add-validation-to-commerce-checkout.php

<?php
// Inside form alter function insert validation using buttons like commerce does. 
// Insert the validation at the beginning of the array so the commerce module
// can access any of our errors and place them in the correct block instead of at top of page.
array_unshift($form['buttons']['continue']['#validate'], 'treepeople_commerce2_organization_validate');

// Inside the validate function, set the errors using a special concatenated field name 
// that include the panel the field is in. Notice there are no outer brackets.
form_set_error('customer_profile_billing][field_organization_name', t('Company/Organization Name field is required.'));

The commerce validation function will use that naming convention to place the error is the proper location on the page.