Taxonomy ordering in admin page

I’ve created a custom taxonomy with hierarchy, with 2 levels – a parent and a child. Upon initial edits in the post creation page, the parent and child entries display in the expected manner, where the children are listed under each respective parent.

However, upon going back to edit the same post, the selected child entry will be listed at the top instead of under its parent. It seems similar to this post, however, the classic editor plugin is not installed.

Is this an expected behavior? I was expecting the custom taxonomy to behave similar to the built-in product category taxonomy in the admin post edit page, where the children are always listed under their parents.