The form says the parent can apply if the child qualifies based on the grand parent’s physical presence:
”Part 4. Information About the Child's Qualifying U.S. Citizen Grandparent
NOTE: Complete this part only if the U.S. citizen parent (or adoptive parent), grandparent, or legal guardian is applying for
citizenship for the child, and the U.S. citizen parent has not been physically present in the United States for five years; two years of
which were after 14 years of age.”