Teasing
To kill a fellow sacred demon especially someone that was likely to be the clan leader or has several stuffs that make him useful to the clan was a taboo, that sacred demon who killed his fellow clansmen will be faced with tribulations that might be pretty hard to survive, that was the reason he let the brat go.
If not for that, he would have killed Damian and let his corpse rot before throwing it away into a pit of fire and ensure that he burns to ashes, not even charcoal will be left behind, the ashes will be thrown Into a large body of water to flow into any part of the world as long as it doesn't cause trouble.
Yao Wang wasn't a righteous dude, that was certain but most times acting according to the rule will not be a bad thing.
For example, If after he began the demon leader he went ahead and killed the bastard, then he would have been seen as a really bad person, someone who can't control his clan and would be seen as a brother killer.