Unless the Form has an OnClose event handler that sets the Action parameter to caFree, allowing the Form to free itself when it is closed. This is a common idiom when using Show() instead of ShowModal().
It does not look at the Owner at all. Nor could it anyway, because the Owner may not be a TWinControl at all. Candidates for an auto-assigned PopupParent include the Application's ActiveForm, the Application's MainForm, the Screen's ActiveForm, and the Application window.