A trial court commits grave abuse of discretion when it denies a motion for postponement of pre-trial based on a party's sudden illness (even if initially lacking a medical certificate but later substantiated under oath) and declares that party in default, especially when the opposing party also failed to make a valid appearance (i.e., counsel appeared without special authority); the requirement for pre-trial to be held "after the last pleading has been filed" can be interpreted to mean after the period for filing the last pleading has expired, and failure to answer a compulsory counterclaim does not necessarily prevent pre-trial.

The underlying case (Civil Case No. 126113 in the Court of First Instance of Manila) was initiated by private respondent Belfast Surety & Insurance Co., Inc. against petitioner Andres C. Sarmiento and his father, Benjamin R. Sarmiento, Sr., seeking indemnification under an Indemnity Agreement related to a bail bond.

• Private respondent Belfast Surety filed an action against petitioner Andres Sarmiento and his father for indemnification under an indemnity agreement connected to a bail bond in the CFI of Manila.
• Petitioner filed an answer with a compulsory counterclaim on December 21, 1979.
• The case against the petitioner's father was dismissed, and pre-trial was scheduled for February 5, 1980.
• On the date of the pre-trial, petitioner sent an urgent motion for postponement, stating he experienced severe stomach pain and loose bowel movements while preparing to go to court.
• Only the counsel for the private respondent appeared at the pre-trial, without special authority.
• Respondent Judge Juan denied the motion for postponement, declared petitioner "non-suited" (which the Supreme Court noted should have been "as in default"), and allowed private respondent to present evidence ex-parte.
• Petitioner filed a motion for reconsideration under oath on February 25, 1980, reiterating his illness.
• Judge Juan denied the motion for reconsideration "for lack of merit" on February 26, 1980.
• Petitioner filed a certiorari petition with the Supreme Court, which was remanded to the Court of Appeals.
• The Court of Appeals denied the petition, upholding the trial court's orders.
• Petitioner then filed the present petition for review on certiorari before the Supreme Court.

• The pre-trial was prematurely scheduled because the "last pleading" (respondent's answer to petitioner's compulsory counterclaim) had not yet been filed, violating Section 1, Rule 20 of the Rules of Court.
• Without a valid pre-trial, the trial court lacked authority to declare petitioner in default for non-appearance.
• Assuming the pre-trial was validly scheduled, the trial court could not declare petitioner in default because the private respondent also failed to make a valid appearance, as only its counsel appeared without special authority.
• The trial court committed grave abuse of discretion in denying the urgent motion for postponement despite the meritorious ground (illness) alleged, and similarly abused its discretion in denying the motion for reconsideration which reiterated the reason under oath.

• The private respondent adopted its comment on the petition as its memorandum, effectively supporting the Court of Appeals' reasoning.
• The Court of Appeals reasoned that failure to answer a compulsory counterclaim does not prevent the scheduling of pre-trial, as otherwise, a party could delay proceedings indefinitely by simply not filing an answer.
• The Court of Appeals upheld the trial court's exercise of discretion in denying the postponement and declaring petitioner in default.

• Whether the pre-trial was prematurely scheduled because the respondent had not filed an answer to the petitioner's compulsory counterclaim.
• Whether the trial court committed grave abuse of discretion in denying petitioner's motion for postponement and subsequent motion for reconsideration based on illness.
• Whether the trial court properly declared the petitioner in default despite the fact that the respondent's counsel appeared at the pre-trial without special authority.

• The Supreme Court granted the petition, reversed the Court of Appeals' decision, and annulled the trial court's orders dated February 5, 1980, and February 26, 1980.
• The Court held that while the failure to file an answer to a compulsory counterclaim might not necessarily prevent pre-trial (as the requirement for the "last pleading" having been filed could mean the period for filing it has expired), the trial court's actions constituted grave abuse of discretion.
• Denying the motion for postponement due to illness, especially when reiterated under oath in the motion for reconsideration, sacrificed substantial justice for procedural niceties, particularly since it was the first scheduled pre-trial and ex-parte presentation had not yet occurred.
• The declaration of default against the petitioner was improper because the private respondent also failed to make a valid appearance at the pre-trial; only its counsel attended, without the required special authority. A plaintiff who does not validly appear cannot ask the court to declare the defendant in default for the same failure. The trial court should have considered dismissing the case or declaring the plaintiff non-suited instead.
• The case was ordered remanded to the trial court for rescheduling of the pre-trial and further proceedings.

