After leaving the bases loaded and having a run taken off the board in the first due to a runner leaving early, Panama broke out for six in the second.
Carlos Flavio started the outburst with a solo homer. Edisson Gonzalez also had an RBI single before James Gonzalez hit his grand slam.
It was the first time a Panama player had ever hit a grand slam and two home runs in the tournament.
"I wasn't thinking home run when I went to the plate, so just hit the ball," James Gonzalez said through interpreter Antonio Gonzalez. "I didn't realize (it was a homer) until I saw it over the fence."
At that point, the 12-year-old shortstop raised both arms in the air.
Panama pitching limited a Canada team that scored 13 runs in a win Friday over Mexico. Edisson Gonzalez and Daniel Cruz combined for 13 strikeouts.
"That was probably the best pitching team we've seen. They had good fastballs and good breaking balls," Canada manager Vito Bordignon said. "We had difficulty adjusting, today."
Canada's Cole Dalla-Zanna drove in a run with a bases-loaded walk in the sixth, but Cruz ended the game with a strikeout.
"The problem we had too many strikeouts with runners on base," Bordignon said. "We get some groundballs instead of strikeouts and we maybe get an extra run or two to make this a different game."