The fact that he gave up his seat to the elderly shows he has good manners.

Literal

Old-person [to-に] seat [object-を] yield [the fact that-とは] he [also-も] manners [object-を] understands.

~とは here marks the preceding clause as a fact leading to a judgment. 礼儀をわきまえる ('to understand propriety') is a set phrase for knowing proper behavior. 席を譲る ('to give up one's seat') is the standard phrase for this courtesy.