Should he forgive the back rent every time the manager decides he has other more important debts.
Once situations like this develop the owner/manager relationship will be damaged beyond repair.
Your manager is taking advantage of you and simply waiting to be evicted. He knows he owes the money and has no intention of paying. He is no longer a "fine" manager he is now a dead beat tenant.
Either take the house back and keep him as a manager, doubt he will be a "fine" manager after that, or fire his ass and evict before he owes 6, 8, 10 months in back payments.
Regardless of how you resolve this situation he will never be a reliable manager again.