hesitantly accepts. In order for Phil (II) to patch things up with her, Phil and Phil (II) switch names with Phil (II) receiving hers and Phil receiving his own. Meanwhile, Carol finds out that Melissa and Todd broke up and feels sympathy for her, as he and Gail continue to hide their fling from the rest of the group. As nighttime approaches, Phil (II) gives a speech and thanks God for being welcomed back into the house, as the group sings "This Little Light of Mine".
Phil attempts to help Phil (II) win Erica back by having him give her a Hope diamond. He soon rejects, but later accepts. The following day, the group exchanges their Secret Santa gifts. Carol and Gail receive their gifts, which they enjoy. Phil buys a yacht for himself, which he detonates, much to the dismay of the others. Melissa receives her gift from Carol, which she laughs at as it is crafty. Todd receives a heartwarming gift from Melissa, Phil (II) receives nothing but a wicker ball from Gail, and Phil (II) gives Erica a hospital bed with a sonogram. The group sees Erica's baby, which brightens everybody.
Phil is a little annoyed that Phil (II) did not give Erica the diamond, but finds forgiveness when Phil (II) invites him to have a drink. Meanwhile, Melissa has a change of heart with the Christmas season, and feels bad about breaking up with Todd. Revealing that she truly does love him, she gets on one knee and proposes to him. However, before he can answer, Phil (II) rolls onto the floor in desperate pain as the group attempt to find out what is wrong.
Meanwhile, Mike begins to suffer in space, as he has been there for over three years. He soon finds that Terry, his last worm, has died and sends him off into space. Deciding that he truly has nobody, he plans to release himself into space. While looking back into the station, he sees another worm moving. Attempting to abort the air lock, he finds the abort a failure and is released into space in a spacesuit.