This is sort of tricky. In essence there are 3 big mirrors. One has 1 enemy, one has 2, and one has 3. Start with the 1 alone of course!

Climb up the yellow-trunk tree and get over to the mirror. Now shoot the enemy. Soon it'll be balancing on one leg. When it does, run to the opposite end of the mirror and stomp-pound it. It'll see-saw the enemy off the mirror. Now go and do the same to the mirrors with the 2 enemies, then the 3 enemies.

When all the mirrors are clear, the caterpillar will fall off the roof. Your shine will be down on the beach!

Super Mario Sunshine Walkthrough