This pops at the end of the prologue.
SPOILER WARNING for the rest
The Prologue is basically a tutorial with introductory character Reks, as you muster up the castle tower with Basch's troops.
As long as you stay with the troops and use Attack, you should stay pretty healthy. (You can use a spell but the cast time could leave you more vulnerable.)
There are 2 potions tucked away in here so you can find them if you'd like.
The hardest part would be where you solo against 3 imperial guards, but even that is easy enough due to them only docking a few hit points with each hit and you being able to kill them off with 2 attacks each. (Plus you have the spell Cure and the potions, if you collected them.)
NOTE: Be sure to save at the save crystal, since you won't get another chance until you switch to Vaan and get out of the city.