2nd, not 3rd Company of Fusiliers.

Caught under rebel occupation were the outnumbered residents of Monte Serrat. Theirs was the civilian reaction to the battles in the countryside: surprise at a conflict they did not understand and fear of war.

The troops had their MGs and mortars in place and M3 A1 light tanks were ready for use.
Kerensky crossed the bridge to negotiate. The rebels soon realized he was trying to stall them. Mourão Filho gave him 2 hours to get out of the way and right in front of him ordered his artillery to, on his orders, shell the 1st Caçadores. Mandarino later complained that with the shelter he had his own company would be hit, but they never intended to fire, it was just psychological.
Muricy prepared an offensive for daybreak: a salvo at the Paraibuna Stone would tell the 1st Caçadores to get out of the way and the 10th Infantry would charge, while the 11th Infantry reinforced by light tanks would swing around in the rear, coming from the east, and get south of the Paraíba in Três Rios, from where it could attack the 1st Caçadores from behind. I presume this wasn't so sound as the 1st Infantry would already have occupied the place by daybreak.

Meanwhile, after negotiations 2 of Kerensky's platoons defected by midnight, severely weakening his position which already was outnumbered. His other officers also wanted to defect. With an impossible position, he retreated to Serraria. Muricy suspended the offensive and just prepared to quickly press forward at daybreak. Mourão Filho left the frontline. The Detachment stayed in place.

At 04:00 Muricy received a guest: Marshal Odílio Denys. He brought the news: the 1st Infantry was coming in their way, not to fight but to defect wholesale. Col Raimundo was swayed in the course of a telephone call. This is what most accounts mention, but before the call Raimundo had already decided to defect and his oppositionist stance was known days earlier. This makes Denys' contribution irrelevant. He makes other claims, such as telling Muricy to advance -but Muricy claimed he'd already agreed that with the staff- or sending written appeals to the 1st Caçadores, triggering their defection - the frontline account is of a legalist liutenant having a chat at the frontline and later at the station before returning and marching out.

After 05:00 the 1st Infantry joins the Tiradentes Detachment as its last echelon, receiving rest and fuel. They advance to Serraria. Kerensky had already retreated to Petrópolis but some of his forces were left behind. Some officers were convinced to defect, others taken prisoner. The 1st Caçadores was gone.

In addition Ltc Raimundo Nonato, who followed Col Raimundo, refused to hand over the 2nd Group of howitzers. He promised to discuss that with his officers and return, then tried to escape with his force. Muricy grabbed a company of the 1st Infantry. "Firing line! Fire on my order!" He marched with them, stopped the column and gave the commander a verbal beatdown and imprisonment. The 4th Battery was swallowed into the rebel force while the 6th fled. I've found no mention of a 5th. The 6th retreated all the way to quarters, meeting on its way the 1st Group coming on the other way and the citizens of Petrópolis, who mistook it for triumphant rebels.