He was born in the french hospital in Colon, which was not a part of the Canal Zone.
I'm certainly the last guy to hammer anybody about citations but how do you know that? I have heard that in a number of other places and have assumed until yesterday that was so until I heard of the existence of a medical facility on the Pacific side.
An officer's tour of duty might require them as well as their spouse to be out of the country when their child is born, so they make that kind of allowance (regardless of the location of the birth).