First, everyone must believe that Martinez is dead, killed while trying to escape from jail. To this end, Monastario has a coffin filled with rocks, signs an official death certificate, and has the empty coffin buried. Word quickly spreads throughout Los Angeles that Martinez is dead. Indeed, Bernardo takes word back to Diego.
Meanwhile, Monastario goes over his plan with Martinez. Again Dressed as Zorro, Martinez will ride to the mission and steal the crown of jewels from the statue of the Virgin Mary. He will hide out in the countryside until things quiet down, and then he will be able to travel where he wishes, the jewels and his freedom his reward for helping Monastario.
The cast and crew spent some weeks preparing the episodes there.
Diego is very worried when he hears what "Zorro" has supposedly done. The real Zorro rides to the mission himself only to be accused and attacked. Diego fears that Zorro will never be able to show his face in Los Angeles again. He ponders the matter and comes up with a plan of his own. With a pocket filled with fake gems, Diego goes to the inn.
Diego, with the help of Bernardo, strews the fake gems in places they are sure to be found. There is an uproar when the jewels are discovered. Sitting with Licenciado Pina, Diego innocently observes that perhaps these jewels are from the crown stolen from the mission. Pina, frightened that Martinez has betrayed Capitan Monastario, hurries to find the Commandante. Angered, Monastario vows to stop Martinez. He rides out of town without noticing that Diego and Bernardo are following him.
Monastario reaches the place where Martinez is hiding out. Seeing a blanket with what appears to be a person wrapped in it, Monastario runs his sword through the cloth.
"This part of the plan you did not explain," Martinez says from behind the Commandante. He draws his own sword, and the men fight furiously. Monastario is cut on his right hand.
"If I did not value my own life so highly, I would take the time to relieve you of yours," Martinez snarls at Monastario. "I make you a gift of it." He turns to leave.
Diego confronts Martinez and fights him as clumsily as he can while still protecting himself. Diego is well aware that Monatario is watching his every move. After fighting for several minutes, Martinez manages to break away and starts running down the rocks. Monastario, who cannot allow Martinez to escape or be questioned under any circumstances, draws his gun and shoots Martinez, killing him.
When Diego removes a small pouch from Martinez's body, he finds the crown that had been stolen from the mission statue. Monastario is puzzled but relieved to see that all of the gems are still in the crown. He tells Diego that he will return it to Padre Felipe at the mission.
"You will explain it was not Zorro who did this?" Diego asks.
Diego asks the capitan how Martinez, who had been officially declared dead, could still have been alive. Monastario blames it on Sergeant Garcia. Then Monastario has a question of his own.
"How is it possible," he asks Diego, "that the most inept swordsman in all of California, was able to defeat Marinez, one of the best?"