If he owned both properties, he can choose to designate one or the other as his principal residence for that period. The folio indicates that he or a family member must OCCUPY the home to qualify for the PRE. With his daughter living there, that occupancy condition is satisfied. But, you still can have only one principal residence AT A TIME. So, he must choose one or the other for that 3 year period.
The example of a homeowner living in a care home applies when that person does not own the care home (typically a “care home” is a multi-unit building, where many un-related people RENT a unit from an arms-length company). So, the person living in a care home still has only ONE house that he OWNS, and is OCCUPIED by a family member. As such, it qualifies for the PRE when he sells it. Note that the house does not qualify for a PRE for the relative (i.e. daughter) because the relative does NOT own the property.