If you had difficulty with this battle, turn back and level up a bit. Also make sure everyone is well equipped. If you turn back, you have to fight this battle again. If you decide to keep going you will be greeted by a whole host of Gigarats. Cutscene to Clive who suggests that Hero keep going alone and leave the Gigarats to Yuri and himself.
Hero reluctantly agrees, then the scene switches to inside the manor.
Graud is complaining because Commander Jacob would not let him join their meeting even after Graud turned up the man they sought. The scene then switches to Hero wandering down a hall in the manor. He eavesdrops at a door, then the scene changes again to inside the room. Commander Jacob is meeting with Nicola. Nicola has been in contact with Cardinal Ladorak and is involved with him in some sort of a plan.