Is it fair of Apple to refuse to sell me a new battery because they claim there is some moisture inside?

Apple does not sell parts like batteries. They will install a battery, however the device has to meet standards. That way when they replace the battery, the device can be warrantied again. A device that is showing water damage cannot be warrantied, so the device would have to be replaced. That is why you cannot get a replacement battery for your device.

Because Apple warranties their work. They set the rules, and we cannot speculate why they do what they do here, as it is against the Terms of Service. They would have explained that to you when you brought the device in. Any work Apple does is warrantied. So, a device that is damaged could cause damage to the work they did, and you would then expect it to be fixed, but it could have been caused by the existing moisture damage. So Apple will only fix a device if it can be 100% sure it is fixed. If the device has moisture damage, they will only offer an out of warranty replacement. They will not replace individual parts.

If there were no moisture issue, and Apple did replace your battery, then they would warranty their battery replacement for some period of time. If the replacement battery malfunctioned for some reason (for some period of time I don't recall), they would fix things to make them right.

But given there is moisture present, Apple cannot stand behind their repair in this manner. So I suspect that's the basic heart of the issue.

If you drove over your iPhone with a car, should you expect Apple to replace the iPhone's screen?

What did they tell you in addition to saying they would not sell you a battery (which I assume means replace your battery for you, as they do not sell parts)? Did they say, for example, you would need additional service? A new iPhone?