Seeing that the tavern’s where YEUNG lives is wrecked and people are killed, PAO falls ill. HONG rebukes the KAM PRINCE telling him that he has been to the Ngaus Village to investigate his background. Unmoved by the KAM PRINCE's offer of fame and fortune, HONG is then locked up. THE KAM PRINCE cheats the KAM EMPEROR who asks to see HONG. Suspected, HUNG HEI looks for HONG and discovers him. Remembering being insulted when once disguised as a beggar, HONG hides the truth in order to maintain his high status. HONG replaces PAO's letter to YEUNG and tells YEUNG cannot go back to him, much to YEUNG's anger. HONG lies to PAO that YEUNG is dead. In deep sorrow and taken in by HONG's hypocrisy, PAO continues to stay at the prince's house. Knowing that YUNG is WONG’s daughter, the SIX GROTESQUES forbid CHING to get along with her and hints to YEUNG that he should marry CHE to CHING. Indignant, YUNG fights with the GROTESQUES.