• Pre-trial Timing (Rule 20, Sec. 1): The requirement that pre-trial be scheduled "after the last pleading has been filed" is primarily to ensure all issues are joined. The Court clarified this can be interpreted to mean after the last pleading has been filed OR after the period for filing it has expired, especially concerning compulsory counterclaims where an answer might not be strictly necessary or forthcoming. It prevents parties from delaying pre-trial indefinitely by not filing a required answer.
• Compulsory Counterclaim: Defined implicitly as one intimately related to the complaint where an answer might merely repeat allegations. The Court noted failure to answer such a counterclaim is likely not a ground for default, distinguishing it from other claims requiring an answer.
• Default (Rule 18, Sec. 1): A defendant may be declared in default only upon motion by the plaintiff. In this case, the declaration of default against the petitioner was improper because the plaintiff (respondent) itself failed to make a valid appearance at the pre-trial and thus could not move for such a declaration.
• Non-Suit (Rule 17, Sec. 3): A plaintiff may be declared non-suited for failure to appear at pre-trial, or the case dismissed, even without a motion from the defendant. The Court pointed out this would have been a more appropriate action by the trial court given the plaintiff's invalid appearance, rather than declaring the defendant in default.
• Appearance at Pre-trial: A party's appearance through counsel requires the counsel to be specially authorized to represent the client (e.g., enter into stipulations, compromises). Appearance by counsel alone without such authority is not considered a valid appearance by the party.
• Substantial Justice vs. Procedural Niceties: The Court reiterated its stance against default judgments and overly rigid application of procedural rules that defeat the ends of justice, emphasizing that petitioner's plea for postponement due to illness, later supported by oath, should have been given due regard.
• Grave Abuse of Discretion: This is the ground upon which certiorari lies. The Court found the trial judge's refusal to postpone despite a valid reason, and the improper declaration of default under the circumstances, constituted grave abuse of discretion correctible by certiorari.

• "If no answer (to the counterclaim) is timely filed, the pre-trial order may issue. Otherwise, an unscrupulous party litigant can hold court processes by the simple expedient of failing to answer."
• "The requirement that the last pleading must have been filed before a pre-trial may be scheduled should more appropriately be construed to mean not only if the last pleading had been actually filed, but also if the period for filing the same had expired."
• "Due regard should have been given to the repeated pronouncements by this Court against default judgments and proceedings that lay more emphasis on procedural niceties to the sacrifice of substantial justice."
• "A plaintiff who makes no valid appearance at pre-trial may not ask that the defendant be punished for the same shortcoming it was equally guilty of."

• Zamboanga Colleges, Inc. vs. Court of Appeals (1 SCRA 870): Cited as an example where failure to answer a compulsory counterclaim does not warrant a default declaration.
• Ballecer vs. Bernardo (18 SCRA 291): Cited alongside Zamboanga Colleges for the same principle regarding compulsory counterclaims and default.
• Agaton vs. Perez (18 SCRA 1165): Cited alongside Zamboanga Colleges and Ballecer for the same principle.
• Trajano vs. Cruz (80 SCRA 712): Cited to support the rule that a defendant may not be declared in default without a motion from the plaintiff (Rule 18, Sec. 1).

• Rules of Court, Rule 6, Sec. 2: Mentioned in relation to defining pleadings allowed (complaint, counterclaim, cross-claim, etc.).
• Rules of Court, Rule 6, Sec. 10: Referenced regarding the requirement to answer pleadings asserting a claim.
• Rules of Court, Rule 6, Sec. 11: Mentioned regarding the reply being the last permissible pleading.
• Rules of Court, Rule 12, Sec. 2(c): Cited as an example where failure to answer (a complaint in intervention) is not a ground for default.
• Rules of Court, Rule 17, Sec. 3: Cited regarding dismissal of action or non-suiting the plaintiff for failure to appear at pre-trial.
• Rules of Court, Rule 18, Sec. 1: Cited regarding the requirement of a plaintiff's motion to declare a defendant in default.
• Rules of Court, Rule 20, Sec. 1: Central provision discussed regarding the timing of pre-trial ("after the last pleading has been filed").