Technically speaking, the whole Batman Beyond franchise was officially DC canon a full decade before Damian Wayne came into existence. Due to the sliding timeline of the comics, it's difficult to put down a year to Damian's birth, but he would naturally be an adult, presumably in his late 40s or 50s, by the time Terry starts his Dark Knight training. Not since his introduction, though, have I heard him mentioned properly in the Batman Beyond books.
Given the nature of comic book ret-cons, this presents a problem, though: if Damian was alive, he should have been the "ideal candidate" for mind transfer in the episode below. This is especially true, given that Ra's (in Talia's body) specifically said the early transfer method needed a "genetic relation" to be accomplished:
All that being shown, central questions are:
1. Does Damian Wayne exist in the Batman Beyond timeline, or is it an alternate timeline?
2. Was his existence ever officially addressed by DC comics?
3. If so, what happened to him to explain why he's not around to be Batman's heir?